Nigeria’s power challenges multifaceted – Electricity Stakeholders


By Abiodun OBA


The power sector is plagued with numerous problems that may prevent early stability in the supply for quite some time.

This is as Electricity Distribution Companies, DisCos, and the generation companies, GenCos, battle with outdated, obsolete networks, inadequate maintenance of equipment, and dilapidated generation machinery, causing below optimal capacity utilization.

Similarly, the Transmission Company of Nigeria, TCN, is being weighed down by twin issues of technical and socio-political factors.

It was gathered that the sector is suffering from low generating capacity, poor system maintenance, vandalism of electricity installations, ineffective enforcement of policies, surge in electricity demand, inadequate investment in transmission infrastructure, and technical losses hindering DisCos from off-take loads from TCN.

It is also facing the challenges of sub-standard facilities, incessant vandalism of pipelines that supply gas to stations, systemic corruption resulting in non-execution of awarded projects, under-capacity utilization, illegal connection, insufficient power allocation, huge metering gap, inappropriate network planning, huge indebtedness/low collection efficiency and maintenance of existing facilities and building of new ones.

The poor power supply is negatively affecting households, small businesses and even large businesses that depend on expensive diesel and fuel to operate their generators. Many businesses are collapsing and it is seriously causing the economy to bleed.

Speaking on the challenges, the acting General Secretary of the National Union of Electricity Employees, NUEE, Dominic Igwebike, said “The frequency of system collapse is mainly due to technical and socio-political factors.

“The technical issues include power transformers, grid expansion and maintenance, availability/application of SCADA and other power transmission technologies, generation capacity, etc. There is also a shortage of trained, experienced, and committed power systems professionals.

“The socio-political issues are even more dreaded, ranging from appointments of those overseeing the power sector to the formulation, implementation, and review of power sector policies. Closely related to this is the procurement processes and the influence of political heavyweights who fronts proxies, etc.

“The care-free attitude of citizens in handling power infrastructure located in their vicinity is another problem. These are manifested in vandalism, bushfires, construction under high-tension power lines, etc.

“The national power grid, a network of electrical transmission lines connecting generating stations to loads over the entire country, is designed to operate within certain stability limits in terms of voltage (330kV±5%) and frequency (50Hz±0.5%). Any deviation from these stability ranges can result in decreased power quality and, in severe cases, cause widespread power outages.

“The system operator is responsible for ensuring that the frequency remains within a ±0.5% tolerance threshold. When there is a significant deviation between demand and supply on the grid, this can cause grid parameters to move outside of their stability ranges, thereby creating the risk of a collapse.

“This usually occurs when demand is greater than supply, thereby causing the grid frequency to drop outside safe operational range which causes the most sensitive plants to shut down automatically. These shutdowns further exacerbate the frequency imbalance and can lead to a full or partial system collapse. We need to have more generations and frequent training of system operators.

“When several private companies are involved in delivering a public service, this can create a complicated, fragmented system where it is not always clear who is doing what. For example, in our electricity industry, different organisations are responsible for managing the DisCos and GenCos. This is inefficient and wasteful. No MW has been added and Nigerians are in darkness.”

According to him, “the main problem of the GenCos is simple technical operational issues like shortage of gas supplies and ageing and dilapidated generation machinery causing below optimal capacity utilization.

“The people who bought the assets did not invest and increase the generation capacity. There is also inadequate power evacuation capacity at GenCo locations, coupled with unstable and fragile facilities.

“DisCos are currently grappling with significant operational challenges including obsolete networks, inadequate maintenance of network equipment, deficient customer data, low meter penetration, and limited investments. The investors only care about the revenues and casualization is still ongoing, the main staff that knows the network has been sacked. External funding received is always mismanaged.

“The political class is multiplying the problems of the power sector because it is not interested in solving the problems. Members of the political class are the owners of the DisCos and GenCos. They are only interested in the revenue and grants given by the government.

“Former governor of Kaduna State, Mallam Nasir el-Rufai was quoted in the media to have said that the Buhari administration spent N1.7 trillion on Nigeria’s ‘broken’ electricity sector in three years. El-Rufai lamented that ‘the entire (electricity) sector is broken, noting that such expenditure by the Muhammadu Buhari administration on a privatised sector was ‘unsustainable.’

“Like we stated in our recent letter to the Minister of Power, there has been no meaningful improvement since the privatization of the power sector. The country has an installed capacity of about 14,000MW but generates about 4,803MW, meanwhile, Nigeria needs at least 30,000MW to reach sufficiency.

