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Power Sector Still In The Mire

REACTIONS AS BUHARI SUSPENDS RUGA

Having squandered his first term without achieving a jot in the power sector, President Muhammadu Buhari is still as flat-footed on what to do to solve the energy crisis as he was four years ago.

A recent move to step up its engagement with German power giant, Siemens, and other foreign firms comes amid frequent transmission grid systems collapse that reduced total power output for Africa’s biggest economy and population to about 3,000 megawatts.

Without remaking the sector, the hope of a swift recovery is forlorn and that of lifting 100 million from poverty in a decade, a pipe dream.

A report that the Federal Government is retooling the national electricity power sector road map with Siemens and other global players to lift the power sector is not new.

Siemens has already partnered some Nigerian private firms, among them Forte Oil, with whom it successfully completed the former’s Amperion Power subsidiary’s power plant.

It is also collaborating with the Lagos State Government on the Light-Up Lagos project, with the Kaduna Electric Distribution Company and the Bureau of Public Enterprises on power generation.

What is unfolding is the Nigerian government’s incompetence in managing the power industry.

The truth is that Siemens had always been a willing partner, just like other major multinationals, when the government declared its intention to liberalise the power sector.

Indeed, in November 2013, the then Minister of Power, Chinedu Nebo, signed an addendum to their joint Memorandum of Understanding of 2012 with Siemens in Berlin, Germany.

It was to extend the scope to include the upgrade and expansion of our transmission infrastructure, support technical skills transfer and train Nigerian personnel throughout the electricity value chain. Apart from a pact to expand power supply by 10,000MW, Siemens has ongoing projects for a 500MW plant at the moribund Ajaokuta Steel Complex and supplied the gas turbines at the power plants in Geregu and Afam.

There has also been considerable interest in Nigeria’s power sector by General Electric, which also inked an MoU with the Federal Government to help add 10,000MW to national generating capacity over 10 years and is engaged in service agreements with the government and private firms for gas and hydro power projects, including the rehabilitation of facilities at the Kainji and Jebba hydro plants. With the right policies, therefore, we can attract the world’s best.

Yet, the country’s power sector is in dire straits: according to the Transmission Company of Nigeria, quoting data from its Nigeria Electricity System Operator, the national power grid suffered its eighth system collapse on June 30; there were four incidents of total system collapse in January, one each in February, April and May, that each time, plunged businesses and homes into darkness. Distribution companies insist it is so far nine times this year and “in excess of 100 since the privatisation of the power sector in 2013,” according to the Association of Nigerian Electricity Distributors.

Nigeria is in trouble because, first, the power sector reforms and road map with the embedded privatisation that were expected to trigger a revolution in the sector, expand output and supply, attract foreign direct investment, boost productive activities and create jobs were badly bungled on the altar of corruption and cronyism.

The Muhammadu Buhari administration that came in ostensibly to clear this inherited mess has compounded the problem by inertia, befuddlement and the President’s statist inclination.

We must break the logjam that inhibits power supply at an average 5,000MW at the best of times, compared to our BRICS peers: China is today the world’s largest electricity producer, India, Russia and Brazil come in at third, fourth and eighth respectively.

Our continental rivals, South Africa and Egypt, are the world’s 21st and 22nd respectively, with Nigeria coming behind at 70th.

This is not the way to power into the world’s top 20 economies club that the government repeatedly claims to aspire to. There has been so much motion without significant movement and this should change. Following a series of liberalisation policies from 1994 onwards, Ghana now exports electricity to Ivory Coast, Togo and Benin Republic.

Buhari should review the power privatisation. Sam Amadi, a former chairman of the Nigerian Electricity Regulatory Commission, was quoted as affirming what is now generally well-known, namely, that the asset transfers were designed to fail. He admitted that not one among those who bid for the assets “had technical competence to manage the sector.

” Shamsudeen Usman, who was National Planning Minister at the time, has also said that the exercise was compromised. This reality compels a responsible and responsive government to act urgently.

Solving the problem should start with the 11 distribution companies which constitute the weakest link in the decrepit value chain.

TransyCo alleges that it was the inability of the DisCos to receive wheeled power that triggered the last system collapse; it has suspended one and has threatened to lock out others if they fail to upgrade enough to take available power.

DisCos hotly contest this, saying TransyCo is also beset with technical problems that lead to systems collapse. A report by a Lagos business paper assesses a combined loss of N713 billion by the DisCos from when they took over in 2013 to 2017.

They have failed to invest and are bogged down by debts. According to ANED, the distribution system needs $10 billion in the next five years to make any impact.

Though also wracked by gas supply issues and obsolete machinery (gas suppliers are owed N1.3 trillion), the GenCos and TransyCo can upgrade when the DisCos, described by the Stakeholder Democracy Network, an NGO, as “effectively bankrupt,” are able to take power supplied. The buck-passing is endless.

Government should undertake a holistic programme of reform of the entire industry.

The government and the DisCos operators should let go of major part of their 40 per cent and 60 per cent holdings to major global operators who can attract and muster the Foreign Direct Investment, technical and managerial expertise to lift the power sector and meet the $3 trillion investment that the African Development Bank says the country needs to attract into the sector by 2040.

We should be guided by the experience in Russia where the Vladimir Putin government deployed state power to recover and re-privatise oil and gas, as well as banking assets fraudulently acquired through earlier privatisations.

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