At the exact moment I was born, my mummy said she heard a loud shout in the neighbourhood. She thought people rejoiced because of her safe delivery. Alas, it was “Up NEPA”!!! I grew up to learn that the shout had been like that decades earlier, in the days when Electricity Corporation of Nigeria (ECN), the predecessor of National Electric Power Authority (NEPA), was in charge of the generation, transmission, distribution and supply of electricity in Nigeria.
On 1st October this year, it would be sixty (60) years since Nigeria got independence from Britain. For over six (6) decades now, we still don’t have a safe, reliable, and quality supply of electricity. Less than 5,000 MW in 60 years! Shameful and sad.
It is a known fact that the economic prosperity of a nation is directly related to the quantity of electricity generated, transmitted and distributed for consumption in the nation. This is true because no meaningful development can take place in any nation without having a vibrant power sector. Although most of sub-saharan Africa has this problem, Nigeria should have demonstrated leadership as a “Big Brother” in this area.
Why don’t we have Electricity in Nigeria?
The problems of the Nigerian power sector are multi-faceted, multi-dimensional and multilateral.
The foremost action a government (local, state or federal) undertakes is the development of a vibrant power system. However, this requires political will by the right leadership, with the right motive to set the right priorities for the power sector. Such leadership will eschew greed, selfishness, corruption, nepotism, anachronism, parochialism, mediocrity and embrace professionalism.
One of the most daunting challenges to nation building is corruption. Any nation that is corrupt, and worse still, where corruption is openly celebrated, will never develop a vibrant power sector.
Nigerians spend about 5 trillion Naira to import, fuel and maintain their private generators in a year. This is more than half the approved national budget. That is a very thriving industry. Yet, it is just a small part of the business community in the nation. Those countries that manufacture generators don’t use them, except on rare occasions as back-up, but they mass produce poorly designed and cheap generators for the African Market. This causes sound and environmental pollution apart from people choking to death from inhalation of carbon monoxide which has killed entire families in some cases. Arguably, this is why we shout while on the phone to friends and families. Too much noise from the “generator effect”. Manufacturers and sellers of Generators will lose this whopping revenue if Nigeria has electricity. Naturally, they have an interest in ensuring the status quo ante remains the norm. Those who own petrol stations, where fuel for generators are procured are well connected too. Recently, this factor led the National Assembly into promoting a bill to ban the importation and sale of generators in Nigeria. They threatened a 10-year jail term for violators. That is how related the matter is. As of the time of writing, this bill has passed the 1st reading in the Senate.
Lack of planning and investment in the power sector for over 6 decades has meant that the existing power infrastructure are aged, dilapidated and unfit for the intended purpose. There is also a lack of maintenance culture in the sector. As the power equipment are, most of the experienced hands who worked in the sector are now advanced in age with little or no transfer of knowledge or succession planning done to improve human capacity development in the sector. Yet, a vibrant power sector relies on a well trained, and highly skilled workforce.
What can be done?
1. Regionalize the Grid
The fastest, and most economic way to develop the Nigerian power system is through distributed generation connected to regional or state grids. It is also the most technically sound approach. If any power engineer or consultant tells you otherwise, check their CV. I speak now as an authority in power systems. Nigeria has numerous primary energy resources, renewable and non-renewable, which can be harnessed for power generation. In the north for example, there is an abundance of solar and wind energy resources which can be tapped into for power generation. In addition, there are several rivers and dams that can add to the portfolio of hydro-electric power generation which already includes Kainji, Shiroro, Gurara, Mambilla, among others. These resources should be used to generate the power to supply the northern power grid. The south is abundantly rich in fossil fuel such as oil, coal and gas. Thus, effort should be made to generate power from thermal plants to supply the southern power grid. If possible, the existing grid circuit breakers will be used as intertie breakers connecting the northern and southern power grids in order to wheel power from either end in times of surplus or deficit as may be applicable.
All of these resources can be harnessed along with biomass, waste and landfill gas to strengthen power generation, north or south of the border. In addition, the proliferation of mini and microgrids, rooftop solar, and hybrid power solutions will greatly increase electricity access in Nigeria. The Rural Electrification Agency (REA) should continue with the good work it is doing in the off and on-grid segments of the power sector. When put together, these steps will immediately reduce the aggregate technical, commercial and collection (ATC&C) losses in the Nigerian Electricity Supply Industry (NESI) and make electricity available for upwards of 18 hours per day within so many months.
This may require the removal of power generation, transmission and distribution from the exclusive list of the federal government (FG) and make it a part of the concurrent list or the enactment of a separate law to regionalize the power grid. States can generate power and sell to adjoining or interconnected states via the regional grid with lower power losses compared to that which takes place when power is transported today via long transmission lines.
2. Effective Regulation
The success of a privatized electricity supply industry relies on the efficiency of the regulatory regime. In Nigeria, the regulator is the Nigerian Electricity Regulatory Commission (NERC). The regulator has to be truly independent to send the right signals to investors. Policy somersaults affect the NESI negatively. The pedigree of Commissioners are important. A proper balance is to have seasoned power engineers among the commissioners, just as we have it today. Up to four (4) out of the seven (7) commissioners are power engineers. Before, we had too many lawyers in a subject area beyond their abilities. We have to avoid putting “teachers in our hospitals and Medical Doctors in the Banks” if we want to have a successful power sector. We need to allow meritocracy and technocracy to be the norm. Quota System cannot deliver a vibrant power sector.
