ONOME AMUGE
The power crisis in Nigeria is like a malignant disease, infecting the nation’s economy and causing its citizens untold suffering. Small businesses are especially vulnerable, as they struggle to shoulder the burden of providing their own power, while individuals are faced with daily frustrations and hardships.
Every day, across Nigeria, the power situation has become like a slow poison, creeping into every corner of life. For businesses, it’s a death by a thousand cuts, as profits dwindle and costs mount. For individuals, it’s a constant reminder of the shortcomings of their country, a constant frustration. And for the economy as a whole, it’s a drag on growth, an obstacle to progress.
The broader consequences of the situation are far-reaching, affecting everything from the cost of living for ordinary citizens to the overall productivity of the economy. As a result, Nigeria’s ability to develop and grow economically is being seriously undermined by the challenges facing the electricity distribution companies (DisCos). These challenges have created a vicious cycle, in which the inefficiencies of the DisCos are leading to an even greater demand for government intervention, which in turn is further straining the country’s already tight finances.
Despite the Nigerian government’s efforts to privatise the power sector in the hopes of improving electricity supply, the country’s power infrastructure still faces a number of significant challenges.
Nigerians are effectively being held hostage by an unreliable power grid. The consequences are multi-faceted and far-reaching, impacting every aspect of life from the most basic necessities to economic productivity.
A report by the International Energy Agency (IEA) revealed that between 2017 and 2023, there were 46 grid collapses, meaning a total blackout of electricity supply in the country.
According to the IEA, the root causes of the grid failures are a combination of aged infrastructure and widespread vandalism.
“Although the country has a total installed capacity of about 13 GW, average available capacity remained around 4.5 GW in 2023 due to a combination of factors such as deteriorating units, poor maintenance and liquidity constraints.
“Unreliable power supply due to limited grid infrastructure, underinvestment and ineffective regulatory frameworks have resulted in an estimated 40 percent of all the electricity consumed in the country being produced from backup generators,” IEA stated.
Challenges within the power value chain are seen to be multifaceted and include transmission and distribution losses, technical losses, and inadequate capacity in the gas-to-power value chain.
It was with much hope and anticipation that Nigerians greeted the arrival of the Distribution Companies (DisCos), a new and much-needed solution to the power crisis that had been plaguing the country for decades. But sadly, the DisCos have been unable to live up to expectations, mired in a host of operational difficulties. This has led to a disconnect between the electricity generated by the GenCos and the electricity that is actually delivered to consumers, resulting in both technical and economic losses. The end result is that the GenCos cannot generate sufficient revenue to cover their costs, while consumers are left in the dark, with no end in sight to the power problems.
According to reports, the challenges facing electricity DisCos in Nigeria are vast and varied. From outdated infrastructure to limited investments. This is as many DisCos operate on networks that are several decades old, with equipment that is long past its prime. A lack of adequate maintenance has led to frequent outages and disruptions, and inadequate customer data has made it difficult to manage and track electricity usage.
In response to ongoing concerns about the state of electricity supply in the country, Adebayo Adelabu, the minister of power, announced the findings of an investigation conducted by the Ministry of Power. The investigation found that certain power distribution companies were turning down electricity supply even in the midst of widespread blackouts. This was despite the fact that GenCos were producing more than enough electricity to meet demand.
Tony Elumelu, the chairman of Transcorp Plc, recently highlighted the need for a sense of urgency in addressing the crisis.
The renowned business tycoon, whose business empire includes a major stake in Nigeria’s electricity generating market (Transcorp Power), outlined several critical challenges facing the industry.
Elumelu argued that the lack of reliable power is one of the biggest impediments to economic growth and development, and that the government must take decisive action to improve the situation.
He highlighted the lack of adequate transmission infrastructure and the liquidity crisis affecting the industry. The listing of Transcorp Power Limited at a valuation of $1.2 billion was seen as a validation of the company’s success and a vote of confidence in the sector’s potential.
Elumelu’s proposal for resolving the energy crisis in Nigeria is a multi-pronged approach, centred on attracting private investment in the gas sector. He argued that the abundant gas reserves in the country could be leveraged to produce much-needed electricity. In addition, he called for the privatisation of transmission lines to improve efficiency and scalability.
In addition to tapping into the nation’s gas resources, Elumelu urged the government to create incentives for private investors to participate in the development of the energy sector. He argued that public-private partnerships could help modernise and expand the country’s electricity infrastructure.
Against the backdrop of a struggling economy, Elumelu’s call for action on the energy crisis takes on even greater significance. The situation is exacerbated by a currency crisis and economic instability, making the need for reliable and affordable electricity all the more pressing. As Elumelu pointed out, a sustainable energy sector is critical for economic revitalisation and the improvement of quality of life for the country’s citizens.
Also commenting on Nigeria’s erratic power supply, Obinna Ejianya, Australian-based publisher of 9News Nigeria and chief executive officer of Nine Communications Nigeria Limited, urged President Bola Ahmed Tinubu to prioritise the stability of electricity supply. Ejianya believes that focusing on this issue is more important than frequent overseas trips aimed at attracting foreign investors to Nigeria.
In a statement titled ‘President Tinubu Should Prioritise Power and Security Stability Over Chasing Foreign Investors’, Ejianya emphasised that by achieving a consistent power supply, Nigeria will naturally attract foreign investors.
Ejianya highlighted that an enabling environment is crucial for attracting foreign investors and cited Nigeria’s advantageous demographic as a significant factor.
Ejianya stated that the president’s primary focus should be on providing a consistent and reliable power supply for the people of Nigeria, rather than going on trips to attract foreign investors. He argued that if the country can achieve a stable power supply, it will naturally become an attractive investment destination, without the need for the President to travel abroad.
He stated: “Stable electricity power supply and adequate security are some of the major quintessential factors that not only create an enabling environment but also help to stabilise the local economy thereby providing a lucrative positive force that organically drives foreign investors to the country.
The recent success of Aba, Abia State in achieving a stable electricity supply serves as a valuable lesson in this regard.”
Ejianya expanded on his argument, stating that the lack of a stable power supply and insecurity are creating a negative environment for investment, both domestic and foreign. He argued that unless these issues are addressed, investors will continue to be deterred and the country’s economic growth will continue to suffer. He posited that the solution to this problem is for the president to make addressing electricity a top priority, so that a conducive environment can be created for both local and foreign investors., ultimately driving economic growth in Nigeria.
