IN the past seven and a half years, the present administration has continuously promised Nigerians reform in the power sector, resulting in regular, if not uninterrupted power supply, to boost the economy and to facilitate opportunities in both industry and society. Despite huge investments of capital for this purpose, the expressed dream remains unfulfilled. The monumental failure that has been recorded is a sad commentary on the creeping failure of the Nigerian state. The biggest losers are the people, manufacturers and investors who have had to deal with the crisis of power outages, with implications for the cost of living and the cost of production.
The latest half-year review of the economy by the organised private sector under the aegis of the National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) indicates that industrial capacity utilisation by May fell significantly to 42.6 per cent from 48.1 per cent recorded in the preceding half year. Among the contributory factors to the decline which the group cited was the declaration that “electricity supply was quite frustrating during the period under review as the nation witnessed disturbing frequent outages, most especially within the industrial estates in cities and towns like Lagos, Aba, Onitsha, Kaduna and Kano where a good number of industries are located”. In fact, on balance, other consumers of public electric power nation-wide were probably worse off. The extended outages and ever-lengthening hours without reliable power supply have inflicted crushing impact on small businesses and the average household.
Daily power generation fell by about 25 per cent to 3000 MW last January. When power contributed by AES Barge and Agip is deducted, net public daily generation hovers around 2000 MW, the output level in 1999 when the present administration assumed office. The available power represents only 40 per cent of the projected power generation of 7000 MW slated for 2006 under the NEEDS programme. Indeed, nothing has changed.
It may be recalled that the economy has remained blighted for several decades while government occupied its commanding heights. Thus there was general acceptance when the Obasanjo administration sought to reverse and transfer to the private sector the commanding heights of the economy and to establish a private sector-led economic system with government acting as a purposeful facilitator. For example, with respect to the very important issue of employment, NEEDS envisaged that the public sector would “right-size” or prune its workforce while creating at the same time conditions for the private sector to flourish and generate seven million new jobs by 2007.
The NEEDS document correctly identified electric power supply as “the most important infrastructure requirement for moving the private sector forward”. That very realisation informed the ministerial order to NEPA to end blackouts within six months in 1999. However, beyond the initial sign of urgency, government’s handling of public power supply has been phlegmatic. It took seven years before the monolithic NEPA/PHCN structure was unbundled and formed into 18 power utilities last April. While government has constituted the Nigerian Electricity Regulatory Commission, the fact is that the 18 new companies are still wholly government-owned and this has left their operation and service very much like before.
Contrary to government expectation, deregulation in 2004 did not attract private investors into the power industry because operating conditions remained unfavourable. Government was, therefore, constrained to take urgent steps in 2005 to boost power supply. All oil-producing companies were required to follow Agip’s lead and individually execute independent power projects. Similarly the Federal Government set about the construction of 11 medium-sized power stations in 11 states. Before then two states had commenced work on separate power plants. We are yet to ascertain the pace and stage of construction works on the various power projects which also entail the provision of ancillary transmission and distribution facilities. But two of the federal plants are slated for completion this year and the rest scheduled for next year. The various power projects are expected to raise public power generation to some 10,000MW.
The fact that all the proposed power stations would be gas-fired raises a critical question. It is the disruption of gas supply to the Egbin power station that further worsened the power outages being experienced since January. Also recent reports indicate that work on the West African Gas Pipeline would take longer than planned on account of problems posed by militants in the Niger Delta. So, is there any guarantee that there would be enough gas supply to run most of the proposed plants when they are completed? There is need for government to address the root cause of restiveness in the Niger Delta expeditiously.
On the other hand, while there has been loss of substantial generating capacity at Egbin, industrial firms in the Lagos area that are hooked to the gas pipeline network owned by the premier upstream oil company have uninterrupted supply of gas to run their in-house gas turbines. Is it possible that the long-standing dispute over gas tariff between NNPC and PHCN is the principal reason for non-restoration of gas supply to Egbin?
We note also that government has not responded to the expressed interest by the Manufacturers Association of Nigeria (MAN) in buying over the unbundled power utility serving the Ikeja area. MAN is clearly equal to that task. Are the utilities being reserved for particular interests? Nevertheless, the decision to build thermal power stations is technically and commercially sound notwithstanding recent diversionary official dalliance with renewable sources of energy. There have been no tales lately about water level problems because the hydro-power stations are in a state of disrepair.
Thermal power generation is sustainable. For instance, liquefied natural gas is being exported to advanced countries. Gas will soon be piped to Benin, Togo and Ghana. Also government has initiated consultations on pumping gas over 4000 kilometres across the Sahara to Algeria for onward delivery to Europe. The present and intended gas exports are for purposes of fuelling power stations among other uses.
Instead of government diverting attention to developing renewable sources of generating power at this point in time, the super-abundance of gas in Nigeria offers the edge to generate very cheap and huge amounts of electricity which would serve as additional attraction for investment and competitive local production for domestic and export markets with attendant massive employment. But, alas, wrong-headed policies have thus far thwarted the realisation of those benefits. It is a shame that, far from being a facilitator as NEEDS proposes, government has proved to be a strangulator of the private sector and the economy. If ultimately, the present government fails to solve the problem of power supply, it is an urgent task that a future government would still need to address.