With efforts of successive governments to improve electricity situation of Nigerian amounting to nought, Nuratu A. O. Abdul-Rashid here concludes that inconsistency and corruption may have to be tackled before real progress is achieved.
When Africa is referred to as a dark continent, it is not always in terms of backwardness and skin colour but literally as a place where there is no light. Africa is dark in the night. Although the thickness of darkness varies from country to country and from region to region, the space that Nigeria occupies sure ranks as one of the darkest part of Africa. South Africa has a population of 55 million and it generates 45,000 megawatts. Even at that, there is a present power crisis even with its status as an industrialising country and not yet an industrialised nation. But Nigeria, with a population estimated by the United Nations at 175 million sharing about 3,000 megawatts must be like living in hell itself. It has not always been like that. It generally estimated that the rule of thumb for an industrial nation’s power usage is circa 1 megawatt (MW) for every thousandth of its population, this therefore puts Nigeria’s electricity need somewhere around 180,000MW given its population of 175 million people.
Wastefulness: Natural gas flaring
Nigeria according to the World Bank estimates is currently losing on the average more than $2.5million (N332.5billion) annually to gas flaring. At about 57% of the daily production of over two billion of the volume of flared gas is said to be capable of generating up to 6MW of electricity power annually.
Vandalism of gas, power as sets addition to the financial illiquidity and gas supply shortfalls, frequent cases of vandalism of power assets and gas pipelines have equally contributed to the challenges of the sector in 2014. The country recorded incessant cases of pipeline bursts on three of its key petroleum pipelines; trans-forcados, trans-Niger and Escravos, which affects quantity of gas supplied to thermal plants at various times and of course quantity of electricity produced.
Between 1976 and 1983, Nigeria constructed Jebba dam, Shirroro dam, Egbin thermal station in addition to the existing Kainji dam. Although the electricity situation was nowhere near good, things were better. Unfortunately, since the fall of the Second Republic, no new infrastructures were added. By 1999, the issue of electricity had become political and tribal wherein a section of the country was accused of monopolizing what was available to the detriment of others.
When late Chief Bola Ige emerged as Minister of Power in 1999, he failed woefully to tackle the menace of darkness. Bola Ige was overwhelmed by the forces of darkness both in the ministry and Federal Government as a whole. In the end, he was removed. In the four years that the first term of President Olusegun Obasanjo lasted and despite the huge amount of money expended to rehabilitate existing but much dilapidated infrastructure, a little more than nothing was achieved.
During his second term in office between 2003 and 2007, Obasanjo and his team changed tactics by embarking on construction of brand new power stations. The administration also began the process of liberalisation of the power sector by enacting the Power Sector Reform Act in 2005. The National Electric Power Authority (NEPA) was scrapped and in its place came Power Holding Company of Nigeria (PHCN). The new processes created six generation companies, one transmission company and 11 distribution companies to retail electricity to Nigerians. Additionally, the exercise sought to establish a phased competitive wholesale electricity market, an independent industry regulator in the Nigerian Electricity Regulatory Commission (NERC), a cost reflective tariff regime in the Multi Year Tariff Order (MYTO) as well as a private management contractor, Manitoba Hydro International to manage the newly created Transmission Company of Nigeria (TCN).
Also to fastback generation, eleven thermal power stations were started under the Nigerian Integrated Power Project scheme including: Alaoji Power Station, Calabar Power Station, Egbema Power Station, Geregu II Power Station, Ibom Power Station, Ihovbor Power Station, Olorunsogo II Power Station, Omoku II Power Station, Omotosho II Power Station, Sapele Power Station. Together, the projects generated contracts worth $414,000,000 for the supply of turbines and electricity generation equipment to General Electric (GE). The primary turbine is GE 9E gas turbine with a nominal ISO rating of 126MW. After adjusting for site conditions, the capacity was set to 112.5 MW. The plants are low efficiency simple cycle but have provision for future extension to combined cycle. The projects were still under construction when the administration wound down in 2007. Some accounts put the completion rate at an average 80 percent.
The type of politics played in Nigeria however, ensured that the succeeding administration halted further work on the projects for more than two years, while concentrating efforts on probing alleged corruption involved in the contracts. Upon assumption of office, late President Umar Yar’Adua disclosed that over $10 billion was spent on power by the previous administration with nothing to show for it. Then Speaker of the House Representatives, Dimeji Bankole, compounded the issue by saying that the actual sum was over $16 billion, while the House power probe committee Chairman, Hon. Ndudi Elumelu, gave a figure of $13 billion.
The National Economic Council (NEC) with Vice President Goodluck Jonathan as Chairman then set up a Presidential Review Panel on the NIPP. Among the terms of reference of the panel headed by Vice-President Goodluck Jonathan and governors drawn from the six geo-political zones as members included how to meet the 6000mw estimated by the government by 2009 and to recommend appropriate utilisation of government’s $5.3 billion. Jonathan headed the panel and six governors, representing the six geo-political zones were the other members. At a media beiefing, Benue State Governor, Gabriel Suswam explained that the panel found that as at 2007, total project allocations/estimates to NIPP was $10.231 billion inclusive of the $2 billion Federal Government counterpart funding for Mambilla Hydro Power project and $1.4 billion for additional nine turbines. According to Suswam, out of these commitments, only $3.08 billion was funded and scrutinised with advance payment guarantees from “first class” Nigerian banks and Letters of Credits issued by the Central Bank of Nigeria (CBN). He said over $1.5 billion of the sum is still in the custody of the banks.
