For Nigeria, Africa’s most populous nation, electricity access is a major problem. From households to firms, power seems elusive.
Electricity grid has collapsed 99 times in eight years under President Muhammadu Buhari, according to a report by The Guardian, with little success recorded in terms of generation and distribution.
To drive home its point, the government, between 2018 and 2023, budgeted N829.788 billion for various electricity infrastructure projects. This is apart from $2.3 billion Siemens deal, which failed to deliver the 7000 megawatts of power it promised.
The amount budgeted for capital expenditure in 2023 is N195 billion, which will be funded from loans.
Of the budgeted amounts, the sum of N376.979 billion was cash-backed and released by the government between 2020 and 2022.
However, these expenditures have not bettered the fortunes of the power sector. Despite the electricity needs of the country, funds released are not utilised.
In 2020 (September), of the N128.005 billion capital appropriation, N68.672 billion was released and cash-backed.
However, only N44.224 billion was utilised out of the amount released, according to data from the Budget Office of the Federation. The rest was not utilised.
In 2021, of the N206.745 billion devoted to capital expenditure, N164.307 billion was released and cash-backed. However, only N122.256 billion was utilised.
Also, in 2022, of the N296.637 billion appropriation, N144 billion was released, cash-backed, and utilised.
However, the conversation is bigger than the amount of money utilised and cash-backed in Africa’s most populous nation. The Senate was told in 2015 that Nigeria spent N2.74 trillion on power between 1999 and 2015.
A report said the country spent N1.7 trillion on power between 2018 and 2020. Another report added that over $7.5 billion was spent on transmission alone under Buhari, yet the power sector problem has persisted.
The amounts mentioned here do not include N1.5 trillion lent by the Central Bank of Nigeria (CBN) to GenCos and DisCos as well as recurrent budgets over the years.
While more Nigerians need electricity, the country’s generation capacity has yet to match them.
As of 2015, the GWH available per customer stood at 0.00290, while the figure for 2022 stood at 0.00197, representing a 32 percent decline.
DisCos smile to the bank amid darkness
Distribution companies have recorded revenue spikes over the eight-year period, with Nigerians paying more to access unavailable electricity. DisCos’ revenue has risen from N278 billion to N828 billion between 2015 and 2022, representing nearly 200 percent increase. However, the DisCos have failed woefully to improve power supply and meter many Nigerians.
Only 4.95 million customers have been metered as at the second quarter of 2022 whereas those on estimated billing were estimated by the National Bureau of Statistics at 5.8 million. Customers accuse DisCos of preferring to collect estimated bills than metering them to ensure that electricity used is appropriately charged.
One customer at Oke-Afa, Ejigbo, Lagos, Mr Emeka Nzekwe, said he had noticed that even DisCos staff members preferred collecting estimated bills, claiming that “it enables them to make some money via corrupt means.”
According to the World Bank, about 43 percent of the Nigerian population do not have access to on-grid electricity, placing Nigeria as a country with largest energy access deficit in the world.
Power generation from GenCos has not made a remarkable improvement in recent times. Generation was 20,337 GWH in 2015 when the number of electricity consumers was 6.99 million. In 2022, generation slightly rose to 21,817 GWH even with 11.06 million consumers.
The gas problem
Gas is Nigeria’s biggest power source, yet it has been unable to provide enough to power electricity generation companies (GenCos). Gas is faced with challenges of maximisation and efficiency. A report said that Nigeria lost N1.9 billion in 2019 to insufficient gas supply for electricity transmission.
The implication of Nigeria’s inability to diversify its power sources, especially in the face of an ability to provide enough gas needed to power the country, is that it may not meet its ambitious 30 percent renewable energy commitment by 2030. It may also affect other elements of the agenda, especially the reduction of carbon emissions.
Aside gas flaring, which contributes significantly to Nigeria’s carbon emissions, 43 percent of the population with no access to electricity depend on carbon-emitting energy sources to generate power. Examples of carbon-emitting energy sources are petrol and diesel generator sets, which depend on fossil fuels.
Recognising these challenges may explain the country’s plan to provide solar power for five million households this year.
Twenty-one percent of Small and medium enterprises (SMEs) surveyed by the PWC noted that power (electricity generation) was their major challenge.
The PWC report estimated that one out of seven businesses exits the country due to the absence of electricity.
What should incoming government do?
Director of Research and Strategy at Lagos-based investment firm, Chapel Hill Denham, Mr. Tajudeen Ibrahim, told Dataphyte that the government should take its hands off the power sector and allow the private sector to run it. He noted that the telecoms sector was a good example.
“After investors had come in, we began to make calls without hitches,” he said.
He stated that the Federal Government’s involvement in transmission and generation should become a thing of the past.
While advocating for mini-grids, he noted that these would ensure that renewable and clean energy was used to power key areas and even rural areas of the country.
He cited a community in Oyo State that had electricity with the help of mini-grids, noting that the community members now had renewable energy to power their houses.
Ibrahim opined that if the incoming government could consider these strategies, it would help improve the electricity sector.
The Chief Executive Officer of the Centre for Promotion of Private Enterprise, Dr Muda Yusuf, called for the decentralisation of power delivery in the country.
“There is a need to decentralise power-delivery in the country. The country is too big for power centralisation, and there is a need for mini-grids. We also need to decide what to do with transmission grids, whether to concession or privatise them.”
While commending the development that saw the power sector move from the exclusive to the concurrent list, he advised that there should be a focus on mini-grids to aupport renewable energy.
“It is commendable that states can now generate their own electricity. Renewable energy should be made available and accessible by the removal of tariffs for equipment. This will ensure that different places can have electricity.”
Yusuf stated that distribution companies should be audited to understand if they could continue to carry on the duty of electricity distribution in the country, especially given their financial capacity.
“There is a need to audit the distribution companies, especially financially. Some of these companies are in huge debt and can barely carry on their activities. So, we need to do a holistic review of this.”
He pointed out that electricity tariffs should be cost-reflective in the country while there should be a system that would ensure that every customer was metered.
“The era of estimated billing should not be allowed to stand,” he added.