Celebrating 57 Years of Epileptic Power Supply

With over 80 million Nigerians still lacking access to electricity, the history of Nigeria’s power sector in the past 57 years has been characterised by failed promises and unachievable generation targets. Ejiofor Alike and Chineme Okafor report

The Minister of Power, Works and Housing, Mr. Babatunde Fashola has refrained from setting generation targets like the previous administrations, stressing that what is necessary is incremental power supply

To best appreciate the evolution of Nigeria’s power sector, a peep through its salient records may not be out of place. Nigeria’s first public electricity utility company, the Nigerian Electricity Supply Company (NESCO) was established in 1929, some 30 years after electricity generation had started in the country back in 1896.

After years of operation, NESCO reportedly had to hand over the management of the country’s public electricity utility to the Electric Corporation of Nigeria (ECN), a successor that was established in 1951 to take over its assets and operations.

But 11 years after, a new partner for the ECN, the Nigeria Dams Authority (NDA) was established precisely in 1962 to help the country develop and deploy her hydropower potentials.

Both ECN and NDA subsequently merged in 1972 to form the National Electric Power Authority (NEPA), which for long had an unchallenged control over public power supply in the country.

NEPA later transmuted into the Power Holding Company of Nigeria (PHCN) after 1999 when the government decided to create a holding company for its then imminent unbundling and subsequent privatisation of the sector.

In 2005, the Electric Power Sector Reform Act (EPSRA) was enacted by the National Assembly, and that formed the basis for the government’s reform of the sector.

Before the EPSRA 2005, Nigeria’s electricity market was governed by a number of legislations which included the Constitution of the Federal Republic of Nigeria; the Electricity Act, Cap 106, Laws of the Federation of Nigeria (LFN) 1990 (as amended) as well as other auxiliary relevant legislations like the National Electric Power Authority Act, Cap 256, LFN 1990 (as amended). The EPSRA 2005, however, put to rest these pieces of legislation, and handed over parts of the sector to private investors, thus leaving the federal ministry of power, which had for years solely managed the sector, with just the task of policy implementation.

The job of regulation then shifted to a new regulator – the Nigerian Electricity Regulatory Commission (NERC); 11 distribution companies (Discos) were created and 60 per cent of their shares divested to private investors just as the government concessioned its hydro Gencos and sold its gas Gencos. The government however retained the transmission network.

Before the privatisation, reports indicated that out of the 79 generation units that the country had, only 19 were operational and average daily generation peaked at 1,750MW.

The government which ran the sector reportedly built no new electric power infrastructure between 1989 and 1999, indicating that the latest generation plant in the country was completed in 1990.

Post reform era Following the 2013 hand-over of power assets to private investors, upgrading the capacity of Nigeria’s electricity market to guarantee stability for the country has faced various challenges.

Even though the reform was initiated to reposition the sector, it has yet to lead Nigeria out of unstable public electricity supply.

Reports from various agencies associated with the sector indicate that up to 60 per cent of the country’s citizens are yet to be connected to the national grid, while the percentage on the grid manages an average 3500MW generated and transmitted daily to the grid.

For a country of almost 170 million to still have more than half of its citizens unconnected to the grid and without electricity in 57 years of its formal existence, means that it has done very little to take the right decisions and strategies to close the huge electrification gap.

Unrealistic targets After successive Peoples Democratic Party-led administrations failed to realise their power generation targets, President MuhammaduBuhari on assumption of office in 2015, set a target of 10,000MW by 2019.

Former President Olusegun Obasanjo’s administration laid the foundation of the power sector reform and set a generation target of 10,000 megawatts by 2007.

But he handed over only generation that was slightly below 3,000 megawatts when his tenure of office ended on May 29, 2007.

The late President Umaru Musa Yar’Adua, who took over from Obasanjo, made power generation one of the pillars of his administration’s Seven-Point Agenda.

He revised downward the 10,000MW target set by Obasanjo for 2007 to what he thought was a more realistic target of 6,000MW for 2009.

Yar’Adua had during his campaign, promised to declare an emergency in the power sector but this promise was not fulfilled before he suffered health challenges that eventually took his life.

But by the end of 2009, the then Minister of Power, Dr. Lanre Babalola admitted that only about 3,500 MW of electricity was actually being generated.

