In January 2013, a Nigerian provided perhaps the most memorable insight into Nigeria’s perennial electricity crisis ever. The man was Professor Chinedu Nebo of the University of Nigeria, Nsukka. He had been invited by the Senate for confirmation of his nomination as a Minister of the Federal Republic of Nigeria. After being subjected to a screening session of questions and answers, Professor Nebo placed Nigeria’s power problems at the doorsteps of “supernatural” powers and principalities.
“Some highly placed Nigerians believe that when there is an outage, it is caused by witches and demons,” he said.
“If the President deploys me in the power sector, I believe that given my performance at the University of Nigeria Nsukka, where I drove out the witches and demons, God will also give me the power to drive out the demons in the power sector.”
A ‘power’-ful theory in mysticism?
Curiously, as of 2013, when Nebo propounded his “witchcraft” theory of electricity generation, Nigeria’s per capita electricity generation—which refers to the annual average electricity generation per person, measured in kilowatt-hours—stood at 160 kWh. But in the seven years between that statement and 2020, despite the huge investments in the sector, the numbers have dropped drastically to 137 kWh. Between 2014 and 2017 it appeared the sector was waging a successful war against the “evil forces”, but the battle lost steam and a gradual decline followed from 2018 up to the current 2020 figure.
In similar fashion, Nigeria’s electricity access, as a share of the population with access to electricity, stood at 55.6% in 2013, but has dropped to 55.4% in 2020.
In contrast, Egypt, which had 99.85% electricity access as of 2013, recorded a 100% access rate in 2020.
Now, there are 5 tiers of electrification according to the World Bank that provide the metrics that determine “access to electricity”. Tier 0 are households without electricity access at all while Tier 1 is the lowest rung on the ladder with basic electricity access to provide some lighting and simple amenities like a radio for up to 5 hours in a day with a total yearly consumption per person of 22kWh. It goes all the way up to Tier 5, the highest level where there is enough electricity to power heavy appliances for up to 23 hours in a day with a total yearly consumption per person of 2195kWh.
If Nigeria’s “access to electricity” is disaggregated by tiers, the full picture of the power situation might be grimmer.
Five tiers of electrification from the World Bank’s Electrification Database
Source: United Nations through Our World in Data
In some way, Professor Nebo’s 2013 analogy could be said to be literary rather than literal, but nearly a decade later, haven’t events over the years rendered his postulation nightmarishly true?
Defining the “Witches” and the “Wizards”.
The “witches” and “wizards” behind Nigeria’s power woes aren’t that invisible—or invincible, depending on perspective—and data and history could provide some insights.
The power sector was privatised in November 2013, with six power generation companies and 11 electricity distribution companies handed over to the private sector. Although the federal government formally presented certificates and legal papers to the new owners of the power generation and distribution companies in September 2013, they had to wait until January 2014 before they could assume full ownership of the privatised companies due to labour issues and other concerns.
Prior to the privatisation period, the challenges bedevilling the sector were obvious: drastic drop in generation, frequent system collapses, low levels of investment in repairs, maintenance and manpower development, high energy losses, and energy theft, among others. Even though private ownership of the sector was expected to lead to productive investments and more efficient operations, the result has been quite disappointing.
To be clear, since the privatisation efforts of 2013, the nation has recorded improvement in generation, due to a number of interventions across the value chain.
In 2020, according to data sourced from Knoema, electricity net generation for Nigeria was 28.15 billion kilowatt hours, having increased from 14.84 billion kilowatt hours recorded in 2001. The leap represented an average annual growth rate of 4.13%.
Through the various interventions of the government, generating capacity has equally risen to 12,522 MW, but due to weaknesses and other technical hitches, only an average of 4,000 MW is delivered daily to homes and businesses through the transmission network and 11 distribution companies.
Expectedly, the impact of poor power supply on the economy has been quite immense, putting enormous operational pressure on manufacturers and businesses. According to a 2019 report, Nigerians consumed 144 kWh per capita annually, Ghana consumed over twice as much, Tunisia over ten times, and South Africa almost thirty times as much although each of these countries have far less population compared to Nigeria.
Unveiling the “witches”, “wizards” and allied principalities behind the nation’s electricity woes requires a step back in time to the privatisation journey, or the years prior.
