With the performance of Nigeria’s power sector ranked below average, operators believe that President Bola Tinubu must deliver optimally to salvage the industry, OKECHUKWU NNODIM writes
The poor generation and supply of electricity in Nigeria has continued to linger despite the privatisation of the power generation and distribution arms of the sector since November 2013.
Analysts and operators agree that the sector’s performance has been abysmal over the years irrespective of the over N2tn pumped into the privatised and government-owned arms of the value chain.
The power problem has defied solutions by successive governments. With the emergence of a new President, Bola Tinubu, expectations are high for a positive change in the electricity supply industry.
Analysts say that as long as power supply remains abysmal, coupled with metering problems, among others, the projected industrial and economic development in Nigeria will remain elusive, no matter how beautiful the monetary and fiscal policies are.
They also expressed sadness over the continued hike in electricity tariffs by power distribution companies, as approved by the Nigerian Electricity Regulatory Commission, despite the prolonged sorry state of power supply nationwide.
This is as operators and stakeholders in the power sector are gearing up for a hike in electricity tariff from July 1, 2023, in accordance with the provisions of the Multi-Year Tariff Order, which gives room for tariff review every six months.
Despite denials, the possible increase in tariff by July is, however, being expected despite the continued low power generation output from the industry since about 10 years after the successor electricity generation and distribution arms of the sector were handed over to private investors.
Data from the most recent quarterly report of NERC for the fourth quarter of 2022, for instance, indicated that available generation capacity in the period under review was less than 5,000 megawatts for a population of over 200 million.
“There were 26 grid-connected power stations consisting of 18 gas, four hydro, two steam, and two gas/steam-powered plants. Cumulatively, the plants’ average available capacity during the quarter was 4,497.32MW,” the NERC stated.
On the collection efficiency of power distribution companies, which are the firms saddled with the task of collecting revenues from customers required to run the power value-chain, the NERC stated that the total revenue collected by all Discos in Q4 2022 was N243.65bn out of N332.28bn billed to customers.
“This corresponds to a collection efficiency of 73.33 per cent,” the regulator stated.
On market remittance by the Discos after collecting the revenues from customers, the commission stated that the combined invoices issued to the Discos in 2022/Q4 was N231.01bn.
This, it said, consists of generation costs from the Nigerian Bulk Electricity Trading Company of N188.74bn; and transmission and administrative services from the Market Operator amounting to N42.27bn.
“From this amount, the Discos collectively remitted a total sum of N181.78bn (N145.91bn for NBET and N35.87bn for MO) with an outstanding balance of N49.23bn. This corresponds to a remittance performance of 78.69 per cent during the quarter,” the commission stated.
It further noted that aside from the inability of the Discos to meet their obligations to the electricity market in terms of remittances to the sector, the power distributors were also found wanting in the deployment of meters.
“The Nigerian Electricity Supply Industry continues to be challenged by the inadequate deployment of end-user customer meters. As at December 2022, only 5,134,871 (42.25 per cent) of the 12,152,106 registered energy customers have been metered,” the NERC stated.
Tinubu’s plan
However, amid the myriad challenges confronting the power sector, Nigeria’s new President had outlined his plans to reform the industry. Some of them include breaking the monopoly in the sector and provision of affordable electricity to all Nigerians.
Others are an increase in power generation capacity, support for power projects that can be delivered quickly to optimise power grid reliability, grid interconnectedness, and grid wheeling. Related News
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Additional measures which Tinubu plans to implement include the review and update of the power sector governance reform and acceleration of the country’s energy transition plans by seeking more funding.
The President, however, acknowledged that Nigeria’s power sector challenges could not be solved overnight, but noted that his plans would address the challenges in a comprehensive manner.
But amidst the ambitious plans of the President, the concerns in the power sector seem to be on the rise, as there are fears of a possible hike in tariff from July 1, 2023, based on the provisions of the MYTO.
This, however, is despite the fact that the power sector is still far from meeting the yearnings of Nigeria for stable electricity.
The President, Nigeria Labour Congress, Joe Ajaero, said service providers in the power sector were performing far below expectation, as he accused power distributors of hiking tariffs surreptitiously.
Their poor performance, according to Ajaero, was despite the financial support of the Federal Government to the sector over the years, as he stressed that plans to hike power tariff by operators in industry should be shelved.
He stated, “The service providers in spite of sundry support have not been able to meet the threshold of 5,000 megawatts. Coupled with this, there have been surreptitious increases without notice in violation of statutes.
“The inherent risk in the new regime of tariff is that there is no control, implying that by August, consumers will pay new rates. The other risk is that by the time other product or service-rendering entities come up with their new prices or rates, the ordinary person would have been compacted into dust.
“We would want to advise the apostles of the market who have called NLC all sorts of names to check their conscience. The rate at which they are going is highly combative and combustible.”
Also reacting to the development, an electricity law expert, Prof Yemi Oke, said power supply in Nigeria had remained poor, stressing that there was no justification for any tariff hike. He insisted that Nigerians could not afford another energy hike having recently had the removal of petrol subsidy.
“Electricity supply has been poor. What has continued to increase is the bill. So, there is no justification for tariff increase. There is a need for more sensitisation. The timing is wrong because we just had the removal of petrol subsidy.
“Also there hasn’t been an improvement in the quantum of megawatts generated and distributed to Nigerians. And I can’t feel the effect of regulation, for it is like nobody is in charge,” he stated.
Tasks before Tinubu
The President, Nigeria Consumer Protection Network and former member, Presidential Ad hoc Committee on Review of Electricity Tariff in Nigeria, Kunle Olubiyo, outlined other critical issues to be addressed by Tinubu in the power sector.
“The government should pull out its 40 per cent stake in the power sector and break the 11 electricity distribution companies’ franchises into smaller units in ways and manners that would break the present market monopoly and promote the ideals of a competitive electricity market,” he stated.
The NCPN president said the government should address matters relating to domestic gas obligation and appropriate gas pricing, adding that the sale of gas to the domestic market should be in local currency, as the commodity was being used by gas-fired power generation plants.
He added, “The government should provide tax incentives, fiscal and non-fiscal incentives as well as access to long term low interest single digit credit facilities to indigenous metre assembly plants and local metre manufacturers in order to strengthen their production capacities.
“End users of electricity in Nigeria should be given the opportunity to buy prepaid metres on the shelves, and the conversion of the postpaid meters being used by maximum demand metered customers, who are bulk users, to prepaid maximum demand metres.
“This will enhance energy accountability and customer satisfaction, as well as value for money. More investment should be channeled into capacity expansion of critical power grid infrastructure and network improvements in order to upscale efficient service delivery.”