On assumption of office as acting President, Dr. Goodluck Jonathan had set a target of 5,000MW by December 2011, through his Presidential Task Force on Power, headed by Prof. Bart Nnaji, who later became Minister of Power.

However, the target was not met and Nnaji’s successor, Prof. Chinedu Nebo shifted the 5,000MW target to December 2014 and later January 2015 but it was still unrealisable.

But by the time 2015 ended, Nigeria’s generation was around 4,000MW of electricity.

In fact, power generation had hit a new peak of 4,502.2 megawatts on December 21, 2012.

After this new peak, generation had stabilised at 4,356.9 megawatts of electricity on December 29, 2012. Before these milestones, the country’s power sector had attained a previous peak of 4,454.1 megawatts on December 19, 2012, after an earlier peak of 4,237 megawatts on August 8, 2012. The Minister of Power, Works and Housing, Mr. Babatunde Fashola has refrained from setting generation targets like the previous administrations, stressing that what is necessary is incremental power supply.

Since President Buhari took over, power generation has continued to hover around the pre-privatisation levels, after hitting an all-time peak of 5,074MW on February 2, 2016.

What happened in 2017? Between October 1, 2016 and October 1, 2017, a lot of developments were recorded in the country’s power sector – both positive and negative. On the negative side was insufficient gas supply to some thermal Gencos especially those of the National Integrated Power Projects (NIPPs), which has remained unresolved.

Also, chronic illiquidity, which impacts heavily on capacity expansion, as well as government’s silence on key regulatory and market decisions, have also helped to ensure that the sector achieved a measured progress so far.

Financially, the sector is not doing well at all, and the buck-passing that dominated the sector in 2016 has not moved away.

The Discos still do not have the capacity to take all that is generated by the Gencos every day, yet they turn around to blame the transmission network for channelling loads to undesirable centres. Also, over this period, operators have struggled with refinancing the cost of acquiring their assets, as well as making critical investments for expansion.

Revenue collections in the system have also remained largely poor, while technical and commercial losses are still quite high.

The industry has also continued to record huge accident rates with the Nigerian Electricity Management Services Agency (NEMSA) reporting in its half year safety ranking of the industry that 82 persons, including workers and users of electricity died from electrocution between January and July 2017.

The NIPP which was set up in 2004 as an integral part of efforts to bridge the country’s power shortages has also had its share of the sector’s challenges along with its transmission, distribution and natural gas supply infrastructure.

Its 10 brand new plants which have a combined capacity of 5,455MW and are slated for privatisation, have not been privatised for sundry reasons, including shortage of gas to the plants.

While the country faces challenges with its conventional power source, and looked to have in 2016 adopted renewable energy sources into its mix, the federal government has, howeve,r balked on the bold steps it took when it signed power purchase agreements for 14 pioneer solar power plants to cumulatively generate 1250MW of solar electricity to the grid.

It, however, launched a campaign to deploy solar home systems to rural homes in the country, and launched its first in Wuna village, within Abuja. On the positive side, though actual generation has remained quite low, capacity has reportedly grown to 7,100MW majorly because the government approved a N701 billion loan sought by the Nigerian Bulk Electricity Trading Plc (NBET) from the Central Bank of Nigeria (CBN) to guarantee payments to gas suppliers and Gencos.

On the governance of the sector, the NERC eventually got its board of commissioners appointed but not with a substantive chairman yet. NERC has also presented for approval by the government, the eligible consumer regulation which now grants Gencos rights to directly sell excess capacities to consumers.

It has also passed a regulation to support investments in mini grid, as well as set in motion plans to ensure smooth reviews of the sector’s tariff.

To further revive the sector, the government in partnership with the World Bank, initiated and signed off a Power Sector Recovery Programme (PSRP) in which funds are expected to flow in to support the sector through the Bank.

Additionally, it revived and retooled the Rural Electrification Agency (REA), and charged it with a priority task of taking power through renewable energy sources to Nigerians.

The REA has so far started off well with the launch of flagship projects such as the Energising Education Programme (EPP), which aims to supply stable electricity to 37 federal universities and seven university teaching hospitals across the country using hybrid solutions.

On debts owed by the government agencies to Discos, the government has also concluded its verification and indicated its willingness to pay them off.

The government equally disclosed its plans to invest about N39 billion in meter procurement and deployment to the distribution networks.