Nigeria’s Expensive Darkness – By Adeola Yusuf
The federal government instructs the Power Holding Company of Nigeria (PHCN) to commence the implantation of new tariff regime by July 1. SENIOR CORRESPONDENT, Adeola Yusuf who periscopes the effects of the tariff hike reports that the Nigerians remain the shoddier victims.
This is the metaphor of electricity in Nigeria: A white man brought his pet monkey to the market where his black counterpart is selling banana. After a couple of minutes’ transaction, the black man needed to urinate and he pleaded with the visiting white man to look after his banana while he uses the restroom. He was amazed when he returned to meet peals of his banana.
“Where is what I beg you to keep for me,” he enthused. But the white man smiled before he said: “Ask your brother over there,” pointing at his monkey. As nature will demand, it was the turn of the white man to use the rest room and he told the black man to look after his monkey. He returned but met his monkey dead! “Who killed my monkey?” He asked angrily. But instead of smiling this time, the black man laughed and said: “Please, do not worry about it, it is a family affair.” If this is funny, the electricity situation in Nigeria is not.
The epileptic power supply in the country worsened penultimate weekend as the nation lost over 600 Mega Watt (MW) and the Managing Director of Power Holding Company of Nigeria (PHCN), Hussein Labo would not want his head to be used to break the proverbial coconut. As at this time, The federal government has ordered the Power Holding Company of Nigeria (PHCN) to commence the implementation of the 2008/2013 regime of Multi Year Tariff Order (MYTO) by July 1, 2011.
The new tariff order will make Nigerians, who are faced with sharp fall in power supply from 3, 700 Mega Watt (MW) to 2800 MW, to pay a 16.5 per cent marginal increase in kilowatt hour of electricity from N8.50 to N10.00 from that date. The country’s electricity industry generates a 12th of the electricity of South Africa, while its population is three times the size at 150 million while, the government is preparing to sell six transmission and 11 generating companies this year, with Nigeria’s Dangote Industries Ltd. and India’s Tata Group and Essar Group among potential bidders, according to the Bureau of Public Enterprises.
The Nigerian Electricity Regulatory Commission (NERC) which gave the new tariff order to the Chief Executive Officers of electricity distribution companies maintained that the last schedule of the 2008/2013 regime of Multi Year Tariff Order (MYTO) will be operational as from July 1, 2011. The commission which said this in a statement by its Head, Media and Public Relations Unit, Maryam Yaya Abubakar, warned the PHCN to ensure improved service delivery to their customers. Commenting on the development, NERC Chairman, Dr. Sam Amadi said, “The marginal increase was since approved in 2008 and we have the responsibility to inform the public as part of our commitment to transparency.”
The epileptic power supply in Nigeria, it would be recalled, worsened on Monday, crashing to 2, 800 Mega Watt (MW) from 3, 100 MW it was less than two weeks ago, just as the electricity workers called on authorities of the power ministry to apologise to Nigerians. Managing Director of Power Holding Company of Nigeria (PHCN), Hussein Labo had earlier confirmed the drop in electricity generation from 3, 700 MW to 3, 100MW last weekend and the National Union of Electricity Employees (NUEE) described the situation as disheartening.
A source at the ministry of power told Daily Independent on Monday that the power supply “now hovers between 2, 800 MW and 3, 000MW,” the drop, which Labo had earlier blamed on the maintenance at Utorogun gas plant and low level of water at the hydro power stations for the fall in generation. The NERC in its notice to Chief Executive Officers of electricity distribution companies of the take off date of 2011 schedule however warned them to ensure improved service delivery to their customers.
“The Commission hereby reminds you of the responsibilities owed to your customers particularly as regards its guidelines on Customer Complaints Handling, Connection and Disconnection Procedures, Customer Service Standards of Performance and Meter Reading.
