Curtailing The Energy Sector Curse - by Charles Iyare

The importance of electricity to the economic development of Nigeria cannot be overemphasised. It is the driving force of development, be it technology, industrial, and other forms of economic expansion. Equitable power generation can improve the life of millions of the people. It can serve as the basis for running an effective economy. Successive administrations have failed to provide adequate electricity needed for economic activities by Nigerians.

Artisans, technicians, and entrepreneurs have been forced to shut down their businesses due to government’s inability to provide electricity, in the process, adding to the increasing list of the unemployed. In some cases, electricity is routinely distributed and for others, it does not show up for months. Foreign investors have subsequently relocated to other countries where they can conveniently operate their business.

Several allegations were made about the current administration’s irregularities in its approval of contracts to companies that were not registered under the Corporate Affairs Commission, and which lacked the capacity to carry out such contracts. A report by an online newspaper, The Nigerian Muse, published on March 18, 2008, stated that the CAC declared 34 companies that handled contracts in the power sector between 1999 and 2007 illegal and that it had no record of the firms in its books. The contracts were worth N6.2bn. Several other illegal companies were allegedly awarded contracts worth millions of naira by the Jonathan’s administration to execute contracts for the National Integrated Power Project without due process.

It is understood that Nigeria needs a yearly generation of at least 10,000 MW of electricity per year to enhance sustainable development. South Africa has a population of about 55 million people but generates an average of 45,000 MW of electricity through various sources, while Nigeria with 170 million people struggles to generate 4, 000 MW. As Africa’s most populous nation and leading economy, Nigeria is expected to be generating not less than 50,000MW of electricity.

Despite the huge funds that have been invested in the energy sector, it has only added 1,687.5 MW of electricity generation, making it about 5,800 MW. Part of the reasons for the poor generation is owed to the extent of vandalism of the pipelines network, which supplies gas to some power stations. Another reason is the lack of commitment by government to invest in the sector. About $20bn has been reportedly embezzled by successive administrations within the past 16 years.

Subsequently, the Nigerian Electricity Regulatory Commission was constituted to give the required institutional support to ensure a balanced regulatory framework to protect both the investors and consumers. This was in line with the objective of unbundling the Power Holding Company of Nigeria into 18 successor companies to achieve increased access to electricity, improved efficiency, affordability, reliability, quality of service and greater investment in the sector to encourage economic growth. Regrettably, the outcome of these plans has not yielded positive results. Government has not lived up to its responsibility of transforming the energy sector. The privatisation of the sector has become worse than it was. The country is plagued with epileptic power supply. Generation of electricity has deteriorated. The sector can best be described as being in a comatose state.

Editor of the Journal of Sustainable Development Studies, Ise Olorunkanmi O. Joseph, of the Department of Political Science and International Relations, Landmark University, Kwara State, stated that ‘‘despite the privatisation of the PHCN in 2013, Nigeria’s electricity generation capacity has declined from the peak generation level of about 4,517.6 MW recorded in December, 2012 to about 3,670MW in January, 2014.” (See www.nigeriapowerreform.org). According to a recent poll by the NOIPolls, limited electricity supply in Nigeria worsened in the fourth quarter of 2013, at the peak of the privatisation process.

The issue that runs through one’s mind is the fact that government and the successor companies did not consider the challenges that the energy sector is facing. Therefore, after successful bids were considered, Nigerians woke up to be confronted with a more complicated electricity sector. Nigerians now pay twice as high for getting epileptic power supply, and in some cases none. Were the successor companies not aware of the state of electricity (electricity generation, transmission, and distribution), before they bid and bought them over? How many megawatts of electricity have been added to existing ones by the successor companies? How come Nigerians are made to pay for what they do not consume? Are there no laws to regulate charges based on consumption? Your guess is as good as mine, on who the actual saboteurs of our economy are.

Part of the challenges of poor electricity supply in Nigeria is the lack of alternative energy source (Nigeria has hydro, thermal, solar and wind electricity sources to tap from to boost her power supply but has not managed to do this effectively over the years) and increase in vandalism. Government should understand that electricity is a major economic booster that can make a country self-sufficient in job creation, economic productivity and growth. It is the means of encouraging young entrepreneurs to advance in business and shun crime and corruption.

- Charles Iyare is Monitoring and Evaluation Officer with the Africa Network for Environment and Economic Justice, Benin City.