N5.7 Trillion Spent For Darkness Eight Years After Privatisation In Nigeria

Payment for transformers, wires, poles persist as supply averages 4,000MW • Fashola, Mamman, El-Rufai, NASS, others’ attempts fail to spark optimism in sector • Grid collapse averages 130 times in eight years • EKEDC blames vandalisation of installations for prolonged blackout

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In what most industry players and consumer right groups, yesterday, described as payment for darkness, Nigerians, in the past eight years, have spent about N5.7 trillion on the supply of electricity as supply averages 4,000 megawatts, about the same level it was eight years ago.

Statistics from Nigerian Bulk Electricity Trading (NBET) Plc had shown that an average of N720 billion worth of electricity bill is processed yearly in the country, bringing the cost to about N5.7 trillion in the last eight years. These bills are settled by electricity users in Nigeria with measurable subsidy from the Federal Government.

While the practice of load shedding and electricity rationing is currently ongoing across the distribution companies (DisCos) serving the 36 states and the Federal Capital Territory (FCT), intense concerns are mounting over the worsening state of power supply in the country.

Recall that the Federal Government had privatised the power sector on November 1, 2013, with expectations that supply to homes and industries would by now exceed 40,000MW megawatts, but data obtained yesterday by The Guardian from the Osogbo-based Nigerian Electricity System Operator showed that available electricity in the country was a meagre 4224.9MW.

Although the data showed that grid generation installed capacity stands at 13,014.14MW, actual generation capacity was put at 7,652.6MW, while transmission wheeling capacity hovers at 8,100MW. Transmission and distribution bottlenecks compound realities as the country only improved supply to consumers by a mere 400MW since privatisation.

According to operators, electricity on the grid on November 1, 2013 when the sector was privatised was around 3,400MW, meaning that the sector had been struggling with power generation and supply in the past eight years.

On August 23, electricity grid collapsed for the fourth time this year, causing a blackout nationwide.

The highest peak power ever generated and transmitted in the country was 5,802MW on March 1, 2021 at 9.30p.m.

Power generation dropped further from a peak of 4,224.9MW on Sunday to 3,844.3MW on Monday, data obtained from the Federal Ministry of Power show.

To heighten the collapse of the service delivery, consumer right advocates yesterday decried the continuous monetary contributions under community development to acquire electricity transformers, poles, wires and other necessary services in privately-owned distribution companies.

In what seems as a situation that might have defied President Muhammadu Buhari’s best capacity, stakeholders insisted that the power sector has underperformed based on every metric of performance and remained far away from the land of promise.

Recall that President Buhari had appointed former Lagos State governor, Babatunde Fashola, in 2015, to break the bottlenecks in the sector, he was relieved after four years, bringing on board Saleh Mamman, who was sacked two months ago and replaced by Abubakar Aliyu.

While President Buhari had approved the composition of a Power Sector Reform Coordination Working Group proposed by the National Economic Council and chaired by Kaduna State governor, Nasir el-Rufai, with no visible results about one year after, the many committees set up at the National Assembly also appear to have no idea to optimise the sector.

To worsen the development, the national electricity grid in the space of eight years has collapsed for more than 130 times despite over $1.6 billion investment pumped into the transmission segment of the sector from donor funds and borrowings from the World Bank and the African Development Bank.

While the Federal Government had spent about N1.7 trillion on the sector with plans to spend additional $3 billion, the new Power Minister, Aliyu, had admitted on the backdrop of increased tariff in electricity that the quality of service in terms of hours of supply, voltage, disputed/estimated bills, or having no access to electricity, remained poor.

He said there is also sector illegality, noting that “payments the DisCos are able to collect from consumers do not cover the full investment and costs of the GenCos, who produce and sell the power, and Transmission Company of Nigeria, which wheels the power to the DisCos.”

A professor at the University of Lagos, Yemi Oke, insisted that from privatisation till date, what has been added to the national grid and transmitted as new megawatts has been less than 500MW despite all the noise and other marketing hypes from sector players and regulators.

