Despite the federal government’s substantial investments exceeding N3 trillion in the power sector between 2015 and 2022, new data from the Nigerian Electricity Regulatory Commission (NERC) has revealed a concerning trend. The average available capacity in the Nigerian Electricity Supply Industry (NESI) has witnessed a 37% decrease over the same period. This unexpected decline raises critical questions about the efficiency and effectiveness of the investments made in the sector.
Key Points:
- Declining Available Capacity:
- The available capacity in NESI dropped from 6,401mw in 2015 to 4,059mw in December 2022, indicating a significant decrease of 37%. This decline is perplexing, given the substantial financial injections made by the government.
- Marginal Rise in Installed Capacity:
- While available capacity decreased, there was a marginal increase in installed capacity by 7.9%, rising from 12,132mw in December 2015 to 13,097mw in December 2022. This points to a disparity between potential and actual utilization.
- Challenges and Contributing Factors:
- Deterioration of plant capacities, inadequate maintenance due to liquidity challenges, and difficulties in accessing foreign exchange are identified as primary factors contributing to the decline in available capacity.
- Non-binding contracts, delayed payments, and stringent regulatory measures also played a role in this concerning trend.
- Ongoing Industry Constraints:
- Inadequate gas supply, transmission limitations, restricted distribution networks, and commercial viability issues with Distribution Companies (Discos) remain significant technical and operational challenges within the industry.
- Future Projections and Recommendations:
- The current generation capacity falls short of meeting the anticipated load demand. Further expansion is imperative to cater to the projected demand increase to 45,662MW by 2030.
- The completion of ongoing power plant constructions, improved policy direction, and effective regulatory oversight are expected to contribute to additional generation capacity.
Conclusion: Despite the substantial investments made by the federal government in the power sector, the decline in available capacity is a cause for concern. This discrepancy raises questions about the efficiency and management of these investments. Addressing the challenges faced by the power sector, such as gas shortages, transmission constraints, and commercial viability, remains paramount. Future success in the sector will hinge on strategic planning, effective policy implementation, and robust regulatory oversight to ensure that investments translate into tangible improvements in power generation and distribution for the Nigerian population.
