During my first lesson in power system planning, the lecturer walked in and said, “to develop a country, one of the first things a government builds is a power system”. How true!
Political power was responsible for the emergence of the Nigerian Electricity Supply Industry (NESI) when Britain, our colonial power, built the Nigerian Power System as a direct mirror of the British power system, the very good beginning of a government-to-government partnership in building our power system.
Yes, there was a time when we had working institutions and systems including the education, rail, and power systems. Electricity Corporation of Nigeria (ECN) and the Niger Dams Authority (NDA) were functional at the time. That was when “Let there be light” meant “and there was light”. Political power changed shortly after the first republic and power system planning, an important activity that requires doing everytime a population increases, was abandoned. Several core principles of electrical power systems was trumped by the political power systems in the decades to follow. Investment in electrical power systems is a continuum just as governmental political power systems. The failure of investment and maintenance of assets in the NESI over the years made National Electric Power Authority (NEPA), created by merging ECN and NDA, to become known at different times as Never Expect Power Always, Never Expect Power At All, to the extent that when it became known as NEP PLC, it was labelled Never Expect Power, Please Light Candle. Such was the extent of darkness that permeated the nation for over 50 years. How infamous NEPA had become, so much so that we shouted, and still shout, UP NEPA!
The questions that rush to one’s mind include what has led to this level of total failure of our systems and institutions? What has led to the decadence of morality, values and celebration of merit over mediocrity in Nigeria?
We have more questions than answers. Is it that the leaders in those good old days have more education than those we have now?
POLITICAL POWER TRUMPS ELECTRICAL POWER
When the political power system in the the dawn of this millennium decided to boost the electrical power system in Nigeria, it decided on the most ambitious privatization in African history. However, since the assets were transfered to investors in November 2013, the electrical power system has been bedevilled by another kind of power based on gross inefficiency, illiquidity, lack of metering, absence of data, theft of power to mention but a few. The numbers brandished in the electrical power system in Nigeria do not add up.
The starting point of a power system is data. Without acurate and valid data, there can be no functional power system. How many customers do we have? How many are paying? What are the actual capacities of the generation companies (GenCos), transmission network maintained by the transmission company of Nigeria (TCN) and the network of wires operated and maintained by the eleven (11) distribution companies (DisCos)? What data do we have of the plant items, transformers, feeders, switchgear, and other components of the electrical power system? Where are they located? What are their statuses?
Economically speaking, there is an established relationship between the success of political power and the availability of electrical power. Every independent political power system should have an electrical power system that uses available mixes of energy resources to drive its ambition to become an economic power. It will also need quality education, security, and healthcare infrastructure.
With the prolonged absence of electrical power due to the failure of political power over many decades, strategic industrial, commercial and domestic sectors of the economy will grind to a halt eventually.
There is so much confusion in the political power system in Nigeria today as far as the electrical power system is concerned. From the promise of free electricity to consumers in the wake of the coronavirus pandemic, to the reversal of privatization both of which attracted huge public sentiments, we had the sack, reversal and sack again of the MD of the Nigerian Bulk Electricity Trading (NBET) Company. The sacked NBET MD, Marylin Amobi, rejected the sack letter from the minister of power and was reinstated by the ministry of finance. To borrow from Fela Anikulapo Kuti (Abamieda), confusion break bone! There was also the removal of NBET from the list of agencies under the Ministry of Power and the refusal or acceptance of the decision by the National Assembly (NASS). Lately, state governments decided to unilaterally take ownership of DisCos as evident in the report submitted to the National Economic Council (NEC) by the El’Rufai led committee investigating the ownership of DisCos. The Federal government (FG) rejected the suggestion. While at it, the term of reference for the committee was confusing and the committee eventually did more than it was asked. Now, one of the outcomes of the recommendations of this committee, the forensic audit of the DisCos, has created a situation where the regulated has taken the regulator to court. The DisCos took the Nigerian Electricity Regulatory Commission (NERC) to court over the planned forensic audit of their operations. Just when the nation was basking in the euphoria of having a second government-to-government intervention in our power system, consumers who have been largely in darkness were informed that they will start to pay higher tariffs within the next few weeks. To make matters worse, some of the DisCos have begun implementing the new tariffs even before the due date. Wait, NERC postponed the introduction of higher tariff citing the impact of the coronavirus pandemic and the order asking for service reflective tariffs in the last few months. Lockdown measures are still in place and power supply is still epileptic. Also, NERC asked DisCos to meter all consumers by 2021 when in actual fact, the DisCos are no longer in charge of metering as meter assets providers (MAPs) have been given such responsibility in the NESI. In short, we don’t know whether what we have in the way of privatization in Nigeria is a deregulated, liberalised, or commercialized system. There is no gain saying, if we want a functional electrical power system, the political power system must allow it to operate based on applicable international standards and norms. The FG directed that NERC should regulate the power sector properly forthwith, whatever that means!