When this is coupled with an improved economic regulation via well structured markets, significant improvements will take place in the power sector.
NERC has rolled out a number of regulations that are aimed at creating competition but there have been challenges to implementation. Some of these regulations include the eligible customer (EC), Independent Electricity Distribution Networks (IEDN), Embedded Generation (EG), Meter Assets Provider (MAP), Distribution Franchising to mention some. If these policies are correctly and fully implemented, the move towards full competition will begin.
Some of the bottlenecks to be removed include the need for stakeholders in the electricity power market to seek the consent of DisCos before they execute bilateral agreements between parties. The tripartite nature of the regulation defeats the principles of competition. Communities, Estates and eligible customers should be able to choose their energy suppliers or importers without recourse to the DisCos. There is no monopoly of network in the law establishing the DisCos and this should not be artificially included by fiat. This same principle applies to EG, EC, MAP and IEDN owners.
3. Deepening Competition in the NESI
To further entrench competition reforms in the nation’s power sector, there is a dire need to separate the wire business from the energy services business in the NESI. The model is known as G +T + D + S where, G = Generation, T = Transmission, D = Distribution and S= Supply.
Doing so, we can add retailing to the electricity value chain. In such a model, end-consumers can choose from more than one electricity service provider or supplier.
As we deepen competition, the NESI will get to that stage which we refer to as the separation of wire business from the energy services business.
The wire business
Operation and maintenance along with needed investment in distribution network of lines or wires, transformers, substation, poles etc that carry electricity to consumers is the core function of a distribution company (DisCo). This new model will allow them to focus on this role without the financial burden associated with energy services.
Energy Services
Every other aspect of the work that distribution companies do now including retailing, billing, revenue collection, energy accounting, metering etc can be created as a new business stream to be managed by independently registered companies under competition laws and business segregation principles.
As highlighted above, if we separate the wire business from the energy services business, we will create the opportunity for consumers to buy electricity from suppliers of choice as well as switch suppliers at will. This has to be done gradually. For example, we do not have the communication infrastructure, robust customer and asset data that underpins this level of development.
4. Seek for help
There is nothing wrong in seeking for help where you don’t know what to do. In fact, parents and teachers mentor young ones along those lines. What should have been done before privatization of NEPA was to revamp the power network. This means it would not be sold at a scrap and would be a bankable investment. The power network we have today is a panacea for illiquidity because of the huge amount of ATC&C losses. This is what the present administration is aiming to do in the Nigerian Electrification Roadmap (NER) project by involving industry giant, Siemens, in carrying out network upgrade. What should have been done is to invite other giants including ABB, Tata, Mitsubishi, GE, Iberdola and more, to handle separate aspects of power network development, operate for at least three years, and then hand over to current DisCos with key performance indicators set so that the quality and quantity of supply must never reduce without adequate sanctions and penalties. This still needs to be done.
If the current operators decide not to go ahead, the NESI should then be handed over to companies with demonstrable experience of running power utilities with a provisio of withdrawal and payment of fine upon mismanagement within a specified time frame.
5. Deal with Corruption
Corruption in the power sector should attract a capital punishment in Nigeria. Anyone who diverts money meant for a power project must face the full wrath of the law to be administered by a specially assigned power system court. The same shall become the fate of anyone who vandalises power equipment, or is involved in electricity abstraction or metal theft. To ensure health and safety, the MD of any company that fails to protect its network and therefore cause the electrocution of personnel or member(s) of the public should be liable to 10 to 15 years in jail in addition to a sanction no less than 10% of the Gross profit of the company.
6. Consumer Metering
A hard stance needs to be taken on customer metering. All consumers should have prepaid meters. Ideally, the distribution companies (DisCos) should meter all consumers within a specified time scale which has to be adhered to. However, there have been several attempts in the past to close the metering gap without success. We have had the credit advance payment metering program (CAPMI) which ended as a disaster where many consumers who have paid upfront for meters did not get their meters to date. Lately, meter asset providers (MAP) and meter asset service providers (MASP) were introduced by the MAP regulation released by the Nigerian Electricity Regulatory Commission (NERC). This were supposed to be independent financiers of prepaid metering for consumers. They are cash zapped. They don’t have the finance to run the business. They also face the opposition and frustration from the DisCos. For the metering gap, estimated to be over 30 million to be closed, it has to either rest with the DisCos or be handled by independent MAPs. In either case, financial intervention from the federal government (FG) or other financial institutions is required.
7. Project Management in Procurement and delivery of Projects
Investments in power systems are capital intensive and must follow the principles of project management (planning, monitoring and control, asset management, life cycle management, total cost of ownership etc). Every project conceived must be followed through even when there is a change in administration because, as they say, government is a continuum. There should not be any case of abandoned project, or equipment in the ports for years. Proper implementation of project requires meritocracy and putting our best foot forward in all we do in the power sector.
There are many more reasons why we don’t have electricity in Nigeria including sabotage, gas constraints, absence of data, lack of corporate governance, poor leadership and management, lack of skilled workforce, lack of equipment, technical and operational inefficiencies, lack of service reflective tariffs, lack of coordinated planning in the electricity supply value chain, lack of effective monitoring of the activities of the operators, impact of a faulty privatization process, illiquidity and more.
This needs to change as a happy 60th Independence without a way forward for the NESI means the shout of “UP NEPA” continues to reverberate in my aging ears.
Will it be a diamond jubilee?
Idowu Oyebanjo is a chartered power systems engineer and writes from the UK
