Business
Stakeholders blame electricity failure on complicated web of officialdom
Stakeholders in Nigeria’s power sector have blamed the failure in regular electricity supply to households not only on government negligence or lack of resources to generate power, but also on a complicated web of officialdom.
The stakeholders revealed this during the panel discussion at the WorldStage Economic Summit 2023 held in Lagos with the theme: National Dialogue on Electricity.
At the summit, one of the panelists, Mr. Johnson Akinnawo who represented Dr. Nnamdi Nnemeka, the MD of Nigerian Bulk Electricity Trading PLC revealed that the power sector was largely challenged by drought of investors.
Another panelist, Mr. Gabriel Idahosa, Deputy President of the Lagos Chamber of Commerce & Industry (LCCI) who represented the President, Dr Michael Olawale-Cole, said to the contrary that refusal by federal government to grant electricity distribution companies the right of transmission had compromised their advantage to make profit.
Also exposing the defects that had been causing the country enormous electricity shortage, the representative of Mr. Dele Kelvin Oye, National President, Nigerian Association of Chambers of Commerce, Industries, Mines and Agriculture (NACCIMA), Mr. William pointed out that electricity generating companies in the Nigeria were challenged by inadequate infrastructure to operate optimally and urged government to address the problems.
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Earlier, Akinnawo had bemoaned the complexity in the entire chain of power generation, distribution and transmission by raising a concern that in spite of the large amount of money that had been pumped in by successive governments, electricity supply remains unreliable.
Responding to the question on how best to address the challenges of power generation, Akinnawo said it would require humongous investment considering the problem of gas supply for power generation.
“There is the problem of gas challenge because it’s more profitable to export gas than selling it locally to generate electricity,” he argued.
He differed with Idahosa’s position on states’ regulation of electricity as well as government ceding transmission to GenCos and DisCos as it did with generation and distribution.
Akinnawo argued that states were not financially endowed, a situation he said might create unintended unfavourable gaps in electricity supply to the respective public and eventually defeat the very essence of the policy of liberalization. He argued further that some states might be able to meet up with the financial capability needed to train and set up regulators.
Suggesting solutions to the challenges of gas, he pointed out that investors would only come into the sector if they know they could make money.
“So, the solution to the challenge of gas in electricity generation is sufficient exploitation as well as exploration of gas to meet domestic needs for assured investment bankability. Model of concessioning the grid must be made bankable to encourage investors,” Akinnawo recommended.
He warned however that breaking up the grid had its advantages and disadvantages, explaining that if the grid is broken down into smaller units, it would take a toll on the main or larger ones whenever problems occurred. But he emphasized that the federal government has yet to make a decision about breaking the grid down to smaller units as suggested by some sections of the Nigerian public.
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Asked about the current high tariff on electricity and what is responsible for it, he explained that electricity as a product must be sold at profit and urged the public to understand that.
Besides, he added, there is regulation in investment networks of electricity which had to be understood so as to know why and how tariffs were calculated. Though he lamented that it was a vicious cycle of some sort, he expressed optimism that Nigerians will soon benefit from the multi-pronged government’s efforts at improving electricity.
While admitting that investment might not have yielded enough results in the past, he assured that with the coming of the 2023 Electricity Act, there’s now hope for state governments to take the advantage to improve electricity supply to their respective communities and make profit as well.
Idahosa stated that the power sector had gone through a series of reforms leading to federal government acceptance that it didn’t have the expertise to improve and privatize electricity.
He disclosed that the country was generating about 14,000 megawatts of electricity but that due to all sorts of technicality and complex management, the Nigerian public could not enjoy more that 4000 to 5000MW total output.
Idahosa also stated that generating, distributing and transmitting electricity are very technical processes which not a few countries have been able to run well.
He canvassed that for the privatization to succeed and ensured seamless electricity supply, the gas sector needed to be improved since power generation requires gas supply.
Asked if the current tariff could be sustained to solve the problem of cost and purchasing power, he said it depended on the key player – government – since, according to him, it bears the cost.
“It’s a dilemma. The cost is not being fully recovered. The reality of high tariff is that unless the cost of gas is reduced to alleviate cost of generating electricity, the tariff will continue to go up. So to reduce tariff, investment in gas must be encouraged so as to reduce cost,” Idahosa explained.