Flawed Reform, Fumbling Results
Nigeria’s big, bold idea to transform its power sector began effectively with the Electric Power Sector Reform Act 2005, designed by the government of Olusegun Obasanjo. The idea, which didn’t effectively take off, was succeeded by the Roadmap for Power Sector Reform 2010, designed to comprehensively transform the power sector through privatisation, raise output to 40,000 MW by 2020, attract competent investors into the market, and kickstart Nigeria’s journey to productivity and economic development.
Before the sector reform moves, a state-owned monopoly known as the National Electric Power Authority (NEPA) was in charge of the generation, transmission and distribution of electric power in Nigeria. It operated as a vertically integrated utility company and had a total generation capacity of about 6,200 MW from 2 hydro and 4 thermal power plants.
The NEPA era was characterised by an unstable and unreliable electric power supply situation that exposed the country and its people to frequent power cuts and long periods of power outages, lack of maintenance of power infrastructure, outdated power plants, low revenues, high losses, power theft and non-cost reflective tariffs.
The privatisation reforms, therefore, were expected to create a new, liberalised market structure.
But the “paranormal” influences showed up when the process was sabotaged and the sale of the generation and distribution companies was heavily compromised as consortiums hurriedly put together by local politicians and businessmen took over the companies.
With no experience, funds, technical know-how or even international clout to attract foreign investors, the result was predictable; Chaos. The power sector’s epileptic episodes, a disease whose aetiology includes spiritual causes, increased.
Debt-burdened GenCos, Defaulting DisCos
The performance of the investors hasn’t only been uninspiring, they have stumbled amid poor operational framework and funding challenges. For instance, in 2020, the volume of “stranded power” – i.e. electricity that DisCos are unable to collect – stood at a whopping 263 per cent.
Data released by GenCos in November 2021 showed that the average unutilized power generation increased to 3,008.18 megawatts in 2021, from 1,030.80 MW in 2013, indicating an increase of 291 per cent in the past eight years, but still far short of generated power due mainly to lack of infrastructure.
In June 2021, the Central Bank of Nigeria announced that power firms owed N823.28 billion to banks, the latest figure from the CBN shows that the debt obligation had risen to N869.74 billion in July 2022.
The DisCos, often considered the weakest link in the value chain, have failed to distribute power from the GenCos through the grid, nor have they been able to generate revenue and pay for the power bought. According to NERC, of the total invoiced value of N222.51 billion they jointly received in the second quarter of 2020 from the Nigerian Bulk Electricity Trading Company and for service charges, the 11 DisCos settled only N62.41 billion, a mere 28.05 per cent.
It was therefore no surprise that in July, the Federal Government moved to restructure five of the 11 electricity distribution companies. Acting through the Bureau of Public Enterprises (BPE), the government announced the restructuring of Kano, Benin, Kaduna, Ibadan and Port Harcourt DISCOs, following what it termed the reactivation of the call on the collateralized shares of the Kano, Benin and Kaduna DISCOs by Fidelity Bank Plc and the African Export-Import Bank.
How will the restructuring help? Thus far there has been a shuffling of board members and the managers of the Discos and the federal government has promised that the consumers served by these discos would not suffer. According to them “the majority equity in the firms will be sold to qualified private sector investors who will re-capitalise and effectively operate the entities”.
In typical Nigerian fashion, controversies have swirled; from DisCos claiming the federal government is the real culprit because of their default on the privatisation promises made in 2013 including a N100 billion subsidy that they have not honoured, to one of the affected DisCos, the Ibadan Electricity Distribution Company, claiming the actions of the federal government through NERC and BPE are illegal and a violation of a court injunction.
While the controversies rage on, as if stirred by the hands of invisible principalities, over who owns what and who deceived who at the point of “contractual engagement”, the actual problems of power generation and distribution and possible solutions are not even on the agenda.
Perhaps as the 2023 elections campaign season finally gets underway on the 28th of September and candidates begin to present manifestos, one of them might present a plan for healing Nigeria’s power epilepsy.
This powerful Dibia, will have to do more than present the same incantations Nigerians have heard over and over like the 2019 APC Next Level incantation of “a minimum of 1,000 MW New Generation incremental Power capacity per annum on the Grid; Distribution to get to 7,000 MW under Distribution Expansion programme”.
This candidate’s strategy must be strong enough to not only unveil, but overwhelm the “witches and wizards” who have long terrorised Nigeria’s power sector.
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