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APC failed on 40,000MW promise, rations 4,000MW

Updated: Dec 21, 2022

Shiroro transmission switch yard…underperforming.

• Stakeholders insist Buhari failed in sector despite N1.7b intervention, $3b loans

• Nigerians paying for darkness, says Oke

• Amadi: Sector worst in last seven years

The state of the Nigerian power sector has degenerated to its worst level in the last seven years, as industries and homes ration less than 4,000 megawatts (MW) of electricity, despite promises made by the All Progressives Congress (APC) government to increase power generation to 40,000MW.

Despite indicators, such as regulations, metering, debt, corruption, corporate governance, generation capacity, grid performance, transmission, distribution capacity and sanctity of contract rated “poor” by industry stakeholders, the current administration may have spent above N1.7 trillion to intervene in the sector, while borrowing another $3 billion.

Stakeholders, who spoke with The Guardian in separate interviews, said most Nigerians are paying for darkness, adding that the sector has been abysmal under President Muhammadu, as three ministers brought in to manage the sector could not turn things around.

APC, during the 2015 election campaign, promised to increase electricity generation and distribution to 40,000MW between four and eight years.

“The APC government shall vigorously pursue the expansion of electricity generation and distribution of up to 40,000MW in four to eight years. The party will also work assiduously at making power available from renewable energy sources, such as coal, solar, hydro, wind and biomass for domestic and industrial use, wherever these prove viable,” the party’s manifesto had noted.

Just last week, Minister of Power, Abubakar Aliyu, who took office after Babatunde Fashola and Mamman Saleh failed to perform, gave a self-appraisal, pointing to what he called a bright prospect for the sector.

But industry players insisted the sector is in a sorry state and requires urgent lifeline.

Association of Power Generation Companies had, in a document shared with The Guardian, said available power generation capacity was 6,616.28MW in 2015 but currently stands at around 5,634.47MW.

The national grid collapsed about 99 times under the Buhari government, leading to a loss of N1.76 trillion for the generation companies alone. Also, most distribution companies (DisCos) are already insolvent, as debt crises have brought the sector to its knees.

Amid challenges of metering, increased tariffs and transfer of funding of new transformers, poles, wires and others to consumers, Nigerians, in the past eight years, have spent about N5.7 trillion on supply of electricity. They pay an average of N720 billion yearly in electricity bills.

The practice of load shedding and electricity rationing is ongoing across the DisCos serving the 36 states and the Federal Capital Territory (FCT). With DisCos accepting an average of 3,000MW daily in the last few weeks, stakeholders expressed concerns about the state of the sector.

Recall that the Federal Government had privatised the power sector in November 2013, with expectations that supply to homes and industries would, by now, exceed 40,000MW.

Mambilla power project…still dragging.

Data obtained from the Osogbo-based Nigerian Electricity System Operator showed that available electricity in the country, as of 5:00 p.m. on Sunday was 4,231.60MW.

A professor of Energy Law at the University of Lagos, Yemi Oke, said there is nothing to show for the investment in the sector, as performance has been stagnant.

“All is not well in the power sector,” Oke said, noting that most of the initiatives introduced by the current administration to solve some of the challenges are “a complete mess.”

He said: “Nigerians are still purchasing transformers, only to remain assets of the DisCos. GenCos are still complaining about the shortfall in the sector. The sector has continued in the blame game.”

Oke described the sector as a bottomless hole where no investor would put his money, as the industry is already creating problems for banks.

The don said while he has lost hope in the ability of the current government to fix the sector, the next administration must ensure re-acquisition and refinancing of the sector, restructure the DisCos, restructure the Nigerian Electricity Regulatory Commission (NERC), ensure progressive licensing regime, abolish rural electrification agency, cede rural electrification fund to states, and promote captive generation, among others.

Former Chairman of NERC, Sam Amadi, said the power sector has been a total failure in the last seven years, stressing that supply has been poor with debt rising, while government continues to invest in the sector.

“The debt is high. Revenue collection is a challenge. The grid has been experiencing repeated collapse. The sector is in its worst state; it is a mess. We are still generating 4,000MW. There is a lack of leadership. There are more corruption cases. The regulator is weaker than ever, and the power ministry has not performed. The sector has been in crisis,” Amadi said.

Managing Partner, BBH Consulting, Madaki Omadachi Ameh, said the sector has remained epileptic over the past seven years, contrary to the high hopes Nigerians had at inception of the current administration.

“The campaign promises to fix the sector and guarantee 24 hours power supply within a short period in the first tenure was completely ignored, as if it was never made,” Ameh said.

He said though there has been marginal improvements in power supply in some parts of the country, the successes are too few and far between.

“Going forward, several structural changes are required in the Nigerian Electricity Supply Industry (NESI) for the change desired in the power sector to become visible. On the generation side, all stranded generations must be mainstreamed through an effective and efficient transmission network. If this is done, there is enough generation capacity in the country at the moment to make a difference. On the distribution side, the current distribution companies have all performed below par.

“Their contracts, on the verge of expiring, should not be renewed, and new international players or local players with strong international collaboration should be brought on board. The efficiency of the collection of tariffs also needs to be looked into, since that is the only way revenue flows into the power sector. Regulation through NERC and other sector regulators needs to be stepped up, and appointments into key positions should be based on competence and experience rather than patronage,” Ameh noted.

On his part, industry stakeholder, Bode Fadipe, said the sector has been a mix of blessings and woes.

According to him, all classes of customers have one sad story or the other to tell about the quality of service they have received from the sector, which ought to catalyse socio-economic and political evolution in the country.

He said privatisation brought new agencies and companies, as Nigeria now has the biggest size of the electricity market in Africa.

“However, that appears to be the stopping point of the benefits of privatisation policy and performance of the sector. The seven years period is also replete with a myriad of disturbing results.

“After nine years of privatisation (2013-2022), the reasons the government privatised its equity are still prevalent and in some instances, have become complicated.

“For instance, within the seven years period, Abuja, Kaduna, BEDC, IBEDC and KEDCO have been taken back from the hands of the original private sector investors. That is not a very good signal,” Fadipe said.

He added: “Not that alone, some of the principal aims that drove the privatisation in the first instance – discontinuance of government investment in the sector, improved efficiency, source of government revenue and many others – have not been realised, nine years into the policy.

“Alongside these factors is also the reality of policy inconsistency; the case of so (too) many cooks preparing and spoiling the broth. Several projects are going on today that seem to be working in silos – Siemens, PPI and TCN projects. The fact that this generation is still speaking of an outstanding debt of over N1 trillion is worrisome.”

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