“We will be resolute and uncompromising in ensuring compliance and imposing sanctions on Chief Executive Officers and Managers of companies that fall short of the required standards,” the Commission said. NERC in 2008 introduced MYTO to ensure that prices of electricity are predictable and to mobilize the required funds to the industry by attracting needed private sector investments through a tariff system that ensures fair return on investment, while protecting customers against profiteering.
“But the question remains, who is responsible for the gas supply to these thermal stations, and why is gas not available to them?” NUEE queried in a press release signed by it zonal organizing secretary, Agyake Anthony and Vice President, Lagos and Ogun, Ntukubes.
“Nigerians indeed deserve apologies from the Presidential Taskforce on Power led by Professor Barth Nnaji over the power situation in the country. The undesirable power situation is a clear indication of their ineptitude and deficient technical knowledge about the sector,” the union added.
Though the Chief Executive Officer of PHCN confirmed the drop in electricity generation from 3, 700 MW to 3, 100MW he swiftly described the situation as unfortunate. Labos’ view was however punctured by Director, Investment and Sector Development, Federal Ministry of Power, John Ayodele who said that there was adequate power supply. While the debates continued between the two chieftains of power ministry in Nigeria, the country’s economy continued to suffer.
Manufacturers operating in the Nigeria business environment disclosed that more than N1.8 billion is being spent weekly as a result of the fall in power supply. The manufacturers, who operate under different trade associations like the Manufacturers Association of Nigeria (MAN) and Nigeria Association of Small Scale Industries (NASSI), said that the major problem facing the manufacturing sector was the lack of power.
They described as intolerable, a situation where the price of diesel had risen from between N85 and N90, to between N98 and N108 per litre, an increase of more than 10 per cent, at a time that the Nigerian economy was still to cope with the effects of the global economic meltdown. A member of MAN and chief executive of a paint company, Joseph Akpan, disclosed that many of the association members had closed shop, while some had relocated to other countries with better operating environment, to continue their businesses. He disclosed that the volume of diesel consumed daily in Nigeria was currently put at between 12 million and 13 million litres.
Before any one could say “up NEPA,” Vice Chancellor of the Delta State University (DELSU) Abraka, Professor Eric A. Arubayi on Wednesday disclosed that administrative cost of running the University is so astronomical that it takes a whopping N13m to power the lighting system in the Abraka campus of the school. Arubayi disclosed this to newsmen at his office for the first time since assumption of office one and half year ago.
As if this was not enough on the Nigeria’s staggering economy, Mobil Technology Network (MTN), disclosed that it spends $5.5million (about N660 million) on diesel fuel monthly in Nigeria. The whopping sum is spent on fuelling the company’s 6,000 generators at its base stations across Nigeria. The generators supply power to the base stations for 19 hours daily.
MTN, now the largest mobile-phone provider in Nigeria, has to spend this huge sum of money to keep its generators running in view of the poor electricity supply situation in Nigeria. According to Wale Goodluck, MTN Nigeria’s manager for regulatory affairs, “we rely on generating plants as our primary source of power.” He spoke in a report published by CNNMONEY.
Other investors and owners of small scale businesses in Nigeria are also reeling under the burden of huge cost of generating electricity to keep their businesses afloat. “It wasn’t always this bad. Nigeria used to have 79 power stations. When civilian rule was restored in 1999, only 15 were still functioning, generating just 1,500 megawatts of electricity,” he said.
But former President Olusegun Obasanjo, had spent $8.5 billion repairing and building power stations, but the output has not increased significantly, he said. “Emmanuel Adewole, an economics professor at the Lagos State University, calls it “the most expensive darkness in the world,” he added. He added that, “The World Bank estimates that the country is losing about $600 million a year because of inadequate supply of electricity.”
Labo expectedly blamed the ongoing maintenance at Utorogun gas plant and low level of water at the hydro power stations for the fall in generation. The insufficient gas supply, the PHCN’s boss stressed, affected some of the power station in the country such as Omotosho. Olorungoso, Egbin, Geregu, Shiroro and Delta power station.
