Nigerians are uncertain that the President Muhammadu Buhari led administration has any immediate long or short term plans for improving the country’s epileptic electricity sector. The doubt is re-enforced by the continued absence of a known blue print that spells clearly, steps to address the lingering blackouts since his assumption of office last May.
“At least for now, we haven’t seen anything that sends that signal to us” according to one manufacturing top executive who says his company still relies hugely on generators to power their production plant.
Interactions with some Nigerians revealed that their major concern is the fate of the distribution (DISCOs) and generating firms (Gencos), unsure if the administration will allow the electricity companies carry on with agreements signed with the previous administration or revoke their licenses outright.
The power sector assets were handed over to private sector investors in 2013 in a landmark move that raised hope of some form of stability among Nigerian consumers. 11 DISCOs and five Gencos, formerly under the control of the defunct Power Holding Company of Nigeria (PHCN), were sold to mostly Nigerian private investors and their special purpose vehicles (SPVs).
Today, most of the firms that dared to delve into the purchase of the assets are strangulating under various economic pressures ranging from inability to raise expansion and upgrade funds to the drag on loan repayment, which is reflecting so negatively in some financial institutions earnings.
There is also the issue of insufficient electric power for on-sale to consumers and the inherent cost implications.
The recent implementation of increased electricity tariffs for distribution companies, unpopular as that is with some stakeholders, is supposed to raise confidence level but many are doubtful it is enough to ensure the financial viability of the privatized distribution companies and the entire electricity value chain and attract more interest.
There have been reports that the federal government intends to complete legacy government-funded projects such as new power plants in Mambilla, Zungeru, Kaduna, and Katsina, that should collectively add nearly 4,000MW to Nigeria’s generation capacity. But there is nothing currently to indicate movement in that direction.
The support for independent power developers has been far and in between. The privately financed US$876M Azura-Edo IPP project came after long protracted foot-dragging. The Azura project is a 450MW open cycle gas turbine power plant being developed in Edo State, Nigeria, and it is the first of a new wave of project-financed greenfield IPPs currently being developed in Nigeria. Besides, there is no modern initiative, against the backdrop of the debate on climate change, to pursue renewable energy sources (solar, wind, biomass, etc) to power the country. And there are no supports to enhance capacity of the national grid on which the distribution companies rely for on-sale to consumers.
Many industry experts have called for Mini-grids that could serve industrial, commercial and residential clusters, and off-grid solutions like renewable energy generation which can be very useful to improve rural electrification. Solar power could be particularly useful in the northern states where solar radiation levels are high, and could form part of the solution for redeveloping those states previously embroiled in the Boko Haram conflict. All of these currently appear off the list for immediate action.
Nigerians are still largely depends on generators of different brands and sizes for the running of their homes and businesses.
The Manufacturers Association of Nigeria (MAN) and the National Association of Small Scale Industries (NASSI) recently estimated that their members spend an average of about N2 billion per week on self-power generation.
A series of power sector polls conducted by NOI Polls Limited, over the period Q2, 2013 to Q1, 2015, revealed that Nigerians received an average cumulative power supply of 5.4–7.1hours per day. Also, on average between Q2, 2014 and Q1, 2015 Nigerians spent between N3, 302-N3, 613 on actual power supply.
The South-West region had the highest average proportion (67 percent) and the South-East region had the lowest average proportion (56 percent) of respondents who saw no improvement in power supply to their households.
Another recent statistics on use of generating sets in the country released by Kabir Usman, Director-General, Centre for Management Development (CMD), revealed that about 60 million Nigerians spent N1.6 trillion on generators annually.