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When the National Electric Power Authority (NEPA) changed its name to Power Holding Company of Nigeria (PHCN), Nigerians used to repeated cosmetics changes and disappointments from government quickly re-christened PHCN to mean Problem Has Changed Name. The on going near systemic failure and revelations of how $16 billion was criminally spent to generate power with nothing to show for it, is a clear indication that this is more than dark humour.
Private homes and corporate Nigeria more than ever before largely depend on generators to provide electricity. And the cost to the economy is very huge and growing.For instance, 70% of all generators and spares made in the United Kingdom end up in Nigeria. It has been said that if all the generators in Nigeria were connected to the national grid, their combined output will give all of Africa uninterrupted power supply.
Recently, MTN disclosed that because of epileptic power supply, it has spent N12 billion on the purchase of generators alone. They also spend about N500 million monthly to buy diesel. When the N5 billion that has gone into replacing items damaged by erratic power supply is added, it is surely a very big deal. MTN will not be faulted in any way for declaring that it is the largest private power generating company in Nigeria and this is not its core business.
To improve the quality of telecommunication services to meet world class bench mark, the Executive Vice-Chairman of the Nigeria Communication Commission (NCC), Mr. Ernest Ndukwe said that at least 40,000 base stations must be in place. This means an increase of 30,000 base stations to be added to the current number of about 10,000 base stations.
The catch here is that NCC has hinted that every base station should have an average of three generators to keep services on, until power supply improves. This translates into 120,000 generators by the telecommunications companies alone. If the average cost of generators is N1 million, the total cost will be N120 billion. When the cost of diesel, spares, manpower and stolen generators are added up, it is truly an astronomical cost element in excess of $1.5billion. It means that if power supply is more reliable, a huge part of this cost will go straight to the bottom line. And we will also pay lower tariffs. Imagine too the pressure this exerts on the Naira exchange rate against foreign currencies.
The telecommunications sector is not alone. With more than 4,000 bank branches nationwide the huge cost of generating power by the banking sector is very obvious. The manufacturing sector which operates at an a average capacity of 55% relies solely on own generated power for their operations. Operating below 70% of installed capacity in manufacturing is a threat to survival let alone growth and profitability. Part of the reason for this low capacity utilization is epileptic power supply.
In nations like China and India, the engines of growth are the small and medium scale companies which in the case of Nigeria are not springing up to take advantage of the vast opportunities that exists. The huge intimidating cost of generating power is one of the major reasons so many small and medium scale enterprises never left the realm of dreams.
With an economic growth target of 13% set by government, and a still epileptic PHCN, Nigerians and foreigners in the generator and diesel businesses are set for unprecedented boom, to the benefit of companies abroad that produce them.
The huge costs incurred in generating power could easily have been put to better use expanding the core businesses of the respective companies. The telecommunication companies could have reached a higher level of service delivery sooner. The banks could have opened more branches with multiplier effects in employment and revenue generation and so on. The economy could have grown faster, sooner.
If the 13% growth rate is to be achieved, the time is now to start doing the right things to correct the criminal neglect of this vital sector. As we strive to be numbered amongst the 20 biggest economies of the world by the year 2020, (FSS 2020), we must begin to project on the yearly level of investments in the power sector that will not only keep pace with growth targets but actually surpass them.
By the end of first weekend of this May 2008, PHCN’s national grid could only generate 860 mw for all of Nigeria in spite of the massive injection of funds now put at $16 billion. On per capita basis, a candle will give more light. How did we as a nation get to this passé where we cannot generate and distribute electricity? It goes back to many years of criminal neglect by successive Nigerian governments but more so by governments in power between 1989 and 1994 when according to a presentation in March, 2007, by Engr. J. O. Makoju, special adviser to the President on Electric Power, not a single dollar was invested in this critical sector.
In over a decade, no new infrastructure was built in spite of rapid growth in population and various ambitious economic growth goals. For instance, between 1995 and 2005, less than 2% of the transmission development plan was implementation. Even existing infrastructure were denied routine maintenance with only 19 out of 79 generation units operational in 1999 with average daily output of 1,750mw.
While Nigeria currently generates less than 1,000 mw, Iran with a population of 70 million already generates 42,000mw. South Africa generates 36,000mw for a population of 40 million which translates to 800 watts per capita. At current capacity, Nigeria is less than a miserable 10 watts per capita. To match South Africa’s 800 watts per person, Nigeria needs to generate 104,000mw of electricity in a hurry.
Obasanjo’s government tried tackling the problem of the sector in various ways. For instance, on the expectation of inflow of private investment funding his government suspended funding infrastructure expansion between 2002 and 2004. But given the level of decay, the long gestation period for new infrastructure to be built and the costs involved, investors withheld their money. The government was forced to resume funding infrastructure development in 2005. The six thermal and hydro power stations including Afam, Delta, Kainji, Sapele and Shiroro were said to have been refurbished during this time.
Dr Ransome Owan, chairman of Nigerian Electricity Regulatory Commission revealed in October 2007, that former President Obasanjo at the twilight of his administration, commissioned 11 power projects that were not ready for take off to score cheap political points. If these had not been revealed, the Obasanjo we all know would have strutted every where declaring in thinly concealed innuendoes the number of power projects executed by his administration. Meaning, if things are not working, hold Yar Adua responsible.
While new capacities are being constructed, the challenge is to keep the fragile and dilapidated existing infrastructure running. Moving forward, the unbundling of PHCN should lead to the unbundling of the National Grid to zonal grid on the existing six geopolitical format. Each zone will then generate power harnessing its comparative advantages. Lagos State is reported to be interested in harnessing solar and wind energy to generate power. Connection to a national grid with hide bound inefficiencies will definitely hobble the march of Lagos state to becoming the Singapore of Nigeria.
It is hoped that the unbundling into zonal grids will eventually lead to complete and manageable privatisation, because only private sector financing, expertise, management and marketing can deliver on the set targets. In addition, energy generated in excess of zonal need can be sold to any other zone. The old NEPA and its successor could not measure loses and could not therefore measure performance and profitability. Its down times were beyond belief, sometimes running into months and years, a scenario unthinkable in a private sector setting.
Electricity is so vital that we can now begin to understand why the first recorded, spoken words of God were “let there be light”
Whether it is gas fired, diesel fed, thermal, hydro, solar or wind powered, Nigeria is fully endowed to generate uninterrupted power. That this is presently not the case is a human failure that in the 21st century world is both unthinkable and unpardonable for a nation so richly blessed.
Okechukwu Peter Nwobu
Okechukwunwobu@yahoo.co.uk
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Posted by Robot| 12.05.2008 14:28