• Saturday, May 18, 2024
businessday logo

BusinessDay

Old problems in power sector keeps Nigerians in darkness

India asks companies to fire-up power plants to meet rising electricity demand

Millions of Nigerians are once again grappling with the reality of power outages, with many areas experiencing unreliable electricity supply or complete darkness for days on end.

While the authorities offer a string of explanations, ranging from pipeline vandalism to gas shortages, citizens are left grappling with the harsh reality of unreliable electricity – a chronic issue that continues to stifle progress and erode trust.

“It’s the same story every week,” said Adeola Adewumi, a shopkeeper in Lagos struggling to keep her food cold without refrigeration. “They say there’s a fault on the line, or there’s not enough gas, but nothing changes. We’re left in the dark, literally and figuratively.”

The latest blackout comes amidst a backdrop of rising anger and disillusionment. Promises of improved power supply, a key campaign pledge of the current administration, seem increasingly hollow.

The explanations from the regulators vary, often citing issues such as gas pipeline vandalism, inadequate infrastructure, and grid failures.

“Our commitment is unwavering in addressing the challenges affecting power supply. We understand the impact on citizens, and our goal is to swiftly resolve the issues of gas supply, indebtedness, and overall sector stability,” Adebayo Adelabu, minister of power said in a meeting with sector stakeholders at the weekend.

He added: “To tackle the gas supply and liquidity challenges, I’ve decided to form a committee involving all stakeholders. Together, we will work on recommendations to resolve these issues and ensure a more reliable and consistent power supply for our citizens”.

However, many Nigerians remain skeptical, believing that a lack of proper planning and investment, coupled with the absence of strong board oversight the management of the Transmission Commission of Nigeria (TCN), are the root causes of the problem.

“We are tired of hearing the same excuses year after year,” said Aisha Mohammed, an energy analyst at the Lagos-based Center for Development Studies. “The government keeps promising to fix the problem, but nothing changes. We are left in the dark, both literally and figuratively despite the privatisation exercise.”

The sector was privatised in November 2013 as the distribution and generation companies were handed over to private investors amid high expectations but the country’s national grid has only managed to record an additional 1,426 megawatts, according to findings by BusinessDay.

This development has sparked criticisms from many Nigerians who have suffered from chronic shortages of power, and repeated promises to fix the problem have long been a staple of election campaigns.

“Another major issue over the years has been the unavailability of gas,” Kayode Oluwadare, an energy expert, said. “Large gas-fired power plant projects require power purchase agreements and feed gas agreements before they can secure funding, but the inability of those projects to secure feed gas supply on a long-term basis is a major challenge.”

Kelvin Emmanuel, chief executive officer of Dairy Hills, said the country cannot increase electricity generation without addressing three things.

He said on social media platform X: “You cannot increase electricity generation without addressing three things: Increasing the high-pressure transmission pipes for gas from 2,000 km to 7,000 km; declaring a state of emergency on prepaid meter adoption to raise it from 5.6 million to 12 million users, as a means to reduce impairment in revenue collections; and investing in transmission infrastructure to ensure the load delivered to Transmission Company of Nigeria is fully off-taken by the DisCos [distribution companies].

“This is why you need a strategy and implementation retreat between ministers of petroleum, gas resources, and power to ensure the KPIs are met.”

One senior analyst told BusinessDay that “with the mounting debt and the record-breaking unfunded shortfall, it is only a matter of time before the market grinds to a complete halt. And that will be devastating.”

Data from the new tariff plan for the 11 DisCos in the country showed the federal government would pay N1.67 trillion as electricity subsidy in 2024, even though the Nigerian Bulk Electricity Trading Plc’s budget only showed a subsidy plan of N450 billion.

The 2024 electricity subsidy is 170 percent higher than the N619 billion reportedly paid last year, according to findings by BusinessDay.

“The rich, accounting for only 20 percent of electricity consumers, are reaping more significant rewards from subsidies than the intended beneficiaries,” said Adetayo Adegbemle, convener and executive director of PowerUp Nigeria, a power consumer advocacy group.

He said the electricity subsidy in Nigeria has become a financial burden that “is no longer sustainable”.

“Urgent action is needed to address the disparities in subsidy distribution, prevent further strain on government finances, and redirect resources to areas where they can have a more significant impact,” he added.

Last August, the federal government said it had spent about N7 trillion as direct interventions in the power sector despite privatising the electricity generation and distribution companies in November 2013.