By Mon-Charles Egbo
Electricity is a prerequisite for socio-economic development of any nation where welfare and security of the citizens are guaranteed. Inadequacy of it, manifesting as unstable supply and frequent blackouts, reflects the ineffectiveness of governments.
As such and with a view to achieving stability and sufficiency, the Nigerian power sector has witnessed a series of successive governments’ interventions since independence. And by the same token, it enjoyed the government’s monopoly until recently.
In 2004, the National Integrated Power Project (NIPP) scheme was initiated to launch gas-powered stations towards boosting power supply. Going forward, and implementing the National Electric Power Policy, NEPP, of 2001, the Electric Power Sector Reform Act of 2005 was enacted, causing the establishment of the Nigerian Electricity Regulatory Commission, NERC. Again in August 2010, the Roadmap for Power Sector Reform was formulated, and its later implementation in November 1, 2013, resulted in the eventual privatization of the power sector, which is where we are today.
With the privatization, two of the three segments of the sector, comprising the six-generation companies and eleven distribution companies, were officially handed over to the investors. The government retained the third arm, operating it as the Transmission Company of Nigeria, TCN. No doubt, the socio-economic deliverables from this measure was to ensure efficient and competitive services that would guarantee sustainable power supply for businesses and households.
Then as part of government obligations towards enhancing the capacity of these electricity providers, through soft loans, the Central Bank of Nigeria in 2015 floated an N 213 Billion Nigeria Electricity Market Stabilization Facility, NEMSF. Meanwhile, government had effected a rise in prices paid by consumers under the Multi-Year Tariff Order, MYTO, introduced in June 2012 to allow tariffs gradually grow as the cost of operations does, just to attract private investment.
But despite these creative and innovative solutions aimed at attaining sufficient availability, the situation is retrogressing by day, even with continued government subsidies for some users. The infrastructures are poor and decaying because the operators apparently refuse to reinvest, suggesting that most of them were not actually prepared for the business; be it related to patriotism, capacity and funding. And to this end, there have been concerns about the suspected questionable conduct of the acquisition deals.
Consequently today, Nigeria is at a crossroad concerning power supply. People are made to pay for power not consumed either by over-billing or billing without supply. Businesses are folding up and jobs are being lost rapidly. Health hazards arising from emissions from power-generating sets are on the increase. Communication, information access and quality of education are threatened. Pressures of urban migration are growing daily.
Poverty and insecurity are multiplying exponentially. At a time her contemporaries are making exploits in science and technology, including advancements in politics and governance, Nigeria is still struggling with self-discovery. All these are because Nigeria’s power sector is not driving the economy.
Granted, the operators argue that they suffer revenue losses sequel to infrastructure vandalism and untoward tendencies of those that shortchange them in various ways, as not all consumers are metered. Other reasons are fluctuating global economy and shortage of gas supply for thermal plants. As such, they canvass tariff increase in order to meet up.
But as logical as this appear, Nigerians are justifiably pained that nothing significant has been delivered to even rationalize the privatization in the first place. They are unanimous that the electricity companies must first improve their services before raising prices or expecting further government support if indeed they mean business.
Reflecting these grievances of frustrated Nigerians, including businesses, who have suffered years of incessant power outages and suppression of productive activities sequel to this dismal performance; the senate president, Ahmad Lawan, is resolute and persistently advocating for urgent pragmatic intervention in Nigeria’s power sector. He is such passionate about it that senate prioritized it on its agenda.
In one outing, he disclosed that “we took the decision to convene roundtable discussions on three critical sectors of our economy. This exercise started with the power sector. The Federal Government in recent years has invested billions of dollars in this sector, most of which money appear to have gone down the drain as the problems of inadequate power supply continue to plague Nigeria. Even the subsequent privatization of the sector has had no visible impact. In fact, many Nigerians believe that we allowed ourselves to be further defrauded through the privatization of the sector. But this is not the time for lamentation. We are determined to find a way out of this national quagmire”.
Meanwhile, at that roundtable event earlier, Lawan lamented that “if there’s any sector of our economy that is so important and yet so challenged, it is the power sector. I believe that this is a sector that needs a declaration of emergency. The truth is that we all know what is wrong.
What we really need to do is to have the political will to take on the challenges generally. From the electricity power reform of 2005 to the privatization of GENCOS and DISCOS and to what is happening today, we know that everything is a fraud. If we play the ostrich, in the next 10 years we will be talking about the same things. I think the time has come for us to have courage”.
This devastating situation challenged the senate to come under a motion on Power Sector Recovery Plan and the Impact of the COVID-19 Pandemic, to advance the advocacy, albeit in sympathy with the investors.
Presiding over the deliberations, Lawan reiterated that the senate had decided “to investigate the trillions spent in the power sector and find out what has happened so far. Government needs to look at this whole thing. Maybe the government is not doing its own part. We need to find out. There is a lack of capital. We feel very bad.
There is no electricity and the country is suffering. I think it’s time for Nigeria to consider reversing the privatization of the power sector or they should just cancel the entire privatization process completely. If we leave it, we may not have power for another ten years. We expected efficiency and something better. The distribution companies have no capacity to supply us power. We shouldn’t continue to give them money. They are private businesses. We need to review this whole thing”.
Subsequently, the senate mandated its “committee on power to investigate all federal government interventions in the power sector since the privatization of the sector with a view to ascertaining the adequacy of such interventions and their desired impact”. And also in appreciation of the current realities on the ground, it asked: “the Ministry of Finance to include the Nigerian Electric Power Sector in the disbursement of the proposed N500bn COVID-19 Crisis Intervention Fund in order to ameliorate the financial hazards and operational challenges such as the enumeration of metering of actual consumers and the recent problem arising from the pandemic”.
Furthermore, the Central Bank of Nigeria was requested “to allow operators in the power sector access to foreign exchange for procurement and materials like what is done in the aviation and oil industry”. And then, while allowing for federal government’s consideration of additional tariff support to the electricity providers, the senate ordered the suspension of “the planned tariff increase which is scheduled to take effect from 1st of July, 2020 bearing in mind increased hardship resulting from the COVID-19 pandemic”.
In all these, the senate has demonstrated remarkable responsiveness particularly in striking a balance between public expectations and present economic challenges relative to the operators’ proven inability to invest for expansion and improvement in dispensing.
Therefore the executive arm should consciously complement these legislative interventions towards lasting solutions to the crisis. Otherwise, Nigerians and the businesses cannot be globally competitive in the avoidable absence of affordable and sustainable power supply.