3rd June, 2024
By Bello Aminu
Despite cynical analysis of the power sector by critics, Bello Aminu argues that the president is making steady progress in the complex industry
To be sure, Nigeria’s power supply crisis is a multi-decade, multi-faceted challenge, defying even some of the country’s most respected public figures who were picked in the past to oversee the sector.
A deputy minister who once headed the ministry said in 2012 that Nigerians must resolve to exorcise the ‘evil spirit’ preventing the country from making headway in its efforts to banish darkness from the government. Ultimately, she left the country in more darkness than she met it.
Although it’s still too early for an in-depth assessment of President Bola Tinubu’s administration in terms of the progress made in the Nigerian Electricity Supply Industry (NESI), one thing is certain: The president is not taking his pledge to ‘light up’ the country lightly.
So, on the 1st anniversary of the Tinubu administration, it would not be out of place to appraise the initial steps taken to ensure that the electricity supply gap is bridged as soon as possible.
The president clearly understands the critical role that a reliable power supply plays in any modern economy. That was why in his 2024 New Year message to Nigerians, he expressed his intention to fast-track electricity projects and private investments into the power sector.
“My administration recognises that no meaningful economic transformation can happen without a steady electricity supply in 2024,” the president said. Since then, the president has moved to back his words up with the necessary action.
Cognisant of how much the unnecessary over-centralisation of the power sector has negatively impacted the growth of the industry for decades, days after he took over the reins of power, the president immediately moved to decentralise and liberalise the sector.
The reforms in the sector took him first to the amendment of the Electricity Act, to break the federal government’s monopoly in electricity generation, transmission and distribution nationwide.
With the amendment, that law now allows the subnational governments to take charge of the entire value chain of power supply management in their jurisdictions, marking a major shift from the past where leaving the power sector in the exclusive legislative list only hobbled the development of the industry.
Several states, including Enugu, Ondo, and Ekiti, have since started setting up their electricity regulatory bodies in preparation for the new conducive environment being created by the current administration.
Secondly, President Tinubu, with a full grasp of the negative impact that legacy and current debts owed the operators in the power supply value chain were having on the system, especially Generation Companies (GenCoS) as well as Gas Companies (GasCos), has since moved to offset the huge outstanding.
Penultimate week, the Minister of Power, Adebayo Adelabu, to the relief of operators, announced that the president had approved that N130 billion be paid from the gas stabilisation fund to the gas suppliers.
Earlier, the Coordinating Director of the ‘Decade of Gas,’ Ed Ubong, had also made it public at an event in Abuja that over $120 million had been paid as part of the dollar-denominated debts owed gas suppliers.
This is expected to go a long way in providing some level of liquidity to the suppliers and therefore by extension put the power supply to the grid in a better stead.
Thirdly, although still meagre when compared with Nigeria’s massive population of over 200 million persons, there has been a substantial ramping up of electricity supply throughout the value chain, meaning that for the first time in three years, over 5,000mw of power was achieved on May 3, 2024.
The minister of power, Adelabu, has further assured that in the coming months, this will be increased to 6,000mw from an average of about 4,000mw, describing even the current increase as still unacceptable.
“Beyond paying the legacy debts, we’re moving around 4,000mw, 4,500mw and it is no longer acceptable. So what we are looking at is to have an agreement to ramp up to a minimum of 6,000mw within the next three to six months.
“I believe we still have the infrastructure to generate between 6,000mw and 6,500mw. In terms of the generating companies, I have no doubt in my mind that the existing capacity can give us 6,500mw once there is stability in the supply of gas,” the minister assured.
In addition, in November last year, the president met with the German Chancellor, Olaf Scholz on the sidelines of the G20 Compact with Africa Economic Conference in Berlin, Germany in his abiding effort to ensure that the power supply challenge is resolved.
The crux of that discussion was on the current Siemens Power project under the Presidential Power Initiative (PPI) and with the support of the German government, which seeks to clean up the entire power supply value chain and remove extant bottlenecks.
In all, the scheme seeks to first deliver 7,000mw of electricity to the national grid in phase one, ramp it up to 11,000mw in phase two of the programme and then expand the country’s electricity supply to 25,000mw in the third phase.
Before Tinubu became president, timelines had been missed already. But to underscore his seriousness with going forward with the Siemens deal, the president followed up the first meeting with the German Chancellor with another one in Dubai, United Arab Emirates (UAE) in December, leading to the signing of agreements to accelerate the scheme.
In all of these, what has become obvious is that on the power supply issue, President Tinubu is not resting on his oars, not since he became Nigeria’s leader. To underscore its renewed commitment to the project, Siemens Energy has also successfully delivered 10 units of power transformers and 10 units of mobile substations on the back of that deal in the last few months.
On the important issue of metering, the federal government is looking to achieve an injection of 3.5 million meters into the power sector, comprising 1.5 million meters through the World Bank Distribution Support Recovery Programme and 2 million meters through the Presidential Metering Initiative.
This is very important because with more metering, the constant illiquidity in the power sector is expected to reduce considerably and with more funds available, additional investment will be made by the operators and ultimately lead to the achievement of economies of scale. With economies of scale will come a likely taming of tariffs, especially like the recent one for premium electricity customers.
Concerning the perennial challenges surrounding the metering of military formations in the country, the federal government recently announced the release of N12.7 billion to provide meters in those facilities across the country. Already, 50,000 prepaid electricity meters have been procured and are to be installed in military establishments across the country.
It appears unfair to judge a nascent government on a sector as problematic as the power sector in its first 365 days in office, but even if we were to go that route, it’s not all gloom and doom. The Tinubu government appears to know exactly what to do and how to do it in the power sector.
-Aminu, an energy economist, writes from Kano