“The recent hike in electricity tariff from N68/kwh to N225 /kwh is absurd in a country where the majority of the masses are grappling with basic survival and an electricity access rate of about 55 per cent.

“The justification given by NERC is that the hike is attributed to only Band A consumers who make up only 15 per cent of electricity consumers and utilize 40 per cent of the nation’s electricity consumption. It begs to understand the sensibility of the person(s) that uttered such a statement purporting that it would not affect the general public.

“They need to answer these questions: Who are the Band A consumers? What do they do? Who are the customers of the Band A consumers? Who bears the brunt of the electricity hike?

“The general public is the one that will be most affected by this. They are the customers and end-users of the Band A products and services. The additional costs will be transferred to the common man, so they are indirectly being exploited notwithstanding their dwindling purchasing power and increasing impoverishment.

“Let’s look at these two scenarios: Company A uses 1000 kWh of energy in manufacturing and works for 24 hours a day.

“With the current hike, his daily energy cost will increase from N50,592,000 to N167,400,000 which is an additional direct cost of N116,808,000 i.e 231 per cent, not to mention the increase in the cost of their inputs as the costs of those will also be increased by the producers to accommodate their own increase.

“The price of company A in Band A products will go up by about 300 per cent and those in Band Z where there is no transformer will buy at the increased price. If they buy at a higher price, they are the ones paying the almost 300 per cent increase, not the manufacturer purported to be taxed.

“Company B, increased the price of its products in line with its new economic reality, consumers don’t have the purchasing power to buy at the new rate, and Company B will close down. As Company B closes down, some of its peers facing the same economic challenge will follow suit, and then unemployment will increase.

“If that happens, insecurity will be on an upward trend, and then the government will spend more than the money made in fighting insecurity which we haven’t been able to get hold of.

“The increased cost of goods will make Nigerian-produced goods unattractive as imported and smuggled items will be far cheaper than it. People will resort to those goods, thereby fuelling the economy and employment situation of the countries of import. Our manufacturing and business sectors will become comatose.

“The two scenarios above show that the hike in the electricity tariff is grossly detrimental to economic diversification, growth, and well-being of Nigerians.

“This is why the US, UK, France, Germany, and all developed economies support their factories with billions invested in power subsidies. Why is Nigeria different? Electricity in Egypt is an average of N21.68 per kwh, and in South Africa, it is N226 per kwh.

“The minimum wage in Egypt is N78,360, while in South Africa it is N328,395. The minimum wage in Nigeria is N30,000, while the new electricity tariff is N255 per kwh. A country that genuinely has the interest of its people at heart and wants to grow will ensure that the real sector is given the most support it can get, not putting a nail in its coffin.

“Furthermore, the safety of our members is at stake, as they are at risk of being attacked by people in the community when they visit for disconnections of light.

“The Minister of Power and NERC did not consult with the stakeholders in the sector before the increase. The minister of power has relegated himself as the spokesperson for the DisCos where he is justifying cost-reflective tariffs.

“What of Service Reflective Tariffs as it relates to consumers? We, as a stakeholder, do not know the energy policy of this present administration.”

Reacting to the development yesterday, the Chief Executive Officer, Centre for the Promotion of Private Enterprise, CPPE, Dr. Muda Yusuf, said inadequate and unstable power supply has impacted negatively on households and businesses.

“The poor power supply has become unbearable to homes and businesses, especially now that energy cost has increased. Both industry players and households are suffering,” he said.

Similarly, the Director General, Lagos Chamber of Commerce and Industry, LCCI, Chinyere Almona, said: “Despite the higher tariffs and without the power supplied, our members will still have to invest in generating plants to provide power to run their businesses. We call for an aggressive metering programme that leads to 100 per cent coverage of electricity consumers.

“This guarantees liquidity for the distribution companies and gives more satisfaction to consumers with a feeling of paying for what they consume.

“Beyond the provision of infrastructure, we need to have a sound regulatory and policy environment to attract more foreign investment into the power sector. The higher tariffs will add to the cost of production, which translates to higher prices of goods.”

Also, the Chief Executive Officer, of Kodion Energy, Mr. Joshua Okorie, who called for massive investments, said: “The Nigerian grid was outdated with decaying infrastructure built under British rule. We need to put in place a smart 21st-century grid system. But amidst these challenges lies an opportunity—a chance for Nigeria to harness its abundant solar resources and leapfrog into a future powered by clean energy.”

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