COLLAPSE OF THE NATIONAL GRID
There are serious systemic issues that should be addressed
For the eighth time this year, the national grid collapsed last week, plunging the entire country into power blackout. The Transmission Company of Nigeria (TCN) and the Nigerian Electricity Regulatory Commission (NERC) have blamed the incident on a transformer that exploded at 330kV Jebba Transmission substation. NERC has also announced plans to conduct an investigative public hearing to identify both the immediate and underlying causes of recurring grid disturbances and widespread outages. But these collapses reinforce existing concerns about the structural defects in the sector.
It is becoming increasingly clear that authorities in the sector are incapable of stabilising the power grid, transmit generated volumes with minimal losses and put an end to frequent collapses. Before now, the common excuse for grid collapse was always that the transmission lines could not wheel the power so generated by the generating companies (GenCos). At some point, frequent grid collapses were attributed to vandalism of some transmission infrastructure. But there are more fundamental issues to address, including range of perverse incentives within the system and weakness of regulation.
It is unfortunate that a decade after the 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 the authorities. Till today, the DisCos that 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 generation companies (GENCOs) have fared better either.
In a report published last year, 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. 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, 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 feeling the biting effect of energy poverty with consequences stretching to every part of the economy.
A former Minister of Power, Bart Nnaji, has called on the federal government to resume the signing of Power Purchase Agreements (PPAs) with private investors to ramp up electricity generation in Nigeria. According to him, Nigeria currently has about 13,000-megawatt nameplate capacity but generates only about 5,000MW due to some factors that include insufficient natural gas availability for the country’s gas-fired plants, which account for 80 per cent of national grid electricity.
According to experts, the main reason why top private investors and investments seldom look towards Nigeria’s power sector may not be all about the absence of funds to invest, but rather about the lack of transparency and accountability. As we have stated on several occasions, any country keen on sustainable socio-economic development and prosperity would not overlook the inevitable reorganisation needed at the hugely dysfunctional behemoth called TCN.
What the frequent collapses of the national grid indicate is that there are serious systemic issues across the power value chain that need to be addressed. And the federal government must work with critical stakeholders in the sector to find solutions to them. To address the challenge of the sector would require more than a cosmetic approach.
