Power Sector’s Post-Privatisation Six Years After

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On the 1st of November, 2013, exactly six years today, attempt at reforming the embattled Nigerian power sector, which began as far back as 2001, climaxed in the privatisation of the generation and distribution sub-sectors. ABAH ADAH ex-rays the sector’s post-privatisation performance to date.

The quest to address the inefficiency that has characterised the operations of the Nigerian power sector over the years with seemingly no hope for improvement led to the idea of power sector reform whose objectives were two-fold: to address the chronic inefficiency  in the old public utilities and engender a privately driven power sector with the needed capital to move the sector forward and meet Nigeria’s fast growing electricity demand.

The move to implement sustainable reforms in the sector came to the fore, giving birth to the National Electric Power Policy in 2001, the Electric Power Sector Reform Act (EPSRA) of 2005 and the unbundling of the Power Holding Company of Nigeria (PHCN) which culminated in the privatisation of electricity generation and distribution subsectors in 2013.

The August 2010 “Roadmap for Power Sector Reform” that was produced by the administration of president Goodluck Jonathan was to a large extent, a robust plan of action, resonating with a clarity of vision and purpose that suggested that considerable discipline and rigour had been expended in its preparation.

The Roadmap projected that to meet the Vision 20:2020 target of 40,000 megawatts, MW, of electricity by 2020, the Nigerian power industry would require annual investment of at least $10 billion.

However, in the aftermath of that the expectations of the public to have improved, efficient and reliable supply has not been met and as such the initial excitement was soon replaced, first with distrust and thereafter, sheer derision of the entire power programme especially in the face of the darkness and epileptic power supply that epitomised the public perception of a seeming lack of progress in the power industry.

As at  2015 when the President Muhammadu Buhari-led APC government came on board, average available power was in the region of 3, 000 to 3, 500 megawatts.

The new government brought an unprecedented hope of improved and steady power supply  to Nigerians, especially as the electioneering campaign and the Party’s manifesto spoke so much about turning around the key sectors including power for effective economic development. The government inherited a  partially liberalised sector and a power roadmap from the immediate past administration and promised to work for its actualisation.

The immediate past Minister of Power, Works and Housing (otherwise referred to as the Super Minister for being in charge of three critical ministries then), Babatunde Fashola, shortly after taking responsibility of the pivotal power sector as minister unveiled his roadmap for the sector in 2016.

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Fashola’s roadmap, unveiled at the launch of a book that celebrates his years as governor of Lagos State, is in many ways a re-statement of the very same lofty plans in the 2010 roadmap.

Fashola’s repackaged Roadmap of May, 2016 with short, medium and long term plans of “Incremental, Steady and uninterrupted power supply, with its related milestones like the sector governance, meter supply, eligible customers and mini-grid regulation dovetailed into a comprehensive electricity market intervention by the federal government – the Power Sector Recovery Programme (PSRP), which was designed to reset the Nigerian Electricity Supply Industry (NESI), while enhancing the 2016 Roadmap.

At a point it became obvious that the target of 40, 000 MW, for Nigeria in 2020 was unrealistic. The 2016 Power Roadmap tactically reduced Nigeria’s power target over 5 years by half. According to the minister, the Transmission Company of Nigeria, “TCN, has expressed a desire” to increase transmission capacity from 5000MW through to 20,000MW over five years (with 2020 as terminus).

A minimum baseline of 4, 500 MW/H was  set for power supply to Nigerians through 2018 as contained in a publication circulated by the Ministry of Power, Works and Housing at the tail end of 2017.

At exactly six years of the great reform today, available power still hovers around 3, 000 to 3, 500 MW as was the case in 2015 after all the orchestrated efforts and the funds expended.

Nigerians are still grappling with epileptic electricity supply, the worst being that the operators have completely ignored the aspect of social services responsibility which government owes its citizens, even if free market must prevail, to exploit consumers indiscriminately through an ever increasing estimated bills often condemned by their customers as not being commensurate with the erratic and poor supply they get.

The merging of power with works and Housing to make one ministry during President Muhammadu Buhari’s first term was fingered by many as a major cause of the inefficiency of the sector.

The people felt the sector which is so critical to the economy but has been too enmeshed in crisis to perform needed to be singled out with its own minister to be able to solve the daunting challenges there-in and bridge the yawning electricity deficit gap that has lingered for years.

Consequently, President Buhari understood this and decided to be on the people’s side in his second term and so while forming his cabinet in August, 2019, he separated the power sector and made it stand on its own with Engr Sale Mamman and Goddy Jedi Agba as Minister and Minister of State respectively.

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Broadly speaking, the challenge with effective and efficient electricity supply in the post privatised electricity  market in Nigeria can be described as a vicious cycle yet unbroken. The problem rests largely with the middle stream (transmission) and the downstream (distribution) sub-sectors in the value chain.

From the stock availability to electricity units delivered to the end-users, there are severe strains that not only threaten the financial viability of the sector, but also practically repel fresh funding and investment across the value chain.

Even as the persistence of these challenges in a privatised framework does not call into question the validity of the reforms, it points to the need for Nigeria to do more in addressing lingering bottlenecks such as the underutilisation of generating capacity believed to be caused by inadequate infrastructure, high distribution losses, poor revenue collection, estimated billing and metering issues, liquidity crisis among others.

Speaking during a power sector event at Kainji Hydro Power Plant in Niger State recently, the Vice President, Prof. Yemi Osinbajo noted that despite the privatisation of Nigeria’s power sector, the federal government’s financial intervention in the industry has risen to N1.5 trillion.

He said, “The Federal Executive Council recently approved the third round of intervention funding for the sector (power), summing up a total of about N1.5 trillion in the last two years (excluding what was spent before the present administration).

“However, if the country is to achieve its aim of channelling funding to other critical sectors of the economy, it is pertinent that structural reforms be put in place to enable the power sector to fund itself sustainably.”

Osinbajo who said that the federal government had continued to support the sector through interventions and appropriate policies however stressed that no government venture would thrive without the private sector playing a fundamental role.

One wonders then, what the problem really is that has continued to hold this critical sector to ransom irredeemably.

On assumption of office few months ago, the  Minister of Power, Engr Sale Mamman alongside his work mate and Minister of State, Jedi Agba said with the cooperation and collaboration of all stakeholders in the sector, it is obvious they were prepared to change the narrative of the Nigerian Electricity Supply Industry (NESI). The task is enormous as Nigeria still have a long way to go, talking about stable power supply.

Questions have been asked if Nigeria can go beyond the threshold of an average of 3, 000 to 3, 500 MW which has been the count since the privatisation in this last lap of President Buhari’s administration.

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