Features

Power Sector Challenges: Would There Be Light At The End Of The Tunnel?

In the last two months, different communities in the country, almost on a daily or weekly basis, have been protesting against indiscriminate disconnections, frequent power outage, and huge estimated bills from distribution companies.

Last week, thousands of protesters under the banner of Association of Ojota Community Development Areas (CDAs) staged a peaceful protest against estimated bills and disconnections by the Ikeja Electricity Distribution Company (IKEDC).

The protesters carried placards with inscriptions such as: “IKEDC, give us human electricity bill”, “IKEDC, Ojota Community is not your ATM”, “No to electricity disconnection in Ojota community”, and “Ojota community says no to crazy electricity bills”.

Speaking on the reason for the huge protest, Idris Ajao, who claimed to be one of the leaders of the CDAs that came together, said that the protest planned for three top TV stations in Lagos, became necessary in view of daily complaints from community members against inflated bills and indiscriminate disconnections by the IKEDC, for failure to pay the ‘crazy’ bills.

He said that apart from a small segment of the community served under the exclusive line 33KVA, none of the communities was enjoying regular electricity that would warrant the huge bills distributed by IKEDC. His words: “Over the years, crazy bills have been the order of the day in our communities, but this 2021, it has gone haywire. Electricity bill is now higher than house rent in Ojota. We want all electricity consumers in Ojota to be metered, while outstanding bills should be erased because they were fabricated”.

While the protest at Ojota looked calm, what happened at Ijaiye/ Ojokoro area of Lagos, the same week, was far from being peaceful. At the community meeting in February, all residents had resolved not to pay the bills delivered that month because they believed they were too outrageous and probably done in error. As officials of IKEDC came with their vans and ladder in March, youths in the communities raged with demands that they must see immediate evidence that bills delivered the previous month were genuine.

Clearly outnumbered and sensing that crisis was knocking at their door as the youths had already seized their ladders, the power officials fled. It was reported that at night, IKEDC field workers sneaked to disconnect the communities from the two mega transformers supplying power to the area. Presently, the few pre-paid consumers in the area are fuming and demanding immediate settlement as they have been caught in the cross-fire.

The current crisis is not limited to Lagos alone. In Kafanchan, Kaduna state, it was reported that energy bills were consistently delivered even when there was power outage for five months. When power was restored, crisis erupted when officials of the power distribution company demanded that all “outstanding” bills must be paid or residents will face disconnection.

The epileptic nature of Nigeria’s power sector resulting in unstable power supply, indiscriminate billings and frequent blackouts has made many Nigerians to see the sector as the biggest image of regulatory ineffectiveness of public utilities. Obviously, the sector has not witnessed much improvement despite initial privatisation and government huge subsidies in recent years.

In the last 35 years, successive governments have made concrete efforts to tackle Nigeria’s energy deficits by maintaining a monopoly in power provision and pumping money into a poorly regulated sector. Since the return to civilian rule in 1999, governments have spent on average about US$2bn annually on electricity provision, but with little service improvements to show for it.

However, in August 2010 the then president, Goodluck Jonathan, launched the Power Sector Reform Roadmap, aimed at shifting the running of power utilities to the private sector. It included the privatisation of the state-owned Power Holding Company of Nigeria (PHCN). Thus, when almost all of the six power-generation plants and 11 distribution companies unbundled from PHCN were eventually sold, there was high public expectation that the new owners would bring a rapid end to frequent power outages in Africa’s largest economy.

Shortly after that, there was some level of improvement as power generation reached a new peak of 5,075 mw. But current levels of supply and the overall production capacity of mega watts remained grossly inadequate. For example, Nigeria has a lower electricity capacity than Slovakia, a country with about 3% of Nigeria’s population.

In a fresh attempt to make power problem a thing of the past, the Federal Government recently signed a contract with Siemens for the pre-engineering phase (the first phase) of the Presidential Power Initiative.

The Presidential Power initiative seeks to improve power generation and transmission in the country. Notably, the pre-engineering phase will include engineering design works, specifications for onshore installation, commissioning works for the transmission and distribution systems, network development studies, power simulation, training, and support services.

The Federal Government in July 2019 also signed a power deal with the power giant to deliver 25,000MW by the end of 2025 and to fix the archaic transmission and distribution infrastructure in the sector. Some targets and milestones were set to ensure provision of 7,000MW and 11,000MW of reliable power supply by 2021 and 2023 respectively. Since then, several steps have been taken such as the initial N8.6bn commitment made by the government in 2020. Currently, Nigeria has a power generating capacity of about 13,000MW with a less than 50% utilization capacity at a peak power generation of 5,222MW.

The Nigerian power sector has been bedeviled by a number of constraints even before the privatization era. They include lack of cost-reflective tariff, poor metering infrastructure, low network coverage and decrepit transmission facilities. These challenges have continued to undermine performance and drive liquidity squeeze in the sector. Over the years, the widening deficiency in on-grid supply of power has forced consumers into costly off-grid alternatives, which account for 52% of electricity consumption, based on IMF estimates.

According to the world bank, about 80 million people still lack access to grid electricity, making Nigeria the country with the largest access deficit in Sub-Saharan Africa. The institution further puts the national electrification rate at 55%, with rural electrification rate at a meagre 39%. Clearly, a lot of work is required in improving the supply of power across the country and ensuring its availability to needy and underserved households and businesses.

While it is believed in some quarters that, the move by the Federal Government is commendable, others are of the view that Nigeria had come up with many initiative in the power sector in the past without a good result. For instance, electricity consumers in the country had recently decried continued increase in electricity tariff without commensurate power supply.

Trade unions, non- governmental groups and even politicians had, at different times condemned the steady hike in electricity tariffs, saying that they are unjustified because there has been no significant improvement in services delivered by power companies and that the new charges are unaffordable to majority of the population who exist on low income.

The Senate, the upper chamber of the National Assembly, also passed a resolution calling for the revocation of the tariff increase. The Senators contended that the tariff is retrogressive and amounts to extortion and exploitation of ordinary people.

The points made by the critics reflect the grievances of consumers, both households and businesses, who have suffered years of incessant power outages that have blighted lives and curtailed productive activities.

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However, the contention that electricity companies must first improve their services before raising prices may seem morally sound but is inconsistent with the workings in a market economy. Power providers need to invest substantially more in equipment and skilled manpower to improve services—this process will take time and invariably raise production costs.

To sustain the production of any good or service requires the producer’s revenue to at least cover that costs. In the case of electricity and other infrastructure services, this cost is paid by either the end consumer or by government through subsidies.

In all of these, Nigerians are more concerned with electricity companies delivering on value. For many people, the problem is not paying for power but the availability of it, and the option to chose how to pay for it, with the availability of electricity metres. Therefore, if recent efforts, like the new deal entered with Siemens can yield positive result, electricity consumers will be glad, and it will help to revive the nation’s economy from its current doldrums.

Oche Samson

Categories: Features, Local, News

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