Seven years after Nigeria set out to reform its electricity supply industry, signs are emerging that regulating and commanding the sector from a single centre could lead to avoidable losses, and experts are calling for decentralisation.
Some of the tell-tale signs that Nigeria’s seven-year-old power sector privatisation is failing to yield the required benefits to the country’s over 200 million people include the amount spent on generators, the frequent collapse of the national grid and the Nigerian Electricity Regulatory Commission’s inability to steer the sector to profitability.
Households with access to on-grid electricity had an average power supply of only 9.2 hours a day in the first half of 2019, according to a survey by the country’s leading polling agency, NOIPolls. Electricity production per capita is less than 15 percent on the average of emerging-market economies and less than 25 percent of the sub-Saharan Africa average, according to the International Monetary Fund (IMF).
In one of its country economic reports, the Bretton Woods institution estimated the annual economic loss of lack of access to electricity and unreliable electricity at about $29 billion. In a 2014 World Bank survey, 27 percent of Nigerian firms identified electricity as the main obstacle to doing business.
In June 2020, the national grid collapsed again, plunging the whole country into darkness, just as it happened in May and April, which questions the integrity of the infrastructure. The network recorded over 11 failures in 2019.
According to Olasupo Shashore, a founding partner of Africa Law Practice NG & Co, a commercial law firm, over-centralisation of authority in Nigeria and the power sector, in particular, has created more poverty than anything else. The localisation of authority, control, regulation is concomitant with wealth and stability. The Transmission Company of Nigeria (TCN), Shashore said, is a clear example of where centralisation is doing more harm than good.
“The TCN should be broken up into at least seven or 10 TCNs and commercialised but not privatised immediately. It should be a graduated process. The TCN desperately needs money,” the senior advocate of Nigeria and former attorney general and commissioner for justice, Lagos State, said.
Paragraphs 14 and 15 of Part II of the Constitution of the Federal Republic of Nigeria as amended put electricity generation, transmission and distribution on the concurrent legislative list. This means state governments have no hindrance to the extent they can go in matters of electricity supply.
“The concept of energy federalism is worth exploring and implementing. I do not think everyone should be on the grid,” Ayodele Oni, energy partner at Bloomfield Law Practice, said.
“In areas where coal may work, and I understand the particular problems with coal, but in areas where it is in abundance, it should be used. Each state should capitalise on cheap, reliable sources of energy in its environment,” Obi said.
Economic activities in Nigeria are unevenly distributed and experts have said depending on the concentration of economic activities, energy infrastructure and supply is to be designed to meet local requirements.
These experts say there is no valid argument that justifies thinking every part of Nigeria needs the same amount of infrastructure at the same time. The South-East and North-Eastern parts of Nigeria require different degrees of infrastructure based on the level of economic activities and one TCN is not able to do this.
“We need to take the monopoly of transmission out of government hands, break it up and commercialise it. The framers of Nigeria’s constitution envisioned a situation where electricity will be distributed and controlled at many local levels,” Shashore noted.
The implication of paragraphs 14 and 15 cited is that there will be state NERCs and smaller territories of distribution. This will help cover the country faster than waiting for everyone to get to the same level at the same time.
National security asset has been used in the past to justify the government’s grip on Nigeria’s electricity transmission network, but power sector operators and policy formulators say this is no longer tenable. If Nigeria’s telephone backbone could be privatised, they say, electricity transmission infrastructure cannot more sensitive.
