It’s Electricity, Stupid!

Again, hostilities resumed in the creeks weekend, with the Niger Delta Avengers (NDA) bombing Chevron and NNPC (Nigerian National Petroleum Corporation) facilities. And this is despite entreaties from the highest levels of government and a supposed one-month ceasefire to prepare ground for negotiations. Indeed, twice in one week, President Muhammadu Buhari has had cause to plead with the militants, who had in the last several months carried out a war of attrition in the creeks, to exercise patience with his government and embrace peace. Buhari had told a delegation of the Niger Delta Dialogue and Contact Group, last Thursday, that he was studying the gazette on the Niger Delta Amnesty Programme of the Umaru Musa Yar’Adua administration and promised to address all outstanding issues. The weekend before the meeting with the Niger Delta delegation, Buhari had, while breaking the Ramadan fast with some leaders of his party, the APC (All Progressives Congress), called on the militants to stop the violence. In apparent frustration, if not helplessness, Buhari had pleaded, “For those of you who have friends, either among the leadership, or among the militants themselves, please beg them in the name of God Almighty to take it easy. We need to stabilize the economy to create employment.”

The president’s 180-degree turn from the initial belligerence of his administration’s handling of the renewed violence in the Delta region may have been due to dwindling government revenue, particularly in the face of a recession. When militants belonging to the NDA began vandalizing oil and gas pipelines, the Buhari administration threatened to treat them like Boko Haram insurgents. To make good its threat, troops were deployed to track down the militants responsible for the pipeline vandalism. The situation, however, degenerated with increased sabotage of oil and gas pipelines, bombing of oil flow stations, kidnapping and killing of oil workers. The result was the disruption of oil production operations, sharp drop in Nigeria’s capacity to meet its quota, and with that, a further dwindling of government revenue. There was also the cutting off of gas supply to power plants resulting in worsening electricity shortages. Avoiding a direct confrontation with the troops on ground, the militants embarked on a successful strategy of wearing down the administration by resorting to small scale actions targeted at the oil and gas infrastructure. In no time, the administration came to the realization that so long as oil remains the treasure base of the nation, it will be strategically unwise to put the Niger Delta militants and the Boko Haram insurgents in the same box. With the military unable to stop the serial vandalism and incessant bombings, the administration had to change track by calling for ceasefire, withdrawing its troops, and offering to negotiate. With the weekend bombings of Chevron and NNPC facilities, the one-month ceasefire barely lasted two weeks.

The administration may be worried about the immediate decline in government revenues arising from a drop in oil production, but I’m even more worried about the negative impact of militant activities on power generation. Growing up in the village as a child of the 60s, when the flame of the kerosene lantern was the most effective means of attending to your school assignment and lighting up your room and finding your way to a neighbours’s as a courier for your parents and casting huge menacing shadows from the dark night as the family sits in the courtyard expectantly waiting for God’s own light in the new moon, I probably did not understand what electric light meant until I was admitted to a general hospital in Kabba, some 15 minutes drive away. I remember how the magic touch on the wall resulted in the luminous brightness of the florescent bulb. I remember seeing the rainbow reflection on the ceiling change from white to blue to yellow, all at the same time as, lying on the hospital bed, my big eyes rolled from one end of the ward to another and back. I remember wrestling with sleep later in the night, how my eyes, already used to the very weak lighting from the flame of the kerosene lantern, struggled to keep out the brightness of the fluorescent bulb. I however began to understand the importance of electricity when I got admission to high school in the late 70s and was sent to the boarding house. Between then and now, long after my village had been connected to the national grid, Nigeria has still not been able to overcome the challenge of power shortages. Indeed, nobody born in, and has lived in this country in the last 50 years, would not have suffered the debilitating effect of electricity outages. How one singular problem could hold down the country for so long is baffling. Indeed, the headline to this piece, an adaption of then US president’s Bill Clinton’s campaign interview in 1993 of politics being the problem, drives the point home.

