THE POWER SECTOR CHALLENGE

The power sector has served the country so poorly

Following series of ‘system collapse’, only 3,231 megawatts of electricity were generated on Wednesday to power a country of 201 million citizens. That is a clear indication that the power sector on which billions of dollars has been invested in the past two decades has practically collapsed. To compound the problem, there are reports that the generating companies (Gencos) have applied for force majeure following the difficulties in meeting their obligations with the Bureau of Public Enterprises (BPE). The question that remains unanswered is: What are the authorities doing to address this crisis that will just not go away?

According to a performance report credited to the Nigeria Electricity Supply Industry (NESI), the Gencos collect less than 30 per cent revenue for the power supplied. “The market situation is not only crippling the Gencos but also halting their desire to recover or expand capacity…Gencos are losing billions of naira every month from actions of other market participants and government parties,” the report stated. The Gencos which acquired majority holdings in the defunct Power Holding Company of Nigeria (PHCN) include Afam Power Plc, Mainstream Energy Solutions Limited (MESL), Transcorp Power Limited, North South Power Limited, Cummins Cogeneration Limited, Sapele Power Plc, Egbin Power Plc and KEPCO Energy Resources Limited (KERL). But they have not made any difference in the lives of Nigerians.

With everybody supplying their own electricity, Nigeria is one of the toughest places in the world to do business. Lack of electricity has over the years limited access to healthcare, education and other opportunities, including running their businesses 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. Sadly, all we keep getting from the authorities are megawatts of excuses that neither address the challenge at hand nor point to the way forward in a very critical sector.

That Nigerians don’t know who to hold accountable for their woes makes the whole situation more disturbing. At a stakeholder meeting in Abuja last December, Minister of Works, Power and Housing, Mr. Babatunde Fashola, advised electricity consumers in the country to direct their complaints about poor power supply to electricity Discos and Gencos. “If you don’t have electricity, it is not the federal government’s problem, take the matter to the people who are operating the power sector, generation and distribution companies”, said Fashola who added: “There are problems without a doubt and we must deal with them…all of the assets that the Ministry of Power used to control power have been sold by the last administration before I came. And so, if you don’t have power, it is not the government’s problem”.

In a recent statement to explain the challenge of the sector, the Executive Secretary, Association of Power Generation Companies, Dr Joy Ogaji said the limitations of the transmission and distribution networks as well as a lack of payments to Gencos account for the drop in generation. “The guarantee (in the power purchase agreements) has ended. Up till now, there is no plan for payment to Gencos, apart from the 26 per cent the Discos are paying. Gas suppliers are not ready to accept 26 per cent payment for the gas they sell to Gencos”, said Ogaji who argued further, “The rainy season is approaching; a lot of the networks are very weak. We will see a further drop in the generation as the rains start because the transmission and distribution networks are very bad.”

It is a crying shame that almost six years after the privatisation of the power sector, the country is still more or less in perpetual darkness.