The Buhari government simply needs to move beyond politics
and sentiments. If President Buhari succeeds in solving the electricity supply
conundrum in Nigeria, that alone will be enough legacy for his administration.
Here is the main problem with Nigeria’s electricity sector:
Nigeria is Africa’s most populous nation, but it has failed consistently to
generate, transmit and distribute enough electricity to power its development
process and accelerate economic growth.
Between 1999 and 2007, President Olusegun Obasanjo focused
on the reform of the electricity sector as one of the major priorities of his
administration. Gas-powered plants were set up across the country under his
watch, turbines and other equipment were imported. His government laid the foundation
for reform in the power sector but could not complete the process, particularly
the privatization of the power sector.
Obasanjo’s legacy includes the National Electric Power Policy (NEPP) of
2001, the National Electric Power Sector Reform Act of 2005 which established
the Nigerian Electricity Regulatory Commission (NERC), and the establishment of
the Power Holding Company of Nigeria (PHCN), to replace the notorious National
Electricity Power Authority (NEPA). The PHCN was later unbundled into 18 successor
companies. By the time President Obasanjo left office in 2007, power generation
in the country had increased from about 1, 200 MW in 1999 to 4, 000 MW in 2007.
For a country of Nigeria’s size and population, this was not enough to
transform the country. Obasanjo was
succeeded by President Yar’Adua.
In the course of his campaign for Presidential office,
Alhaji Umaru Musa Yar’Adua stressed the importance of the electricity sector as
an engine of growth. He promised to declare a national emergency in the sector.
He eventually didn’t declare an emergency but shortly after assuming office in
2007, President Yar’Adua established a Presidential Committee for the
accelerated expansion of Nigeria’s power infrastructure with a mandate to
ensure the delivery of 6, 000 additional megawatts within 18 months and an
extra 11, 000 MW by 2011. By the time President Yar’Adua gave this directive,
Nigeria’s power generation capacity was down to 3,000 MW per day. South Africa
with a much smaller population was at the time generating 36, 000 MW. Egypt
with a population of 78 million also had a generating capacity of 36, 000 MW.
The Yar’Adua Committee which was given 18 days to do its work, submitted its
report one year later!
The House of Representatives also conducted a probe of the
electricity sector. The House Committee on Power led by Hon. Ndudi Elumelu
accused the Obasanjo administration of having spent over $10 billion on the
electricity sector without having much to show for it. The Committee disclosed
that between 2000 and 2007, the Obasanjo administration spent over $10 billion
on various projects in the power sector. The Elumelu Committee raised questions
and demanded answers. The Presidential Committee meanwhile recommended that the
country would still need about $85 billion to meet the target of 20, 000 MW
generating capacity as recommended by the Vision 2020 Committee. President
Yar’Adua in the course of it all, ordered a probe of the Nigeria Electricity
Regulatory Commission (NERC). The Chairman of the NERC and six commissioners of
the agency were suspended from office and invited for questioning.
President Yar’Adua’s government soon entered into
discussions with General Electric (GE) and later signed a Memorandum of
Understanding with the German Government on power development projects in
Nigeria. Siemens was one of the six German companies included in that MOU. The
Government also launched a Gas Master Plan to address the problem of gas supply
to the Papalanto, Omotosho and Geregu power plants built by the Obasanjo
government. Contracts worth over $660 million were awarded, but despite all its
good intentions, the Yar’Adua government could not make much difference. Power
supply remained epileptic in Nigeria. There are many who believe that the
efforts of the Yar’Adua administration were abbreviated by a lack of urgency
occasioned by the President’s health challenges and the obsession of that
administration with the past administration’s expenditure in the power sector.
It was so bad that power equipment worth $5 billion that had been imported in
2, 500 (or 800?) containers by the Obasanjo administration, which arrived three
days after President Obasanjo left office were abandoned at the ports for three
years. Taxpayers incurred a demurrage of N4 billion!
President Yar’Adua was succeeded by Dr. Goodluck Ebele
Jonathan. As former Chairman of the National Economic Council and former Chair
of the National Council on Privatization, Jonathan was certainly privy to the
Electricity Sector Road Map and the Power Sector Master Plan. He continued
where his boss former boss stopped, but even more so, from where Obasanjo
stopped, and by avoiding the ugly politics and blame game that had developed
around the subject of electricity delivery in Nigeria, he was able to make
significant process in the areas of accelerated reform, policy execution,
provision of power sector infrastructure, public-private sector partnership and
privatization.