LIQUIDITY CRISIS LIKE NO OTHER
The bottom line is that the NESI is financially zapped of energy to progress like a market. For example, ministries, departments and agencies (MDAs) of the FG use power “free of charge”. A large number of consumers steal electricity, and the vast majority of those who don’t, either can’t afford to do so or too apathetic to pay. You cannot get investors to come into the sector because of the kind of illiquidity and aggregate technical, commercial and collection (ATC&C) losses in the electrical power system bequeathed to us by the political power system in Nigeria.
The ordinary consumers are already impoverished but are the ones suffering in the sector. Metered customers will bear the brunt of this increased tariffs. Those on estimated billing will face harsher consequences. In essence, using this methodology, DisCos can raise the account balances of consumers so high to the extent that the liability will be so huge for any buy back or takeover.
On the matter of increased tariffs, the NASS, civil society organizations, organized labour and trade union congress can get in the way.
The import duties on meters is a cog in the wheel of progress towards closing the metering gap in the NESI. Government agencies should talk more to one another on this issue – customs, ministry of power, NERC, CBN, ministry of finance etc.
We failed to plan and therefore planned to fail. Going forward, the total cost of production and landing cost of a unit of electricity (kwh) has to be determined first. Then, the FG should secure a financial intervention to provide meters that can be associated to individual consumers and people can move their meters when they move houses.
DisCos have said that there are currently 8 million consumers in their books and they have only 4 million metered to date. Yet,they claim that over 10 million others are involved in electricity abstraction. Apart from the fact that these numbers don’t add up, this shows that DisCos know and accept that they have not done customer enumeration. Let’s be clear about the 10 million people reportedly stealing electricity. Does this number include millions more on estimated billing?
If the DisCos know that electricity theft is a problem, can they invest in my technology to stop electricity theft?
SUBSIDIES & BAILOUTS
The FG should not continue with subsidies and bailouts in the manner it had done in the energy sector, now that “there is no money”. What it should do:
1. Establish the landing cost of a unit of electricity.
2. Provide meters for all consumers.
REVERSAL OF PRIVATIZATION
FG made a mistake in the agreement made with investors because it was skewed towards milking the consumers dry.
The National Assembly and many Nigerians have concluded that the Privatization has failed and we need to start afresh.
My personal view is that we should have a unique arrangement that combines the benefits of the reform process with a socially acceptable form of electricity supply market. Let no one be afraid of halting a failed process lest it should grind to a halt on its own. If political power system muscles up the needed will to assemble our best brains in the sector together, they will do the needful.
NASS should wade in to create a governance structure in the NESI that will lead to a successful reform.
The economic power of a country or nation is measured, not by the number of few billionaires in the country, but by the value created by the ordinary persons using electrical power. If the tariff for electricity continues to grow unabated, the cost of manufacturing will get to a point where we will have to import everything including toothpicks and pure water.
Let all stakeholders work together for the success of the power reform, determine the unit cost of electricity per kWh and agree to pay for the cost.
It cannot be overemphasised that the FG should be more careful with contracts it signs with third parties. Now, it needs to aggressively pursue the Siemens’ deal to a grand success, and fund the metering gap in the NESI by a dedicated financial intervention for us to see the light and have a system where Political Power boosts Electrical Power.
Idowu Oyebanjo is a UK trained power system professional.