Tackling Nigeria’s Electricity Deficit for Economic Growth

By Abraham Amah

For over a month, Nigerians, NERC, the electricity regulations company, and the power distribution companies, called Dicsos, have been involved in brickbats over an increase in the electricity rates charged consumers, after they calibrated consumers into a nebulous band categorisation which still leaves many places in dark, despite the outrageous increase. This is a reflection of Nigeria’s inadequate generation and supply of electricity which still hovers around 6000 megawatts after more than 60 years of independence.

Nigeria, Africa’s most populous nation and one of its largest economies, grapples with a chronic electricity deficit. This deficit not only affects the daily lives of Nigerians but also hampers the country’s economic growth potential. Due to the absence of steady power supplies, many manufacturing entities have shifted to using diesel to power their machines, and the high cost of diesel, which the government deregulated over ten years ago, to make it cheaper and available has made the condition worse and exacerbated the already unproductive situation, as the manufacturers would naturally pass on the cost to the consumers.

In the last couple of months, notable multinational companies have exited the Nigerian business environment based on many factors, two of the main being the inadequate supply of electricity to run their businesses and the high exchange rate which adds to the already high cost of doing business. Under such a dire situation, it is difficult to imagine how the President’s current efforts at attracting foreign direct investment, FDI, would pay off, much less handsomely. Investors cannot be trooping to a country where multinationals that have been there for over 50 years are exiting.

The inadequate power supply and its vicious attack on economic growth manifests conspicuously on the small and medium scale enterprises which are the main drivers of the economy. As their name suggests, these enterprises offer employment to millions of youths, much more than the big corporations and many of the advanced and emerging companies were made what they are today because of the attention the government paid to their survival. In Nigeria, these enterprises are burdened with lack of steady power supply and excessive taxes by all tiers of government.

Many of the small and medium scale enterprises that got loans from public and private credit agencies have closed shop because of their inability to maintain the huge financial burden of sourcing for private power in the absence of national electricity. Those that have managed to sustain their businesses despite all odds, cannot compete with imported products because their average cost of manufacturing is higher than imported goods.

Across all the sectors; health, education, tourism, entertainment, telecommunications and ICT, and households, players continue to groan under the weight of inadequate power supply and the unfortunate reality is that the government seems to have lost ideas about how to reinvent the sector and make it more purposeful to serve Nigerians in their quest for economic growth. By 2015, Nigeria was denoted as the biggest economy in Africa but the last rating for 2024, puts Nigeria as fourth, behind South Africa, Egypt and Algeria.

A cursory look at the efforts put in by the government will reveal that, more than any other factor, corruption has been the bane of the power sector in Nigeria. Between 1999 and 2007, former President Olusegun Obasanjo sunk more than a billion dollar in trying to revive the faltering power sector. That money went down the drain into private pockets and till today, not even one Nigerian has been held responsible for that mishap.

When the sector was deregulated, due process was not seen to have been followed and Bureau of Public Enterprises, BPE, the institution responsible for the selling of the predecessor company, the Power Holding Company of Nigeria, PHCN, handed over the assets to their cronies and associates who knew next to nothing about the complex and intricate business of power. Today, those companies are mired in huge debts and asking the federal government to sink in billions again as bail out funds. The circus show continues and the Nigerian people are as usual, at the receiving end.

To make matters worse, the federal government retained the full ownership of the Transition Company of Nigeria, TCN, the sole transition company in the overall electricity value chain and that has hampered efficiency because it is treated as a government parastatal which is at the whims of a few powerful people who do whatever they want. Bureaucratic red tapism is the achilles heels of the body as necessary maintenance to respond to downtime takes longer than necessary because of officialdom.

Communities that have paid for transformers wait as long as six months to one year to get it fixed even when they weren’t supposed to pay for the transformer. So it is with other components that needs to be replaced to provide electricity for private and industrial consumption. Besides the inefficiency of TCN, there is the urgent need to upgrade the national grid infrastructure which keeps collapsing to the embarrassment of Nigerians. In one month this year, it collapsed three times and no one can quantify the attendant losses that trailed those collapses.

Surprisingly, what works for other countries doesn’t work for Nigeria. All the economies that have overtaken Nigeria both in Africa and other parts of the world, have invested heavily, with results, in the private sector and that is the basis of their massive economic growth which they rub in Nigeria’s faces at every opportunity. The stories of the quantum leap in power generation of Egypt, Vietnam, South Africa, Indonesia, Malaysia and Singapore are commonly told here and elsewhere and one wonders why it is difficult for the Nigerian government to copy from such success stories.

At the twilight of the Muhammadu Buhari administration, he unbundled the electricity sector and moved it to the concurrent legislative list where both federal and state governments can legislate on it, and thankfully, some states are beginning to take advantage of that to build their own generating plants. As good as the move is, the present administration must ensure that it removes any clog in the wheel of that progress for it to make sense. A situation where a state generates power and still leaves the transmission solely in the hands of the TCN would make a mess of the good policy.

Gas has become an indispensable component of electricity generation and Nigeria has the largest gas deposit in Africa but as usual, is unable to feed the few electricity generating plants it has has with the gas at its backdoor. Many of the turbines that should ordinarily generate power are comatose because their specifications do not fit Nigeria’s gas supply models. Those who are building new power plants must ensure that there is a sync between their models and the type of gas Nigeria has so that plant owners do not get frustrated after sinking billions of dollar to build a power plant only to discover that they cannot feed it with the type of gas needed to power it.

As the government makes sincere and genuine efforts to offer interrupted power supply to households and businesses, it must also begin to look in the direction of where the world is going: renewable energy. A lot of countries currently focus on renewable energy for the supply of electricity to their people and while Nigeria is still grappling with the current situation, the government must also focus so that it can take advantage of the opportunities offered in this new found sector to add to whatever Nigeria has and ensure that Nigerians not only have steady supply of power for their personal use but also to drive the economic growth and retain its enviable position as the biggest economy and the true giant of Africa.

Amah, a regular commentator on current issues, writes from Umuahia