Nigeria Matters

Electricity Situation: The Promising Kickoff and The Probable Kickback!

The National Electric Power Authority (NEPA) was broken down into the Power Holding Company Nigeria Ltd. (PHCN) in April 2005, giving birth to a total of 18 new companies which were created for proven generation and distribution; and to ensure effective, efficient and stable power. But the changes have only been cosmetic. Blackouts are widespread across the country’s biggest city here, and the capital, Abuja. And consumers are plagued with inflated bills, which in local parlance are called “crazy bills”. In fact, according to most consumers, things have only got worse.

Corruption is rampant in the new electricity companies – six generating companies, 11 distributors and one transmitting – and little is being done to check it. Some technical staff has even been caught taking bribes from defaulting consumers for turning a blind eye. However, top officials of the PHCN claim the power reforms have been successful. They say that revenue generation has gone up by 133 percent between 2006 and 2007.Nigerians should judge PHCN on the basis of the revenue index, rather than performance or service delivery. According to figures released by the organization, the monthly revenue generation they claimed grew from an average of about 25 million dollars in 2006 to the current 58 million dollars in October 2007.

But opinion analysts have argued that the claim was a lip-service, insisting that the only way of looking at the increase in revenue is to match the revenue with a corresponding leap in service orientation and power supply. For instance, Oyigbo (a Port Harcourt suburb), where I live, in the last 12 weeks, electricity supply has been a rarity. Daily supply averages three to four hours at the most. The bills, however, keep coming. These have spiraled, despite the many hours of darkness. The story is the same everywhere. Those who can afford to rely on generator sets to keep businesses and establishments running in the West African country. If Power Holding Company gives uninterrupted power for two days, then you are lucky. Power failure under PHCN is more than what it used to be under NEPA. Now it is total darkness. This is affecting everybody’s business.

An informal market survey by IPS showed that portable generators, that are everywhere in the poor rural settlements, sell for between 830 dollars and 1,000 dollars depending on the capacity. Medium-sized establishments rely on industrial generators which could cost anything from 7,874 dollars to 23,622 dollars. Trying to get around the acute power shortage, some state governments have resorted to establishing Independent Power Production (IPP) companies to boost electricity production. For instance, the Lagos State government in 1999 set up an IPP project that is presently producing 40 MW. Between 1999 and 2000, the Rivers State government in the Niger Delta region started the Omoku Power Station as part of the IPP Gas to Power project of the state. The project which uses gas from the nearby AGIP oil well (where gas is still being flared) is generating less than 400 MW. It was expected to satisfy the power drought in the entire state, but the aim was defeated.

The previous regime boast as if the power generated at the Omoku power station would be make-up to the national grid of the PHCN for sufficiency of the regions consumers, but the reverse became the outcome. Again, the Trans Amadi Power Station, a similar project built by the said state government in 2002 was arguably productive as to augment the already supplied electricity through the PHCN to the Trans Amadi Industrial Estate in Port Harcourt, but it has appeared a mirage

Previously encouraged by the ”gas-to power” electricity project, the Obasanjo government planned to construct seven such power stations at a cost of 2.5 billion dollars in the other Niger Delta states. The Niger Delta comprises nine oil-producing states and part of Ondo state in western Nigeria. Ex-President Olusegun Obasanjo hence announced that the plants are part of the government’s strategy to raise the country’s electricity generation capacity from the current low of 3,400 MW to 10,000 MW by 2007(already past today). Nigeria‘s hydro and thermal power generating stations have an installed capacity of 5,237.6 MW, but due to lack of maintenance and corruption, twin ills of most public service utilities, they are operating below their installed capacity.

The private sector has a pivotal role to play in meeting the power requirement for the development of the country. A suitable framework is required to be put in place to facilitate the private sector involvement in this highly capital intensive power and gas sector. The ex-president lured the World Bank to commit itself in the gas-to-power project, alleging his loyalty for the Institution for providing the necessary transparency checks on the processes of the project. He accorded them with a new power generation expansion plan programme released by his administration and made available to IPS, projecting electricity generation by PHCN to hit 15,853 MW by 2010.

PHCN, according to the document, planed to achieve the new generation output by building up its capacity steadily over the subsequent five years, through the total resuscitation of all existing power stations, and contributions from Independent Power Producers (IPPs). We applauded them step based on a strong conviction that all our plants, currently undergoing repairs, would be brought on stream by this time towards 2010. We were also very confident that by then, all the IPPs, ongoing Federal Government power projects, the proposed Niger Delta power stations and the proposed Joint Venture Independent Power Projects (JVIPPs) with oil and gas firms and other IPPs would have come on stream by now.

The existing power stations and their installed capacities are: Egbin Thermal Station, Lagos (1,320 MW); Afam Thermal, Rivers State (969 MW); Sapele Thermal, Delta State (1,020 MW); Ijora Thermal plant, Lagos (40 MW); Kainji Hydro Station, Niger State (760 MW); Jebba Hydro Station, Niger State (578.4 MW) and Shiroro Hydro, Niger State (600 MW). Existing IPPs, according to the projections, are expected to contribute 750 MW by 2010 while the proposed JVIPPs and other IPPs are expected to generate 2,790 MW and 1,365 MW respectively into the national grid.

