The Minister of power, Adebayo Adelabu is seriously worried by the sharp decline in electricity supply across the country.
In an apparent bid to find lasting solutions to it, he has summoned the Chief Executive Officers of the Abuja Electricity Distribution Company (AEDC), their Ibadan counterpart and the Managing Director of the Transmission Company of Nigeria (TCN) to a crucial meeting.
But even before the meeting is held, the minister could not hide his dissatisfaction with the distribution companies for allegedly failing to adequately distribute much of the power generated by the TCN. He is piqued that despite concerted efforts to improve power generation resulting to an increase of more than 4,000 Megawatts, certain distribution companies have failed to live up to their statutory duties of distributing the additional output.
“Wilful non-performance will not be tolerated, and severe consequences, including license revocation may be imposed”, he threatened. It is not clear how the minister arrived at his conclusion that non distribution of the additional output by the distribution companies is responsible for the shortages in power supply. Neither is it public knowledge the difference in the quantity of power generated but not distributed.
But one thing that stands out is that the threat followed persistent nationwide power outages with no respite in sight. The national grid suffered serious breakdown on February 4, throwing a greater part of the country into unmitigated darkness.
Before then, the national grid had also collapsed on September 14, 2023. The Enugu Electricity Distribution Company EEDC had in a statement then titled, “Notice on total system collapse” informed its customers of the unfortunate incident.
Ironically, the collapse came barely a week after the TCN rolled out its drums in celebration of a seeming 400 days of grid stability. The uncanny coincidence went at length to diminish whatever glory the TCN intended to take from the purported grid stability celebration.
If the grid breakdown of September, 2023 was not sufficient to illustrate the dire straits the country is entangled in the provision of regular electricity, that of last month vividly showed the gravity of the challenge. There is little doubt there are inefficiencies on the part of power distributors that add to the epileptic power supply across the country. The differences on the level of performance of the various power distribution companies attest to this.
It will however, amount to scratching the surface of the matter to solely lay the blame for the dismal power supply in the country at the doorsteps of the power distributors. The issues are more fundamental than this and cannot be resolved by the revocation of the licenses of the distributors.
The crux of the matter is the abysmal shortfall in power generation which the distributors have practically no solutions to. The Association of Electricity Distributors puts the electricity needs of the country at 33,000 Megawatts. The universal rule is that you need 1,000 MW for One million people. It estimates there are 32million households connected to electricity. So you need to generate at least 32,000 mw to ensure stability in power supply.
The minister said the total output of the country stands at 4,000mw. How this will meet the needs of electricity users is a matter of conjecture. Even if all the 4,000mw generated are fully distributed, that can in no way make a significant change in the dismal power equation of the country.
It would seem much of the problem lies in power generation. How to make up for the deficits between the electricity needs of the country and what is currently generated is at issue. The gravity of the challenge is further reinforced by observed trends indicating rising demands for electricity across the country.
Estimates provided by the Nigerian Electricity Regulatory Commission have it that electricity demand will grow to 45,622 megawatts by 2030. There is a lot of work to be done especially in the sphere of power generation. We need to work very assiduously to ensure stability in power generation. Grid collapse as witnessed in the recent past cannot make for efficiency and stability in electricity supplies.
It is not enough to isolate the inefficiencies of the power distributors or generators for blame. We need to take a holistic perspective of the deficits in the power generation, transmission and distribution chain to address all the challenges that have rendered stable infrastructure across the country. There are challenges arising from the inability of the government to settle outstanding debts to power generating and gas supply companies.
The minister painted a sordid picture of the debt situation:”we are owing a total of N1.3tn to power generating companies, out of which 60 per cent is being owed to gas suppliers. We have a legacy debt prior to 2024 to the gas companies of $1.3bn; at today’s rate that is close to N2tn. Now if you add the N2tn legacy debt owed gas companies and the N1.3tn being owed the GENCOS, we have an inherited debt of over N3tn in this sector”
He must have also shocked many when he attributed the crash in power generation and the attendant poor supplies witnessed in January to the stoppage of gas supplies due to indebtedness to gas producers. That is as bad as the situation has become.
When the minister said subsidy on electricity for 2024 will gulp N3tn, he may have been referring to this outstanding debt even as only N450bn was budgeted for that purpose. That may be a subtle argument for the total elimination of the subsidy on electricity which the International Monetary Fund IMF and the World Bank have been stridently canvassing.
The other dimension of this disclosure is that for the country to meet its obligations in that sector and ensure stable power supply, total deregulation of that sector is the way to go. That may as well be the argument. But it is not all there is to it as the ability of the citizenry to cope with the additional burden has to come into consideration.
It is true that the oil sector has been deregulated with more money coming into the coffers of the government. There is also the claim that the government is still maintaining some form of subsidy in that sector and that petrol will definitely sell higher were the real dynamics of market forces allowed to play.
There may be some element of truth in that. The government may have chosen that path in order to mitigate the dire consequences of full deregulation on the lives of the citizenry. Yes, deregulation may conform to fine economic principles. But every policy operates in a given milieu and must factor in environmental variables in order to be effective.
Ours is still a vulnerable economy populated by the poorest of the poor. This economic reality must not be ignored by the multilateral institutions striving to impose the models of the advanced country on the rest of us. The effects of the fuel subsidy removal and liberalisation of the foreign exchange market have been telling on our citizens.
More money has been accruing into the federal government’s coffers after the deregulation. Instead of sharing the difference with the state governments to be frittered away, much of that should be injected into capital projects. The power sector which holds the ace for the industrial development of the country should be accorded topmost priority.
It is not just enough to always pass the burden of our inefficiencies in providing public goods and services to the ordinary citizens. There is a lot of waste in the public sector that should plugged, harnessed and injected into projects that will lead to public good. Countries all over the world subsidise goods and services. Developing ones with a large army of the unemployed and vulnerable population have even more reasons to reasonably subsidise.
The epileptic electricity supplies in the country despite the huge resources injected into that sector has become a serious national embarrassment. It is a sad development that despite the unbundling of the power sector, no significant change in power stability appear in sight. We must be licking the wounds of the mockery by South Africa which in a nationwide television advertisement during the AFCON competition tagged us, “a generator Republic”