The report said there was an ongoing comprehensive review exercise taking place to determine the most up-to-date estimates of costs to complete the project. This is in view of the cost over runs arising from over 18 months of delay and stall in funding. Suswam, in his report, also identified intermittency and stoppage of funds as among the factors that helped to frustrate the implementation. Lack of thorough feasibility studies was also manipulated as being responsible for the several challenges of the project in the area of transportation, water supply and transmission connections to the sites. There was also what the report called “slow pace of surveys, enumeration work and payment to land owners has impacted on site development. The project also lacked clear and defined ownership structure/agreed responsibilities and it has resulted in a disjointed and uncoordinated project implementation”.
For a new approach in the project, Suswam advocated the need to undertake comprehensive studies of the project strengths and weaknesses as well as rekindle federal and state governments’ interests in the project as shareholders on the investment.
Underscoring the importance of good funding to complete the projects in order to realise the full value, the report also recommended that the project should be executed under a new management structure and pragmatic and dynamic implementation scheme and efforts should be made to eliminate project bottlenecks through stakeholders’ participation.
The report said after due deliberations, the committee agreed that completing the project as initiated was the right way to go as it would be the only sure way to improve Nigeria’s power supply logjam and free its citizenry and businesses from the shackles of darkness.
On the funding procedure henceforth, the committee recommended that $5.237 billion be provided through the interaction/cooperation of the federal and state governments while also suggesting legitimising of fund allocations from the Excess Crude Savings Account by securing appropriations by the National Assembly and state Houses of Assembly.
On August 26, 2010, acting President Goodluck Jonathan launched the Roadmap for power Sector Reform at an elaborate ceremony in Lagos. The roadmap was to culminate in the near elimination of interruption in power supply by end 2012. Hear him “A friend of mine jokingly asked me: Can Nigeria celebrate one day of continuous (uninterrupted) power supply? Then I answered: “By God’s grace by December 2012, Nigeria will not just celebrate one day, but one week, one month, and even better. It’s actually with that vision and mission that we are here today to launch the Roadmap for Power Sector Reform.” Some of the key highlights of the roadmap he presented: divestiture from PHCN successor companies, establishment of an appropriate pricing regime, establishment of a bulk purchaser, provision of Federal Government of Nigeria (FGN) credit enhancement, clarifying and strengthening the licensing regime among others.
The President added that his administration was in the process of commissioning independent power producers, international oil companies to produce at least 5,000 megawatts of new capacity. “These plants will begin production in 2012 and 2013. Government will provide the credit enhancement that will enable them invest in the construction of the power plants.”
On January 31, 2011, Jonathan told United Nations diplomats on in Addis Ababa, Ethiopia that “If I’m voted into power, within the next four years, the issue of power will become a thing of the past. Four years is enough for anyone in power to make a significant improvement and if I can’t improve on power within this period, it then means I cannot do anything…”
Almost five years after, not a single megawatt has been added to the national grid. Rather, the situation deteriorated from over 4,000 megawatts to about 3,000 megawatts by January 2015.
Some analysts attribute the failure of Jonathan administration in the power sector to corruption, nepotism and lack of transparency. Many believed that the facilities were merely handed over to either friends of the administration or power brokers across the country. As a result of this, the Nigerian Electricity Regulatory Commission (NERC) has not been able to effect sanity in the sector. The various companies are alleged to be engaged in massive money laundering and fail to improve infrastructure or even supply metres to their consumers.
Both NERC and Bureau of Public Enterprises manufacture excuses for non performance by the investors including forcing consumers to pay N750 monthly fixed charge to the companies whether or not electricity was supplied. Some consumers including staff of the distribution companies alleged that because of this guaranteed income from premises with metres, the companies rather prefer to divert supply to areas where there are no metres and who are not charged this fixed rate.
In 2014 for instance, the Kano Distribution Company had “prudential issues” over diversification of over N1 billion from the company’s account in which Federal Government still owns 49 percent. A Report submitted by the NERC’s team that conducted an open-book review of the company’s accounting and financial records for the period 1st November 2013 – 30th April 2014 uncovered irregularities. NERC said on 5th February, 2014, N670 million was paid to Northwest Power from the Kano Electricity Distribution Company (KEDC) central collection account with Fidelity Bank Plc.
Sahelian Energy also made a payment of US$2,740,000 (about N430 million) to KCETAS Africa Power as Technical Service Agreement (TSA) fee in addition to US$150,000 paid in cash for technical support. The NERC also requested explanations for the expenditure of N10 million for a two day board meeting (consisting of N8 million sitting allowances for Chairman, six directors and Company Secretary, and N2 million for accommodation).Although it entered into a Share Sale Agreement (SSA) with the BPE on December 23, 2013, Northwest Power Limited is yet to complete the payment for the Kaduna DISCO, one of the last successor companies from the defunct Power Holding Company of Nigeria (PHCN) to be sold.
In August 2014, the BPE approved an unusual of the extension of payment deadline by Northwest Power by 60 days to pay for Kaduna Disco. Many Nigerians believe that the insistence of Prof. Berth Nnaji to stick to the rules in the privatisation of electricity that cost him his job.
The process leading to privatisation also saw the concessioning of transmission infrastructure to Manitoba Electricity of Canada. But midway into their management of the sector, every doubt that there is indeed real job needed to create a competition-driven electricity market, was not in doubt; from obvious financial illiquidity to constant gas supply shortfalls, weak transmission system and of course, extant dearth of corporate governance practices within the retail end of the industry, the challenges of living out the “quick return” promised by the government to buy supports from Nigerians in the run-off to the privatisation became obvious and somewhat difficult for stakeholders to contend with.