The dream of a constant electric power supply in Africa’s biggest economy remains a dream as the average constant capacity delivered to the country’s national grid has recorded an additional 1,400 megawatts (MW), nine years after a fanfare privatization exercise.
After an elaborate exercise in November 2013, power generated and made available on the national grid, increased by 43 percent from an average of 3,400mw in November 2013 to an average of 4,863.25mw despite over N1.6 trillion interventions by the federal government.
This additional power can barely generate enough power for Nigeria’s commercial capital, a state that requires about 9,000MW of electricity supply daily.
“Nigeria’s power sector has faced epileptic growth due to issues associated with the value chain from generation, transmission, distribution, and to the customers,” Etulan Adu, an energy professional told Dataphyte.
As at November 7, generation capacity stood at 7, 652MW and transmission wheeling capacity of 8,100MW, according to the Nigerian Electricity System Operator (NESO).
“It is absolutely unacceptable that in 2022 after trillions of dollars have been sunk into the power sector, we still can barely transmit less than 8,100MW,” James Harry, coordinator of the Association of Electricity Customers Monitoring Network, said.
The NESO put the all-time peak generation ever attained in the country at 5,801.6MW.
“Nigeria needs about 50,000 megawatts for the economy to thrive,” Ahmad Zakari, the senior special assistant to President Muhammadu Buhari on power infrastructure said at the Nigeria Energy 2022 Conference.
Under President Buhari’s administration, the national grid has collapsed about 98 times; this year alone, the grid has collapsed more than half a dozen times.
“Going by the unceasing power outage, the unbundling has yet to deliver the benefits that necessitated the denationalization in the first place,” Adeniyi Adeloye, an energy expert in Nigeria’s tier-one bank said.
He noted that the gap in value delivery can be ascribed to non-cost reflective tariffs, energy theft, non-payment of utility bills by consumers, obsolete power distribution infrastructure, and bellyup metering systems, among many other relevant reasons.
“To tackle this barrage of challenges, money is required. This is one place the Discos fall short,” Adeloye said.
Data from the Nigeria Bulk Electricity Trading Plc (NBET) showed the total payment received by the GenCos in the first half of this year was 54.64 percent of the amount due to them, compared to the 95.02 percent they got in the same period last year.
The Nigerian Electricity Regulatory Commission (NERC) said in its latest quarterly report that low remittances had continued to adversely affect the ability of NBET to honour its financial obligations to GenCos while service providers struggle with the paucity of funds.
According to the regulator, there is an urgent need for all the DisCos to implement new strategies to increase their collections in order to improve their remittance performance.
Other experts say the lingering power crisis in the country has forced more people to generate electricity in small units from off-grid sources, usually fossil fuel-powered generators.
“Within this same period, backup power supply has doubled, growing exponentially to an estimate of about 40,000mw,” a former commissioner at the Nigerian Electricity Regulatory Commission (NERC), said via phone.
Dataphyte’s findings showed Nigeria has budgeted the sum of N1.6 trillion to the Ministry of power in the last five years between 2018 and 2022.
According to the country’s budget document, the capital allocation to the power sector in 2022 stood at N299 billion representing 97 percent of the total expenditure for the sector.
Since 2013, the Nigerian government through the Central Bank has provided intervention funding for the power sector up to the tune of N1.6 trillion, and the lack of adequate returns has compelled the Central Bank to demand a line of sight to bills paid by customers.
Nigeria is now banking on the support of multilateral organisations like the World Bank and deal the country signed with German electricity company Siemens to increase generation and raise distribution capacity three-fold to 11,000MW by 2023 at the cost of over $3 billion.
Pedro Omontuemhen, partner and energy, utilities and resources leader at PwC Nigeria, believes so much more is still required to meet Nigeria’s power needs despite the successes achieved within the last seven years.
“This is a good development, but we are still far away from the required capacity for Nigerians energy needs,” Omontuemhen said. “Between generation and transmission, Nigeria is losing a lot of power – 9,000MW – to all sorts of fixable problems.”
Nigeria, Africa’s biggest economy, is lagging behind some of its peers on the continent in terms of electricity.
Egypt, a country with a population of 104 million inhabitants, added a total of 28,229MW to its national grid between December 2015 and December 2018, resulting in a total installed capacity of 59,000MW.
According to the United States Department of Commerce, International Trade Administration, this has been achieved through a fast-track project that worked on installing 3,636MW of electricity in eight months worth $2.7 billion.
Egypt also signed another project with Siemens in March 2015, which added 14,400MW in 2.5 years by building three mega combined power cycle stations.
South Africa, Africa’s second-biggest economy, has an electricity generation capacity of 58,095MW.
“By converting old simple cycle power plants to combined cycle, another 1,850MW were installed,” the US report said.
The World Bank estimates that Nigeria’s economy loses about $29 billion a year because of electricity supply problems.
“The inadequacy of electricity supply is one of the biggest impediments to the competitiveness of the manufacturing sector in 2022,” Muda Yusuf, the immediate past director-general of the Lagos Chamber of Commerce and Industry, said.