President Jonathan had threatened, right from his early days
in power that he would privatize the PHCN, and reform the electricity sector.
In due course, he launched a Power Sector Transformation Plan and gave full
effect to the Nigeria Electricity Sector Regulatory Act of 2005. He
commissioned and upgraded a number of power plans including the Azura-Edo power
plant, the first fully privately owned Independent Power Plant in Nigeria. He
re-organized the PHCN by selling off the Federal Government’s majority stakes
in the 18 companies unbundled from PHCN in the shape of six Generation
Companies (GENCOS), 11 Distribution Companies (DISCOs) and a Transmission
Company owned fully by the Nigerian government. Private sector investors in the
GENCOs and DISCOs paid as much as $3.3 billion for the acquired PHCN assets in
what was considered an open and fair process even by international observers.
Nigerian banks supported the process, investments were also attracted to the
gas sector. By 2013, the power sector
had resurrected with installed generation capacity at about 12. 910 MW, but
available capacity nevertheless remained at less than 7. 652 MW. Transmission
capacity was 8, 1000 MW while a distribution peak of 5, 375 MW was recorded.
Thus, the problem of low capacity utilization persisted.
President Goodluck Jonathan handed over to President
Muhammadu Buhari in 2015. Like other Presidents before him since 1999,
President Buhari even as a candidate promised to transform Nigeria’s power
sector. In the run up to the 2015
elections, President Buhari in a document titled “Covenant with Nigerians” and
also in the “APC Manifesto”, promised that “The APC government shall vigorously
pursue the expansion of electricity generation and distribution of up to 40,
000 MW in 4 to 8 years.” The promised figure was twice the Vision 2020
Committee projection of 20, 000 MW by 2020. The reality is that the Buhari
administration has not been able to deliver on that promise. In 2017, former
Minister of Power, Housing and Works, Babatunde Fashola claimed that the
government had achieved a record 5, 074 MW in actual power generation. From 2015 to date, President Buhari has continued
to give assurances that his administration will sort out the electricity sector
crisis.
The administration has reportedly spent more than N900
billion on the power sector as intervention fund. It has signed a six-year
contract with Siemens of Germany for an upgrade and technical input across the
value chain to generate up to 25, 000 MW in three phases. The Buhari
administration accuses previous administrations – Obasanjo, Yar’Adua and
Jonathan’s of wasting Nigerian resources on the power sector without results
and the Jonathan administration of mismanaging the privatization process. It is
alleged that over $6.8 trillion has been spent on Nigeria’s power sector since
1999. Meanwhile, the country remains literally in darkness. Many companies have
had to relocate from Nigeria. Businesses, homes and families are compelled to
provide their own electricity. The cost of diesel is high. Many lives have been
lost to generator explosions. There are communities in Nigeria that have not
seen electricity for seven years, simply because they are not connected to the
national grid! The House of Representatives has asked President Buhari to
declare a state of emergency in the electricity sector. The standard response
has been to blame either the former ruling party, the PDP (1999- 2015) or the
Jonathan privatization process or more specifically, the power distribution
companies. In 2017, the Buhari government mooted the idea of probing the power
sector from 1999- 2015.
Needless politicking, sentiments and emotions have proven to
be the bane of the electricity sector in Nigeria. Every Minister of Power since
1999 has always been ready with an excuse for inefficiency. Babatunde Fashola, as Buhari’s Minister of
Power, Works and Housing heaped the blame on the privatization process.
Buhari’s NERC blames the DISCOs and even threatened to revoke their licences.
This blame game continued last week with Fashola’s successor as Minister of
Power, Engr. Saleh Mamman threatening that the DISCOs are the problem of the
electricity value-chain and if they do not sit up, their licences will be
revoked. He says he has even sent a memo to the Federal Executive Council to
that effect. The FEC should ignore his memo. Mamman doesn’t sound like he knows
what he is talking about. Ignorance is bad in itself, but the kind of tripodal
ignorance that has been demonstrated by the current Minister of Power is
curious!
