As 2022 draws to a close, a look back at the power sector offers bleak hope. It has been a cycle of stunted growth and chaos of failures in the transmission, generation and distribution subsectors. Like the Nigerian economy, the energy sector has refused to progress due to a lack of investment and managerial competence. There is a link between the energy sector and industrialization. In fact, one cannot do without the other; An adequate electricity supply is essential for the growth of companies, especially Small and Medium Enterprises.
Nigeria needs an estimated capacity of 25,000 MW to 40,000 MW to serve its 218 million people. Still, currently, installed power generation capacity is approximately 12,522MW, and transmission and distribution infrastructure can only deliver an average of 4,000MW to businesses and homes.
President Muhammadu Buhari, upon resuming his post in 2015, presented a renewed perspective for the electricity sector; however, as he prepares to leave Aso Villa on May 29, 2023, the industry remains a field of shame.
Nigeria’s energy industry faces multidimensional challenges, plagued by underinvestment, aging infrastructure, debt and inefficiencies. The shortage of energy has paralyzed SMEs, has impeded the growth of productive sectors and has made the cost of local products uncompetitive.
The Electric Power Sector Reform Law of 2005 and the subsequent Roadmap for Power Sector Reform of 2010 set out to comprehensively transform the power industry through privatization, raise output to 40,000 MW by 2020 and attract investment and the best global players to the market. Unfortunately, lofty milestones have been lost due to the secular decline caused by the mismanagement of privatization.
Some 90 million Nigerians lacked access to electricity in 2019, the world’s worst, down from 70 million in the Democratic Republic of Congo and 58 million in Ethiopia, the World Bank said. The International Monetary Fund says Nigerian companies lose around $29 billion annually due to energy shortages.
All approaches to bail out Nigeria’s energy sector have failed as most Nigerians live without 24-hour electricity.
Consequently, current power generation is below 3,800MW and electricity use per capita is 136KW/h, one of the lowest in the world. in Libya it is 4,270 KW/h; India, 616KW/h; China, 2,944 KW/h; South Africa, 4,803 KW/h; and Singapore, 8,307 KW/h.
DAILY POST highlights four major events that have affected the Nigerian energy industry, namely the relentless collapse of the national grid, the liquidation crisis of electricity distribution companies and the failed National Mass Metering Project, NMMP.
The national grid collapses
Incessant national grid outages marred the period under review. Although the Nigerian Electricity Regulatory Commission, NERC, still needed to collect data on system collapse in 2022, grid performance and various DisCos updates showed that Nigeria’s power grid had collapsed some eight times by September this year. year.
For example, on September 25, 2022, the grid collapse occurred when power generation in the system dropped from over 3,700 MW to just 38 MW.
On July 20, 2022, Nigeria’s power grid experienced the sixth collapse in 2022, while on June 13, the grid was also reported to have collapsed. The nation’s power system collapsed twice in March (the same period TCN said saw a peak of 5,615.40 MW) and twice more in April this year.
electricity bill 2022
The Senate approved the Electricity Bill 2022 in July to promote reforms in the electricity sector; however, President Muhammadu Buhari has yet to approve the bill. Senator Gabriel Suswam, Chairman of the Energy Committee, said that the bill seeks to provide an ideal legal and institutional framework for the industry. He further said that the bill would correct imbalances in Nigeria’s existing transmission infrastructure.
DisCos liquidation crisis
There have been ups and downs for power distribution companies in Nigeria. Debt burden, poor balance sheet and lack of investment are hallmarks of the challenges DisCos faces. Even so, the distribution infrastructure problem has continued to affect the subsector. Following privatization in 2013, Nigerians thought the development would herald a new outlook, but the opposite was true. Energy Minister Abubakar Aliyu said that nine of the eleven DisCos are on the brink of bankruptcy. Aliyu further revealed that the situation had forced the Nigerian government to order banks to find serious investors interested in buying their 60 per cent stake in Abuja, Kano, Kaduna, Benin, Ibadan and Portharcourt DisCos.
National Mass Measurement Project
In 2022, the federal government promised to provide Nigerians with free meters through the National Mass Metering Project; however, this has not yet been achieved. Central Bank of Nigeria Governor Godwin Emefiele stated that the bank shelled out N47.8bn for approximately 865,956 meters across the country. However, with the implementation of projects by DisCos and Meter Asset Providers, MAPs have yet to achieve the expected results of providing free meters to Nigerians.
Presidential Energy Initiative-Siemens Project
The Nigerian Government signed the €63 million Electricity Road Map deal with Germany-based Siemens in 2019 with the goal of modernizing the country’s national grid and achieving 7,000 megawatts by 2021, 11,000 megawatts by 2023 and 25,000 megawatts by 2025.
The Federal Executive Council, FEC, in December of last year approved the project with the hope of promoting improvement in the nation’s electricity sector; however, the first target of achieving 7,000 MW by 2021 has been missed, while the 2023 and 2025 targets of 11,000 MW and 25,000 MW respectively are obviously unattainable.
Energy Minister Abubakar Aliyu had announced the delivery of the ten morbid power transformers to be located across the country, but on Wednesday, former Managing Director of the Transmission Company of Nigeria, TCN, Dr. Usman Mohammed revealed that the Siemen-FG agreement cannot reach 7000 MW.
Reacting to Nigeria’s energy performance in 2022, energy expert Eleojo Joseph said the industry had been a colossal failure.
He revealed that electricity transmission in Nigeria needs to be localized to address the problem of collapsing national grid.
“The electricity sector in 2022 is a colossal failure. We have never experienced this amount of national grid collapse in Nigeria. It was as if the national grid was a switch that was turned on and off. The Nigerian Transmission Company must be dissolved and electricity must be localized. We are wasting material and financial resources in the operation of the TCN.
“Why is it difficult for us to generate more than 5,000Mw? The answer is simple. Mini and small electricity generating companies should be encouraged and given the necessary financial assistance to increase generation. Imagine a situation where 2,000 mini and small businesses generate 200 Mw to 2,000 Mw across Nigeria, using sun, water, wind and other resources.
“Regarding distribution, that the Government once again review the privatization of the DISCOs. Allow competent organizations to come on board and the narrative will change dramatically. See the telecommunications sector as a point of reference. DISCOs are doing what they like because NERC, as a regulatory body, is neither effective nor efficient. The war will continue between consumers and DISCOs because of the dog-to-dog situation between them. Why should consumers buy poles, meters and transformers for DISCO?
“In general, the government should declare an emergency in the power sector and attract reputable international power generation and distribution companies to enter this critical sector. Without electricity, we are doomed as a nation.”
He also stated that “local manufacturers will continue to wallow in pain and the economy will continue to plummet.”
Similarly, dissecting the power sector in an interview on Wednesday, Dr. Usman Mohammed said the power of the nation is the worst today.
He said the sector regressed instead of progressing with the 1 billion naira intervention by the Nigerian government.
As a way forward, he suggested that whoever emerges as Nigeria’s president in the upcoming elections should personally champion Nigeria’s energy sector reforms.
He also stated that the key to unlocking the potential of the sectors is adequate investment in the three sub-sectors: Transmission, Generation and Distribution.
Usman said a competent management team must be recruited if Nigeria’s energy sector wants to change in the coming years.
In fact, regardless of the direction of the energy industry today, Nigerians expect the country to take the right path in the future.