By Jerry Uwah
A CNN report last week derisively tagged Nigeria as a country that is oil rich but energy poor. The global television news network was referring to Nigeria’s abysmal electric power supply situation. It lamented that even the oil wealth might be hampered by a recent decision of the leading world powers which rose from a gathering on climate change in Glasgow, Scotland in the United Kingdom of Great Britain with a firm resolve to drastically curtail investment in fossil fuel exploration and exploitation in a desperate bid to halt the millions of tons of carbon dioxide spewed into the air from the burning of fossil fuel.
Nigeria has a notoriety for abysmal electricity supply in the whole world. The World Bank recently celebrated Nigeria’s deplorable electricity supply situation by declaring it the country with the highest number of people without access to electricity.
Nigeria effortlessly snatched that notorious award from insurgency-plagued DR Congo and is now sitting comfortably with it as it does practically nothing to hand it back to one of Africa’s impoverished nations. About 45 percent of Nigeria’s 207 million people have no access to electricity. In numerical terms, something close to 90 million Nigerians have no access to electricity.
Even the estimated 55 percent of the population with access to electricity are persistently pummeled with power outages as power supply hardly last for 10 hours in a day. Nigeria’s installed power generation capacity stands at 13, 000 megawatts (mw). Ironically, the power generation companies (GenCos) have the capacity to wheel 7,000mw of electricity into the beleaguered national grid. The weak links in the power supply chain, however, stop that quantity of power from reaching consumers.
The Transmission Company of Nigeria (TCN), the only arm of the power supply chain fully in the hands of the federal government, can on its part transmit less than 5,000mw of electricity to the power distribution companies (DisCos). The DisCos are the weakest link in Nigeria’s electricity supply chain. They can only distribute just about 4,000mw of electricity.
The DisCos cause the GenCos colossal losses on daily basis because of the idle power they cannot collect and distribute to consumers. Even as consumers grope in darkness all over the country, the DisCos would reject electricity wheeled into the national grid by the GenCos because their distribution equipment cannot handle the supply surge.
The DisCos are at the root of the debt contagion plaguing the nation’s power industry. They are indebted to the GenCos to the tune of something close to N600 billion. On some turbulent months, the DisCos would obtain from the GenCos, electricity worth N40 billion, sell everything to consumers and collect well over N20 billion from consumers only to chip in N2 billion to the accounts of the GenCos.
The debt contagion caused by the cash-strapped DisCos has crippled the industry. The GenCos are consequently indebted to gas suppliers who in turn are discouraged from investing in gas processing projects that could end Nigeria’s dangerous flaring of gas in the oil fields. The GenCos themselves cannot invest in power generation projects that could lift Nigeria’s 90 million people out of darkness and abject poverty.
Nigeria’s abysmal power supply is at the root of the country’s inglorious toga as the country with the highest number of people in abject poverty. The number of poor people in Nigeria is as high as that of those without access to electricity. Nigeria’s eternal darkness takes the lion share of the blame for the 33.3 per cent unemployment rate, which again is partially responsible for the embarrassing poverty rate in the country.
Millions of Nigerians can create jobs for themselves if power supply is regular. But they have been condemned to irredeemable joblessness and confined to abject poverty because they have to buy a power generator before they could open even a barbing saloon. Nigeria’s economy depends heavily on an estimated 64 million micro, mini, medium and large power generators that spew millions of tons of carbon into the air on daily basis as they toil to generate 60 per cent of the nation’s electricity while public power supply remains on stand-by.
The DisCos have defeated the federal government’s objective of privatizing the power sector in November 2013. Government had sold the generation and distribution arms of the defunct Power Holding Company of Nigeria (PHCN) to private investors in the hope of shifting to them the heavy burden of funding the capital intensive sector.
Ironically, government corruptly sold the distribution arm of the industry to incompetent, cash-strapped firms hurriedly incorporated for the purpose of the privatisation exercise. Consequently, government found itself in a tight corner as it has to fund not only the deficits emanating from low power tariff but the cash-strapped DisCos earlier mistaken for the Messiahs of the industry. The DisCos problem is that they lack the credit worthiness to attract loans from banks for rehabilitation of their decayed distribution infrastructure. They are such bad debtors that no bank would touch them with a 10-foot pole.
Ironically, no one in the federal government knows what to do with the inefficient DisCos. The agreement that foisted them on the system seemingly tied the hands of government in terms of dispensing with them and enlisting the services of competent investors with the liquidity to upgrade the nation’s archaic power distribution facilities.
That inauspicious privatisation bind leaves Nigeria’s power industry moving in a vicious cycle. It can only keep 90 million people in perpetual darkness and push millions more into abject poverty with Nigeria’s eternal darkness. While the corrupt and incoherent power privatisation exercise might keep the nation’s industries and other heavy consumers of power in a permanent bind, the federal government can rescue most of the 90 million Nigerians still groping in darkness in rural communities by investing in non-grid solar power facilities that would supply minimal power to low level consumers.
The federal government has done practically nothing to encourage investment in solar power which is not only clean but noiseless. Nigeria probably has one of the world’s most expensive solar power facilities. One study concluded that the cost of solar panels, inverters and batteries for generation of solar power have dropped by 80 percent between 2010 and 2019 due to innovations in solar power technology. The reverse is the case in Nigeria. Prices of those equipment have doubled in some instances.
The medium size solar battery that sold for N35,000 in 2019 now sells for anything from N55,000. A standard solar panel that carried the price tag of N36,000 in 2019 now sells for well over N50,000.
In fact, one would be lucky to install a 2.5kv solar facility now at N1 million. In 2019, one could do that with less than N600,000. While the prices of solar power equipment are receding in other parts of the world because of improvement in technology, the situation in Nigeria is worsened by the persistent depreciation of the naira. The naira which was trading at N480 to the dollar in 2019, has inauspiciously depreciated to N570 in the parallel market.
In fact, there are fears in the foreign exchange market that the exchange rate of the naira to the dollar could hit the N600 mark by the end of the year. Now that it has become obvious that the DisCos are irredeemable and that as the cog on the wheel of Nigeria’s power sector, they could only be removed through a revolution, the federal government should shift its subsidy of the DisCos to solar power in a bid to make the system affordable.
If the cost of installing a 2.5kv solar facility is reduced to N400,000, thousands of power consumers in the middle income bracket would switch to solar and reduce the supply burden on the decaying facilities of the encumbered DisCos. Besides, it would reduce environmental pollution caused by smoking power generators.
That would enable the DisCos to provide more power to industries and create more jobs in the process. Non-grid solar power is the solution to rural electrification. The federal government can lift millions of Nigerians out of eternal darkness and improve their standard of living through intensive investment in rural non-grid solar power facilities.
*Jerry Uwah is a commentator on public issues
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