Describing the development as motion without movement, he decried the situation of the sector, saying that: “It’s a big shame!”

While the electricity generation companies (GenCos) had said stranded electricity, currently at record high, created losses of above N1.5 trillion on their investment, the Executive Secretary of the Association of Power Generation Companies, Dr Joy Ogaji, said the market is faced with financial, operational, construction, market, macroeconomic, contract and regulatory risks.

According to her, while statistics from the Nigerian System Operator (SO) says load demand currently stands at 28,850MW, there are indications that there is a suppressed demand of over 22,000MW when compared to what is available for grid generation.

“The lack of sanctity of contracts have resulted in huge debt burden on the (GenCos) who are seldom fully paid for power generated and supplied to the market.

“The reform path may be long but there is need for the will to begin and government has no doubt demonstrated that will. Yes, there are challenges, but the benefits outweigh the challenges. Where there is a will, there is a way. Without doubt, challenges do exist in the sector; Nigeria must position itself to overcome the above challenges to evolve from a developing to a developed or matured market,” Ogaji stated.

An energy expert at the University of Ibadan, Prof. Adeola Adenikinju, stated that the privatisation of the power sector has not met the expectations of most Nigerians, stressing that the sector has underperformed.

According to him, while the interventions by the Central Bank of Nigeria (CBN) are commendable and have produced some results with resolving some of the liquidity challenges and the metering problem, the fundamental challenges of the sector seem unresolved.

“The stakeholders must come together to review the privatisation contract and provide for sanctions for parties that are not meeting their obligations. Pricing and investment are at the heart of solving the power problems,” he said.

President of Nigerian Association for Energy Economics, Prof. Yinka Omorogbe, said the sector was privatised to companies that were not experienced and kept the decrepit transmission system.

She also noted that lack of proper gas pricing systems and difficult approval process for licensing worsen the outcome of the sector.

Omorogbe said: “I think we need to rethink, restrategise, and realise that enabling environments are incredibly essential and that is the primary role of government.”

A legal practitioner and consumer rights advocate, Kunle Olubiyo, also decried the state of the sector, stating that electricity consumers are forced or conscripted to pay for distribution transformers, recycling cable, aluminum conductors, poles and other accessories.

He accused the downstream power distribution companies of surreptitiously using the investment of electricity consumers in filing for CAPEX at Nigerian Electricity Regulatory Commission (NERC).

“Federal Government should put in place the necessary machinery to commence immediate review of the privatisation of the power sector haphazardly packaged and wrongly delivered in 2013,” Olubiyo said.

Olubiyo, who is also the President, Nigeria Consumer Protection Network, said: “Taking a look at the general performances of the power sector, the picture is fluid and toxic and there is little or nothing to celebrate. Today, after the distribution companies manage to pay the monthly salaries of staff there is usually no other money to invest in improving their networks.”

He stated that Nigeria had no accurate customer data, adding that this was conservatively put at between eight million to 12 million. “Without credible data it will be difficult to plan and be taken seriously. Tariff is usually tied to customer data. Data is needed for mass meter roll out,” Olubiyo stated.

He added: “The post-privatisation bitter experiences of the end users of electricity in Nigeria have been reduced to a scam of sort. And it seems to the end users that Nigerians have been sold a dummy.”

BUT one of the DisCos, Eko Electricity Distribution Company (EKEDC) has disclosed that vandalisation of electrical installations was responsible for the prolonged outages experienced across the nation.

The company appealed to customers and the public to join in the fight against vandalism of its electrical installations. The DisCo made the appeal in a statement issued by its General Manager, Corporate Communications, Mr Godwin Idemudia.

Idemudia said incessant vandalisation of electrical installations was one of the biggest challenges of EKEDC and other DisCos. He said it was responsible for prolonged outages and underdevelopment of the nation’s power sector.


– The Guardian

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