Power fluctuations in 2023, government’s plan for 2024

THE quest to ‘light up’ Nigeria has failed to yield the maximum results, as the numerous problems bedevilling the power sector remain unresolved. 

For the outgoing year 2023, Nigeria’s national grid could only cope with 4,886.40 megawatts (MW), according to data from Nigeria Electricity Systems Operator data.

Concerns of the sector in the outgoing year

From the 10 years post-privatisation, the enactment of the Electricity Act 2023 and three grid collapses in the outgoing year, Nigerians still struggle to have power for their homes and business activities.

To solve the issues of  power outages, the government resorted to a service-based reflective tariff (a scheme that allots power to an estate or cluster for some number of hours in a day.)

According to the Nigerian Electricity Regulatory Commission (NERC), the classification of Tariff band A is 20 hours and above, Tariff B – is 16 hours and above (but less than 20 hours) and tariff C (12 hours and above, but less than 16 hours).

The scheme, also failed to work as some consumers who subscribed complained of default from some concerned distribution companies.

For an industrialist and Paint production businessman, Emeka Nwuba, who subscribed to band A of the service-reflective tariff for his paint industry business in Abuja, he could not get the maximum amount of power supply from the service providers.

Emeka had resorted to an alternative source – diesel –  and also lodged a complaint with the NERC consumer department.

Emeka is not alone in this, as the fuel subsidy removal led to weak consumer spending and the soaring price of energy prices (diesel, fuel, kerosene).

“I own a Beauty saloon and had several workers. I have rationed their work days because of rising transportation costs since many of them come from different parts of the Federal Capital Territory, “A beautician, Afoma Ikwuegbu, told The ICIR.

Interventions failed to lift the sector

Nigeria, also witnessed numerous interventions from multilateral agencies (World Bank and the African Development Bank) running into trillions of Naira. Despite all these, Nigeria’s power sector still reeled under epileptic power supply.

Issues and 10 years post-power privatisation 

The Federal Government commenced the privatisation of the Nigerian electricity distribution and generation companies in November 2013, benchmarked on a 10-year moratorium of operational licensees with the hope that the decision would halt the age-long power crisis.

However, a decade later (November 2023), the problems of the power industry have remained unsolved, becoming a persistent clog in the wheel of progress for Nigeria’s economy.

The President of Nigeria Consumer Protection Network Abuja, Kunle Kola Olubiyo, told The ICIR that Nigeria’s power privatisation has failed to deliver power supply, despite huge investments.

“The Present administration needs to review this privatisation. The government is spending a lot of resources on electricity subsidy, yet the sector is privatised,” he said.

Also, the National Coordinator of All Electricity Consumer Protection  Forum, Adeola Samuel Ilori told The ICIR that Post-privatisation power sector has failed despite over N7 trillion interventions.

“The government is still sinking money into privatised electricity sector. This is not a good development. Already, N3.3 trillion was put into the sector under President Muhammadu Buhari without appreciable progress. We’re not far from 4,000MW despite these trillions. Consumers are not getting the best of service.

“Banks are gradually taking over the distribution companies’ acquisition due to illiquidity and huge debts. We need to go back to the drawing board and review the licensing of DisCos,” he added.

Non-reflective tarrif and Discos concerns

The 11 electricity distribution companies are battling with liquidity issues and low remittance compounded by the metering gap; still, the generation companies struggle with poor investment and transmission inadequacies, leading to incessant grid collapse. These concerns are why the Nigerian government keeps paying subsidies.

According to the NERC chairman, Sanusi Garba, Nigeria has a projected N1.6 trillion for electricity subsidy in 2024.

The Minister of Power, Adebayo Adelabu, also justified this electricity subsidy at a retreat with Stakeholders in the industry and said, “You cannot jump overnight and implement the cost-reflective tariff. I can tell you that till today, the government still subsidises power. For political reasons and empathy, you cannot cause additional burden on Nigerians.”

As a result of non-implementation a cost-reflective tariff and lack of efficiency, for years, the country has struggled with 5,000 MW of electricity daily for a population of over 200 million people.

According to NERC report for the second Quarter of 2023, the 26 power plants’ generation capacity dropped to 4,387.91MW.

A new dawn with new Electricity Act 2023

The Electricity Act, 2023 (“the Act”) was signed into law by President Bola Ahmed Tinubu, on 6 June 2023. The Act was passed in light of the Federal Government’s initiatives to accelerate Nigeria’s energy transition process as well as allow states play part in growing the sector and consolidating the regulation of the Nigerian Electricity Supply Industry (NESI).

Essentially, the Act repeals the Electric Power Sector Reform Act, 2005, consolidates the laws relating to the NESI, and provides a comprehensive and institutional framework for the power sector in Nigeria.

Areas covered by the Act include electricity generation, transmission, distribution, supply, trading, system operations, electricity offences and the enforcement of consumer rights and obligations.

It also makes provision for a holistic, integrated resource plan and policy that recognises all the sources for the generation, transmission and distribution of electricity, including the integration of renewable energy into Nigeria’s energy mix.

The enactment of the Act marks the second of a three-stage reform process that started with the Constitutional Amendment to remove the constitutional restrictions on the states’ right to legislate for power generation, transmission and distribution and which will culminate in the enactment of electricity laws by the various houses of assembly for each state.

Electricity Subsidy in 2023

On subsidy payments, it was observed that in the first quarter of the year, the Federal Government subsidised power by N36 billion, this increased to N135.2billion in the second quarter and jumped to N204.6 billion in the third quarter. Figures for the fourth quarter are not because we are still in the fourth quarter of 2023.

Metering gap

The number of metered electricity customers in Nigeria stood at 5.47 million in Q2 2023, indicating a growth of 10.4 per cent from the 4.96 million reported in Q2 2022.

On a quarter-on-quarter basis, the growth was only 3.1 per cent from 5.31 million recorded in the preceding quarter.

Minister’s 2024 power sector focus

The Minister of Power, Adebayo Adelabu, has, at the recent meeting with power sector stakeholders, decried that it was shameful that the national grid only utilised about 4,000 megawatts 10 years after privatisation.

He said that the government would ensure proper corporate governance among the various power sector stakeholders – the generation, transmission and distribution value chains.

“Market rules must be enforced and corporate governance structure prioritised,” he said.

Also, in his New Year message, Adelabu said the Tinubu-led administration is focused on enhancing electricity distribution and transmission infrastructure to minimise technical and commercial losses.




     

     

    “Our primary focus is enhancing distribution and transmission infrastructure to minimise technical and commercial losses. The lack of liquidity continues to be a significant challenge in the electricity market.

    “We are currently reviewing the implementation process of a cost-reflective tariff, while the Government will continue to subsidise power supply to those that are vulnerable in our society,”

    He stated that closing the meter gap is imperative, and ongoing initiatives, including World Bank programs and the Presidential Metering Initiatives, will gain momentum.

    He added that the ministry will intervene in distribution infrastructure, supplying transformers to communities without burdening citizens financially.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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