The disturbing power supply situation

EPILEPTIC power supply has become a sad chapter in Nigeria’s development history, and it has remained one challenge that has defied successive governments; yet electricity is one of the most critical components in the development matrix of any country.

There is no questioning the impact of regular electricity supply on the economy because its use and access are strongly correlated with economic development. The energy sector has been acknowledged to be fundamental to development across all sectors of the economy. It drives the wheels of the economy. The industrialised countries of the world with thriving economies built their growth on steady power supply.

Apart from the inconveniences that follow poor supply of electricity in all aspects of national life, the inadequacy increases cost of production; and therefore cost of manufactured goods because of the huge expenditure on alternative sources of power. Running generators and high fuel cost have seriously increased the operating costs of businesses forcing, particularly small businesses to go under.

It is no longer news that a lot of manufacturing companies across the country have folded up or moved to other countries because of high cost of production occasioned by the epileptic power supply situation in the country. Added to other harsh economic realities, this has significantly contributed to the slow growth rate of the country’s economy and the high rate of poverty across the land. 

Capacity to change the ugly narrative about the sector has often been a recurring mantra of the opposition during national electioneering campaigns, but it has remained one promise that has consistently not been fulfilled; yet the country has all it takes to generate surplus electricity for its internal use and supply to neighbouring countries.

While campaigning ahead of the 2015 general election, the present ruling party, the All Progressives Congress (APC), vowed to resolve the challenge within a very short period, as it accused the then incumbent Peoples Democratic Party (PDP) of incompetence to handle critical issues affecting the country’s well-being. Six years in the saddle, only marginal improvements have been made, as the situation remains substantially unaddressed.

This administration listed ensuring energy sufficiency in power and petroleum products as one of the five key execution priorities in the Economic Recovery and Growth Plan (2017 – 2020). Although some improvements have been recorded in terms of provision, the cost of enjoying the facilities keeps climbing periodically. 

Government had planned to expand power sector infrastructure and optimise the delivery of at least 10 GW of operational power capacity by 2020 to boost economic activity across all sectors and improve the quality of life.  It had promised to concentrate on overcoming the challenges which relate to governance, funding, legal, regulatory and pricing issues across the three main power segments — generation, transmission and distribution — and ensure stricter contract and regulatory compliance. 

It also aimed at improving the energy mix including greater use of renewable energy and increasing power generation by optimising operational capacity, encouraging small scale projects and building more capacity over the long term. 

Unfortunately, the squabble between the Presidency and the National Assembly between 2016 and 2019 saw power sector budgets consistently being terribly slashed by the legislature, a development which stalled the completion of major power infrastructure projects across the country and arrested other plans which would have improved the power supply situation to boost the economy.

For too long, government had monopolised the generation and distribution of electricity in the country with no significant improvement to show for it. The unbundling of the sector by the Goodluck Jonathan administration saw the introduction of private sector players, a move that was made to break the monopoly grip and introduce efficiency and cost-effectiveness into the sector. It is yet to be seen if that objective has been achieved.

A number of factors have been said to be responsible for the poor power supply situation, government monopoly being the most often cited potent drawback.  The bogus grid system with its archaic infrastructure which has been largely unattended to in the last 30 years is a fundamental factor in the malaise. Poor funding to bring the architecture to the fore has been a recurring problem. Sector cartels which have turned into saboteurs that would rather maintain the status quo and benefit from it, including importers and marketers of power generators and inverters, fuel marketers, contractors and corrupt government officials have made regular electricity supply impossible.  Nigerians are paying a heavy price for this sabotage.

Other very critical factors include weak regulation and stiff legislation. Operators in the sector have become more powerful than the Nigerian Electricity Regulatory Commission (NERC). The sector cartel drowns out decisions and policies before they happen. Although the sector has been unbundled, the space is not open enough for small holder players to be part of the game.

However, the private sector which was expected to help the situation through massive investment in infrastructure is yet to show enough capacity. It has been grumbling over cost-reflective tariffs and shopping for credits even when necessary facilities that would rate consumption are yet to be fully complied with. Except for a negligible few, no discernible efforts have so far been made by certified private sector players to increase generation and distribution capacity in the relevant and respective areas.

As a result, steady power supply has continued to elude the country and the huge sums voted for improvement, have often disappeared without trace or sanction. It has become a dingy hole where funds are funnelled to feed corrupt system operators while businesses and the economy suffer.

Continued reliance on the bogus grid system will most certainly not help the improvement of supply because apart from the archaic infrastructure, it is not cost effective in terms of volume of supply and maintenance. Although government has been talking about encouraging the development of off-grid system in terms of coal, waste, solar and wind, implementation has been slow and lethargic. It is a crying shame that a country with so much endowment cannot scale this growth inhibiting challenge.  

For some time now, government has been struggling with the deployment of the Five Million Homes Solar Installation Programme under the Economic Sustainability Plan (ESP), using mini grids. The Rural Electrification Agency (REA) is saddled with the responsibility of driving the implementation while private companies would install and manage the home systems, drawing funding from a low-cost loan facility from the Central Bank of Nigeria. It was meant to be a game changer in the renewable energy sector, but the game is taking some time to change. 

The issue of cost reflective tariff has been on and has always attracted resistance for Labour, CSOs and some consumers; but this would not have become a big issue if the public had cause to believe that they are not subsidising inefficiency. With massive improvement in power supply, it is most likely that businesses in particular would prefer paying cost-reflective tariffs instead of wasting huge amounts on generators and fuel to run their operations.

Government and sector players must step up their game as the current frustrating situation is not helping individuals, businesses and the economy. The country’s economy will witness a renaissance in small, medium and large scale businesses and massive improvement of the economy with steady supply of electricity across the country. The result would be a massive reduction in poverty levels and a better gross domestic product for the country.