He said: “The Utorogun Gas Plant was shut down for maintenance, which will hope that in the next one to two weeks from now it will be back to normal.
“The nation’s power generation woven around 3,100 to 3200 megawatts as against 3,700 megawatts that is been generated in the past months.”
According to Labo, the low level of water at the hydro power plants also contributed to the low power distribution witnessing in the country today. He maintained that due to the low water in the hydro power plant, the country’s generation dropped drastically. He emphasised that the ongoing maintenance of Agip and Shell gas pipelines in some of their units also contributed to the low power supply in the country.
“It is unfortunate that we are witnessing this low power supply at this time when our hydro power plant is facing low water level,” he stressed. The ongoing power outrage witnessed in the country was, according to Ayodele due to the low demand that is often caused by repairs of PHCN facilities around the country.
But Ayodele said that the raining season, which caused some damages on PHCN’s power facilities around the country added to the backpedalling in power supply. He added that when the repair work is fully done it will boost supply in the country. “Presently we have enough generation but ongoing maintenance hindered distribution but we hope that soonest it will be address and restore back.
“For instance some part of Ikoyi and Victoria Island in Lagos and other part of the country are undergoing rehabilitation and maintenance of facilities which is hoped that it will be addressed fully in a short while,;; he said. It will be recalled that the Utorogun Gas plant is part of the main sources of gas supply to the Nigerian Gas Company (NGC), which supplies the Power Holding Company of Nigeria (PHCN) for the generation of electricity in the various gas-fired power plants across the country.
Meanwhile, the Management of Power Holding Company of Nigeria (PHCN) said that the ongoing low shedding in the country’s power supply was a as result of short fall in gas supply to its thermal stations. A statement issued by PHCN Abuja and made available to Daily Independent in Lagos said that the drop in power was due to persistent shortfall in gas supply to Egbin, Geregu and Olorunshogo power stations by the Nigerian Gas Company (NGC).
“The management however regrets the inconveniences being experienced by its esteemed customers, due to reduction in generation from its power plants which has given rise to the on-going load-shedding nationwide,” the statement read.
The statement said that the Nigerian Gas Company and Shell Petroleum have attributed the gross shortfall in gas supply to the maintenance of a leak in the pipe line evacuating condensate and crude from Utorogu gas plant.
“ This reduction has come at a time when our dams are at their lowest level, and our ability to replace the lost thermal generation with hydro generation is severely limited.
“While we are sensitive to the plight of our customers, we appeal for understanding and assure that power supply will improve as the NGC has promised to hasten the repair process with a view to restoring normal gas supply to the affected stations,’’ PHCN appealed.
From the days of NEPA
Since 1972 till early part of 2006, Electricity production and supply in Nigeria has been a monopoly of the federal owned Electric utility body known as National Electric Power Authority (NEPA). This utility was charged with the responsibility for the generation, transmission, distribution and sale of electricity to customers and was run as a vertically integrated company.
Lack of adequate funding and managerial strategies resulted in the steady decline in the performance of the utility. In 1993, for example, the energy generated was 1,669 MW. The country leadership then did not see any need to invest in the power sector. Between 1981 and 1985, during the fourth National Development plan, there was oil boom and power demand growth rate was over 10%.
The government should save the economy from collapse by pursuing the power sector’s reforms with sincerity. The government should also beat down the prices of diesel as a short-term measure to the manufacturers. The Nigerian Electricity Regulating Commission (NERC) should endeavour to make a positive impact on the general populace, industry participants, potential investors and consumers.
Power sector reform is expected to improve the stability of electricity supply, improve cost recovery, and increase the availability of investment capital. To improve cost recovery and the financial health of utility systems in developing countries, there is increasing pressure to price electricity at its marginal cost and allow independent power producers (IPPs) to sell power to the grid.
On the reforms new prepayment methods should be encouraged for poor people to choose and monitor how much they wish to spend on electricity each month.
Culled from The Daily Trust in Nigeria.