Government should go all out to fix the power problem
In a 2021 report, the World Bank rated Nigeria as the poorest country in the world on power supply to citizens with 85 million people not connected to the grid and a loss of $26 billion annually. If anything, the situation in this critical sector has only worsened. With everybody supplying their own electricity, Nigeria is one of the toughest places in the world to do business. Lack of electricity has limited access to healthcare, education, and other opportunities for majority of Nigerians. Many small and medium scale businesses have been crippled due to the prohibitive cost of generating their own power. Even the big business ventures, particularly the manufacturing ones, are also feeling the biting effect of energy poverty with consequences stretching to every part of the economy.
To compound this dreary situation, the epileptic electricity supply in the country collapsed almost totally last weekend when the total available power dropped to below 500 megawatts. There were of course megawatts of excuses for the development that rendered many of the electricity generation companies (Gencos) redundant and the distribution companies (Discos) with zero power allocation. The situation has left Nigerians wondering whether the authorities will ever get the power sector to work for the people.
More than a decade after privatisation of the power sector, majority of Nigerians have come to the inescapable conclusion that the process through which countries like India, Singapore and a host of other contemporary emerging economies successfully used to reset their electric power challenge is proving too difficult to be applied effectively on our shores. Instead of generating, transmitting, and distributing enough megawatts of electricity to homes and industries across the country, what we get almost daily are excuses from relevant authorities.
Whatever may be the reasons for the current darkness in the country, it is also true that other stakeholders in the power sector, including—if not especially—the federal government, have contributed to the challenge of electricity supply in Nigeria. For instance, the government has frequently fiddled with the statutory exercise of allowing for a cost reflective tariff for the market to encourage further investments and growth. There are serious systemic issues across the power value chain that need a holistic approach to being solved.
Before now, the common excuse for grid collapse was always that the transmission lines could not wheel the power so generated by the Gencos although non-availability of gas is being blamed for the current mess. Meanwhile, the Discos who were the beneficiaries of the shambolic power sector reforms have all failed to invest in modernising and expanding the transmission lines. But that is not to suggest that the Gencos have fared better either. Many of the sector players are owed significant debts that really need government intervention if there is to be a practical resolution. In terms of moving forward, a lot of heads needs to come out of the sand so that commercially sound solutions can be implemented.
To address the challenge of the sector would require a holistic reform. There are more fundamental issues ranging from perverse incentives within the system and weakness of regulation. The grid is the weakest link but is also a vital link between generation and distribution. We have capacity to generate about 12,500 MW but the grid cannot take more than 5000 MW. The problem should be sorted out urgently.
President Bola Tinubu and his administration must understand that we cannot grow our economy without this critical infrastructure. And all options should be on the table.