Today, it was alleged that the presidency was so much scandalized by the huge waste that characterized government’s investment of over $10 billion in such power sector. Yar’adua, according to the government official, deliberately kept silent to understudy the past administration in order to move the country from the woods. His recent pronouncement that the previous administration spent a whopping $10 billion with nothing to show indicates that the weak president Nigerians expect from the Yar’adua Presidency is not true. Yar’adua, in a national television interview, explained that the state of emergency in the power sector was not feasible because the government was yet to formulate the structural framework for such a declaration. He further revealed that the government was working out the detail with a view to sending it to the National Assembly.

Contrary to the above revelation, the speaker of the House of Representatives, Hon. Dimeji Bankole, said over $16 billion was actually spent in the sector by the administration of former President Olusegun Obasanjo. This was as the House Committee on Power and Steel set to summon Governors Segun Agagu of Ondo, Liyel Imoke of Cross River, Gabriel Suswam of Benue and Danjuma Goje of Gombe State to testify in the investigation of the $10 billion invested in the sector in the last dispensation.

Agagu, Imoke and Goje having served as ministers of power and steel during the Obasanjo Administration would have an outstanding evidence to show, while Suswam was a one-time chairman of the House Committee on Power and Steel in the same direction. The note revealed that over $6 billion addition to the figure represents extra-budgetary spending on the sector was earmarked during the said period. The huge money sunk into the power sector without much to show for it is heart-breaking and an attribute of colossal waste on the poor budget planning and lack of proper oversight by the relevant bodies.

Viewing Yar’Adua as a man, who has the interest of the people of heart, the economic program of the present administration have been so designed to address the myriad of problems the nation has been facing over the years. I have no doubt that the President will build the nation to attain the height of being one of the 20th largest economies in the world by the year 2020.

It is refreshing to note that in less than a month, more than five companies have arrived in Nigeria over two years now, all of them showing willingness to participate in those activities associated with the modernization of the power sector in Nigeria. The past system which made it impossible for the private sector to be an effective participant in the energy sector has now been quashed. At the moment, it has become very clear that private sector participants are welcomed and within the past few years, several of such companies, specializing in electricity generation, have been given the nod of the head to put in place modalities to commence operations in this nation.

The country has vast reserves of oil and the potential to be one of Africa‘s richest nations. But the economy has been steadily withering after years of waste, corruption and mismanagement. Meanwhile, unemployment is soaring and much of the population lives in poverty with no access to electricity, roads or education. The simple argument has to be found in the fact that no investors, serious minded investors, will pour in millions of dollars in a country where his factory is doomed by the non-availability of electricity. It has been argued in some quarters that even the standard of living of the citizens can be enhanced to acceptable heights if a family is certain that it has access to electricity and if members of the community are convinced that they can take part in small scale industrial activities.

The Yar’Adua administration should plan to crack down on contract fraud that has a multibillion-dollar loophole, this proposal could force companies to report abuse of taxpayer money, including projects to secure and rebuild this nation. For decades, contractors have been siphoning the nation dry though frivolous, fictitious and fake contracts resulting to internal fraud or overpayment on government-funded projects. The contractors should be compelled to notify the government if they find evidence of contract abuse of more than N100 million. Failure to comply could make a company ineligible for future government work. The proposed should rules, which may come in the final approval stages, specifically exempt ,contracts to be performed outside the this nation.

I hate to sound cynical, but what lobbyist working for a contractor in this nation wanted this get-out-of-jail card for? I’m not saying that’s the way it went – I’m just suggesting that’s the most logical line to draw, I think somebody’s got some explaining to do. We do not agree with also excluding contracts performed entirely outside the shore. These types of contracts, which in many cases support our efforts to fight the global war on corruption, need greater contractor vigilance because they are performed with diligence. The government procurement policy shouldn’t be exempted.

Some people have argued that one way by which the citizens of Nigeria can be towed out a state of permanent backwardness is to ensure that the curse associated with non-availability of electricity is removed once and for all. It is this realization that a country without electricity qualifies as a backward country that would convinced this administration that there is no way by which the problems of development can be tackled if the issue of energy is not seriously tackled.

As an agitator of Nigeria4BetterRule, I wouldn’t mind paying the 5% fuel tax if it wasn’t being wasted on completely unnecessary pork and barren road projects as seen in power sector. Maybe the president should come to the Oyigbo; a suburb of Port Harcourt and drive through the huge gully roads that bypasses both of Trailer Park and The Afam V Power Project . He could then speed along the gallop spans that have replaced the scenic switchbacks heading into Aba/ Port Harcourt Expressway, or he could enjoy the “meander-looping” bypass that has more traffic jams than the original road. He’ll never have to slow down if he drives on our almost vacant Shell road– a highway that no one wants or can afford to use. Maybe he would enjoy crossing the bridges that should be spanning Imo River, not the Trans-Kalabari River. I agree that there are roads that need to be built and maintained. I also believe that this can be done with the 5% tax if people in this regime would use a little common sense and stop throwing away money on useless projects.

It should be noted that all those people who mean well for this country, both within and outside the country, after congratulating the members of the new government, have always added caveat – you have mammoth problems ahead of you and one of them is the poor electricity status of Nigeria.

It is very clear that this administration is aware of the fact that after two full years, if Nigeria does not revert to a state of normalcy in the area of electricity, it is just possible that the goodwill of the people can be forfeited. But the lemming-like approach of the President in addressing issues related to the energy sector is a refreshing development that makes it very clear that this time round, the problems of electricity will be solved. This is the commitment of the new government of Umar Yar’Adua and this commitment should come to fruition.

One Comment

  1. One of the best articles on the ongoing debacle i have read; and i should commend this. I am a consultant engaged in analysing developments in Nigeria’s energy sector.


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