The All Progressives Congress (APC), Nigeria’s ruling party, has delivered far less electricity to homes and businesses than it pledged seven years ago as supplies continue to fluctuate.
The country’s beleaguered energy sector is seen as moving at a slow pace despite the interventions of President Muhammadu Buhari’s administration, which lasted for seven years this week.
For decades, the country has suffered from a chronic power shortage, and repeated promises to fix the problem have long been a staple of election campaigns.
Just like his predecessors, President Buhari won the 2015 presidential election, with a promise to boost the country’s energy supply.
“The APC government will aggressively continue to expand electricity generation and distribution up to 40,000 megawatts within four to eight years,” he said in the 2015 APC statement seen by BusinessDay.
We have given ourselves a target of 10,000 megawatts of distributable power. In 2016 alone, we intend to add 2,000 megawatts to the national grid,” President Buhari said while addressing the National Economic Council Retreat held at State House, Abuja on March 21, 2016.
The country’s total power generation reached 3,128.5 megawatts as of 6 a.m. Wednesday, with a generation capacity of 7652.6 megawatts and a wheel transmission capacity of 8,100 megawatts, according to the Nigerian Electricity System Operator (NESO).
NESO has set the all-time peak generation achieved in the country at 5801.6 MW,
The country’s ongoing energy crisis has forced more people to generate electricity in small units from off-grid sources, usually generators powered by fossil fuels.
At first glance, the federal government’s reforms to improve cash flow and market discipline in the energy sector appear to be paying off.
Last March, Nigerian lawmakers voted overwhelmingly to support a constitutional amendment bill aimed at allowing state governments to generate and transmit their own electricity.
To take advantage of this opportunity, Lagos State plans to establish an independent regulator while the Lagos Electricity Market Scheme is expected to be largely privately owned and operated with a new independent transportation management system operator.
Also, the nine-year conflict between Geometric Power and Interstate Electric that impeded Aba, the commercial hub of eastern Nigeria, from enjoying a 24-hour power supply this year was halted by Geometric Power paying the $26 million buyback value of the Aba circuit-fenced area.
However, experts question why the energy generated and available on the national grid, which was around 2,946.15 MW in 2015, is currently hovering around 4000-4200 MW on average despite billions of dollars of investment over the past seven years.
“It is completely unacceptable that in 2022 after trillions of dollars have been poured into the power sector, we are still barely able to generate 3,500 megawatts,” said James Harry, Coordinator of the Electricity Customer Monitoring Network.
The Central Bank of Nigeria intervened in the energy sector in the amount of N 1.6 trillion.
CBN said last week that it issued N15.71 billion to energy sector players including generators and gas companies, under Nigeria’s Bulk Electricity Trade Payment Guarantee Facility, bringing the cumulative payments under the facility to N1.30 trillion.
She said that N22.67 billion has also been released to Distribution Companies (DisCos) for their operating and capital expenditures, under the Nigeria Electricity Market Stabilization Facility (Phase 2), adding:
“Cumulative disbursement under NEMSF-2 is currently 251.93 billion NEMSF-2.”
“In addition, under the National Comprehensive Metering Programme, the Bank disbursed N0.19 billion to DisCos for the purchase of electricity meters, bringing the cumulative payment for the purchase and installation of 865,956 meters nationwide to N47.82 billion.”
The Central Bank of Nigeria said the energy/infrastructure interventions are designed to improve investment and development of enabling infrastructure in Nigeria’s electricity supply industry.
Despite this level of intervention, generators were estimated to owe more than N400 billion in 2020 alone. While interventions have been central to ensuring the profitability of operators along the industry value chain, they remain insufficient and unsustainable,” noted Augusto and Partners.
Pedro Omontoymen, Partner and Leader of Energy, Utilities and Resources at PwC Nigeria, believes that much remains to be done to meet Nigeria’s energy needs despite the successes of the past seven years.
“This is a good development, but we are still far from the required capacity for the energy needs of Nigerians,” said Omontoymen. “Between generation and transmission, Nigeria is losing a lot of power – 9,000 megawatts – to all kinds of problems that can be solved.”
Nigeria, Africa’s largest economy, lags behind some of its counterparts on the continent in terms of electricity.
Egypt, a country of 104 million people, added a total of 28,229 MW to its national grid between December 2015 and December 2018, resulting in a total installed capacity of 59,000 MW.
According to the US Department of Commerce, Department of International Trade, this was achieved through a fast-track project that installed 3,636 megawatts of electricity in eight months, valued at $2.7 billion.
Egypt also signed another project with Siemens in March 2015, which added 14,400 MW in 2.5 years by building three massive combined cycle power plants.
South Africa, Africa’s second largest economy, has an electricity generation capacity of 58 thousand megawatts.
“By converting the old simple-cycle power plants to combined-cycle, another 1,850 megawatts were installed,” the US report said.
In Ghana, between 2000 and 2020, electricity generation capacity increased at a rate of 6.4 percent annually from 1,358 megawatts to 4,695 megawatts, according to data from the country’s energy agency.
“Nigeria needs a comprehensive policy review in the energy sector,” Ahmed Refai Zakari, Special Adviser to
Head of Infrastructure, said at the 12th annual Roundtable event for PwC a few weeks ago.
Nigeria has an installed capacity generation network of 13,014.14 megawatts, according to NESO data.
“Over this same seven to eight year period, the standby power supply has doubled, and has grown exponentially to an estimated 40,000 megawatts,” Iwo Ekbo, a former commissioner of the Nigeria Electricity Regulatory Commission (NERC), told BusinessDay.
The International Monetary Fund estimates that the Nigerian economy loses about $29 billion annually due to electricity supply problems.
“Inadequate electricity supply is one of the biggest barriers to the competitiveness of the manufacturing sector in 2022,” said Muda Yusuf, former general manager of the Lagos Chamber of Commerce and Industry.
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