It seems to me that government needs to go beyond
scapegoating, passing the buck, sentiments and politics, to address fundamental
problems of the electricity sector, and cross-cutting issues in the entire
value chain. There are consequential steps that should have been taken after
the privatization exercise of 2013/2014 to deepen the transition process away
from PHCN which the current administration has conveniently ignored. This is in
part responsible for the distortions within the entire value chain. If the
Minister of Power does not know what these are, he should consult the Bureau
for Public Enterprises, the National Electricity Regulatory Commission and the
Vice President’s Office which oversees the National Council on
Privatization. If he does not trust
anyone in those departments, let him talk to Nasir el-Rufai, the Governor of
Kaduna State who as Director General of BPE, at the time of the commencement of
reforms in that sector can tell the story much better - that is, if he doesn’t choose to play
convenient politics.
If el-Rufai plays politics with the matter, let him talk to
Dr. Lanre Babalola and Bola Onagoruwa. For example, the Gas Production and
supplies to the various Power Plants are still largely dependent on NGC/NNPC
which are government-controlled and as usual cannot respond to the 24 hours
need of the privatised power generating plants. Unfortunately, in the last 5
years, this critical component of the value chain of power generation has not
been resolved by President Buhari’s Government. Gas Production and supplies is
yet to be privatised and NNPC/FGN remain the major bureaucratic problem for the
gas-based electricity generating investors. Even the gas price in USD has not
been allowed to be translated into appropriate naira tariff for the entire
value chain of electricity supplies.
Recently we read in the media, that the Federal Government
has granted sovereign guarantee to NNPC to build gas pipeline from Ajaokuta to
Kano (AKK) for $2.8 billion, with about two captive gas-powered generating
plants along the gas pipeline. But any discerning observer of the industry will
ask whether this AKK should be a priority now, when you can deploy the $2.8
billion to solve the immediate problems of the stranded 10 gas-powered
generating plants in the hands of NIPP/Niger Delta Power Holding Company. It is
certain that this $2.8 Billion project will not be completed in the next 3-4
years and may never get sufficient gas to reach Abuja or Kano, when even Kaduna
refinery built since 1989 with Crude Pipeline from Escravos has never gotten
enough to refine Nigeria’s export crude on a daily basis. These are the issues
each of the Ministers has refused to look into, focussing instead on chasing
the DISCOS as the weeping child.
Is Minister Mamman aware at all of the existence of 10 power
plants that are being managed by the Niger Delta Power Holding Company (NDPHC),
a limited liability company that is managed by public officers? The Minister of
Power was quoted as saying Nigeria now has a generating capacity of 13, 000 MW
in 2020. In 2013, Nigeria had a generating capacity of 12, 910 MW. What has
been added since 2015? Even if 7000 MW is produced today, can TCN with its 330KVA/132KVA
transmit that much to all the DISCOS? The answer is capital NO. The Minister
pretends not to know that TCN is the weakest link between the GENCOs and
DISCOs. The Minister should show us how much has gone into 330KVA/132KVA in the
last 5 years across Nigeria.
The Federal Government could have sold ten more power plants
to increase capacity. It has not done so. Even then, the so-called claim of 13,
000 MW is at best academic and fictitious. Minister Mamman claims that the
Transmission Company of Nigeria (TCN) has a capacity to transmit 7, 000 MW but
it actually transmits about 5, 000 MW out of which the DISCOs can only take
about 3, 000MW. There is shortage of electricity in the country and so, high
demand for limited supply has driven up prices and yet government is insisting
on the withdrawal of subsidy and a hike in electricity tariffs by April 1. I
don’t get it. No wonder all the private
sectors, industrial and commercial houses generate electricity at about 70-85
Naira per kilowatt hour for themselves, but this has disenabled them from
competing with other manufacturers around the world. This is one of the major
reasons that the private sector must be allowed to take over the entire value
chain of the electricity industry. Since 2015 that Yola DISCO has been returned
to the Federal Government, it will interest the general public to hear from the
Minister, how much investment in 132KVA, 33KVA and 11KVA infrastructure has
been provided in the entire North East that Yola DISCO covers.
The Buhari government simply needs to move beyond politics
and sentiments. If President Buhari succeeds in solving the electricity supply
conundrum in Nigeria, that alone will be enough legacy for his administration.
He should listen only to those who know. Engr. Saleh Mamman has absolutely no
clue. I hope the Minister knows he is a member of the National Council on
Privatisation and therefore cannot take any policy decision without NCP
approval first.
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