Every administration since this democratic project started in 1999 has made a song, if not an anthem, of generating 10,000 megawatts. Yet 17 years on, Nigeria is still struggling with slightly above 5000 megawatts, that is, when the power plants operate at full capacity. But more often than not, the power plants never operate near full capacity at any time. Take Egbin Power Plc., the biggest power plant in Nigeria, for instance. Acquired in 2013 by Sahara Group, through KEPCO Energy Resources Ltd., with an installed capacity of 1,320 megawatts, the new owners have difficulty keeping the plant operational at 87 per cent revamped capacity due to gas supply problems. Before privatization, the plant generated 300 megawatts at the best of times, with none of the six units fully operational. With $328 million invested since the plant’s privatization, and for the first time in 35 years, three of the six units completely overhauled and one other unit restored, Egbin can generate, with gas availability, 1100 megawatts. But then, gas, with vandals’ relentless attacks on the pipelines, does not seem to be ever readily available. At the peak of the attacks on oil facilities by the Avengers early last month, there was a system collapse when generation suddenly dropped at Egbin from over 800 megawatts to about 200 megawatts resulting from a cut off in gas supply. In the same way, the latest attacks on Chevron facilities in the Escravos has taken out Olorunsogo plant, with a generation capacity of 600 megawatts and daily loses of N470 million.

Despite the unbundling of the 18 business units under the behemoth Power Holding Company of Nigeria (PHCN) in 2013, the challenge of incessant power shortages is still a long way from being resolved. Investors who acquired controlling shares in the generation and distribution companies have enough problems growing their investment without having to worry about gas unavailability. There is the problem of government inability to make up its mind if electricity should continue being a social service and remain unfunded and unavailable, or an economic product with market determined pricing for it to attract investment. There is also the problem of government refusal to privatize transmission, as it did generation and distribution.

The Transmission Company of Nigeria (TCN) is singularly authorized to carry all electricity generated in the power plants to the distribution companies. The TCN does not perform this role efficiently as it does not ever pay the generating companies for the electricity it transmits because the distribution companies have problems collecting payment for electricity consumed by government institutions, usually the biggest debtors. Cutting off gas supply to power plants will arrest the little progress made since the privatization of the electricity sector. If investors in the generation companies are going to continually have plants that may not be able to generate anything near cost recovery, how will they make profit or pay down banks facilities or even commit to further investment? Why should they not consider pulling out, at some point?
It is for this the government has to work hard and fast to stop the activities of vandals in the Niger Delta. To opt for the military option will be economically costly, and most likely end in a humanitarian disaster. And to settle for negotiations is no more than rewarding criminality. For if the Niger Delta Amnesty Programme as implemented by the Goodluck Jonathan administration was any guide, while the militant leaders were obscenely enriched, the basic problems of the region in the areas of infrastructure deficit and oil spill and poverty were barely addressed.

In the medium to long term, it is unlikely the continued implementation of the Amnesty Programme will bring the desired result. For the continued enrichment of militant leaders can only bring about the formation of new groups of Avengers and Revengers. The revenue involved is an ever-attractive weapon of blackmail. And the Niger Delta region, either through official or unofficial channels, or even a combination of both, are masters of that art.

The way forward is to demobilize that weapon by allowing the region keep its oil and simply pay tax to the federal government. That is how all other federations of diverse nationalities, either in a presidential, parliamentary or even monarchical system of government, are structured to work. The report of the 2014 National Conference is a good place to begin the process of reviewing the 1999 Constitution to restructure Nigeria as a proper federation. It is a good thing the House of Representatives has had a buy-in. The Senate should do the same. Dr. Usman Bugaje and his colleagues in the Northern Leaders’ Conference, who delude themselves that the North owns the crude oil because it controls 72 percent of the total land mass in the country, are free to leave the comfort of their homes in Abuja and Kaduna and invade the creeks to claim ownership. I have no doubt the militants will welcome them with open arms.

What I do know is that this country cannot take off, much more develop, so long as the power situation remains in this parlous state. The cost of electricity outages to individual Nigerians, to companies, and to the nation is too much.