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A Special International Report
Prepared by
The Washington Times
Advertising Department - Published on September 30, 1999
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Sponsors (1) Federal Ministry of Finance
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Power to the people
For the upper strata of Nigerian society, the hum of a generator is a calming sound. Whenever the lights go out, seconds later the generator kicks in. But for those who cannot afford the luxury of an alternative power source, there is only darkness.
“The mission of this ministry will be to provide regular power supply throughout the federation at affordable price…[This] goal shall be pursued relentlessly and with all seriousness,” he said. “It will no longer be business as usual.”
Indeed, for the last decade, business has been anything but usual in Nigeria. For many without power, there has simply been no business.
Power supply is erratic, often off for days on end, even in the country’s capital, Abuja, and business centers Kaduna and Lagos. Usually the life-blood of industry, the lack of electricity has robbed the country of foreign investment and taken a heavy toll on local commerce. For the informal sector, highly dependent on a constant supply of electricity but not rich enough to afford the amenity of a generator, the effects have been debilitating.
“The cost to households and businesses across the country is so colossal it is mind-boggling,” Ige said. The federal government estimates the nation has lost some $800 million due to unreliable power supply by the National Electric Power Authority (NEPA). And this despite the parastatal having the installed capacity to generate power in excess of national peak demand.
“The entire power supply has been characterized by epileptic and unreliable supply, bogus billing and archaic rate collection,” Ige explained. “Corrupt practices within and outside NEPA, irregular maintenance, acts of vandalism, supply of substandard equipment and outright criminal acts such as theft and collusion have combined to demean the efforts and image of the authority. It fits the public conception of ‘Never Expect Power Always’.”
To fulfill its promise, the government has set an aggressive goal: to fully deconsolidate and deregulate electricity power and authority. Foreign and Nigerian companies will be invited to participate as Independent Power Producers in generation, transmission, distribution or combination. Companies will be allowed to build, own and operate and /or transfer electric power.
The government has also pledged to amend the necessary legislation to facilitate power purchase agreements. Mobil Producing Nigeria Unlimited and Enron Incorporated are already pursuing power generation from natural gas, with Mobil set to provide 350 megawatts (MW) of power in Bonny and Enron 540 MW in Lagos.
Powering the Future
When the administration took over, the situation was dire. Combined installed capacity of the country’s three hydro and five thermal power stations had dropped from 5,876 MW to 5,400 MW. They are now running at a meager 1,600 MW. With national demand estimated at 2,470 MW, demand has far outstripped supply.
Part of the problem has been what Ige described as the “gross negligence” that has left the plants in a sad state of disrepair. Further, with 36 percent of the installed capacity more than 20 years old and the remaining capacity no less than 12 years old, the aging equipment is in dire need of rehabilitation.
To make the most difference in the shortest amount of time, the ministry plans to pursue refurbishing and turn-around maintenance on the hydro-stations to increase power by some 670 MW within six months. In the long run, between NEPA’s rehabilitated hydro and thermal stations and IPPs the ministry expects to bring in excess of 6,000 MW on line.
Independent Power Producers, in the meantime, will be encouraged to provide and sell temporary power while they build new stations.
Years of neglect have also taken their toll on the country’s transmission lines. According to the ministry, the national grid suffers from an incomplete loop, as well as old and decaying lines. Power transformers and circuit breakers have either broken down or do not operate at optimum capacity. Towers and insulators have been vandalized only to be replaced using substandard materials. In some areas of northeast, northwest and southeast Nigeria, the grid is virtually nonexistent while in others it is overloaded by up to 50 percent. In some extreme cases, transmission stations were simply abandoned after completion.
The problem will be tackled in stages beginning with strategic intervention in the critical areas of the grid either through refurbishment or new constructions. New circuit breakers will also be introduced or replaced if defective, and overall maintenance of transmission stations will be undertaken.
In the longer term, the ministry plans to implement a comprehensive Energy Accounting Scheme and grid metering to ensure the energy consumed is accounted and paid for.
Finally, with deregulation enabling independent companies to build and own or operate transmission lines, improvements are expected to move quickly.
Perhaps the most serious degeneration has occurred at the level of distribution, which minister Ige describes as “the bane of power delivery in Nigeria.” According to the minister, distribution and marketing has been overcentralized and fraught with serious malpractice. Billing is irregular, erroneous or arbitrarily estimated. Without proper regulation, distribution has also suffered from illegal connections and outright consumer theft.
Ige has announced aggressive action to “bring sanity and efficiency to power distribution and marketing.”
Among the most immediate actions will be to minimize the number of power outages by installing and replacing injection transformers, distribution transformers, feeder pillars and circuit breakers, as well as overloaded distribution accessories. In cases where power outages are inevitable, customers will be informed of interruptions in advance.
In the past, the lack of a properly functioning accounting system has made monitoring of consumption and supply difficult. Now, with the introduction of energy accounting principles, consumers can expect a system based strictly on “he who does not pay gets no supply, and he who gets no electricity supply does not pay,” Ige said.
New billing and payment systems will also be introduced within six months enabling people to pay into banks and designated areas. “This way money will come to NEPA’s pocket instead of our being told that armed robbers stole the money from the office,” Ige said.
To ensure accountability, NEPA will be decentralized and managers given more control over their own districts. They will also be given more responsibility, as they will now have to publish power outage reports to assess their performance.
Under the new scheme, those who disobey the law will now be held accountable. “Very tough penalties will be pressed against illegal connections, defaulters, sales of NEPA materials, touting, impersonation and fraudulent staff,” Minister Ige explained. “Legislative changes will be made for up to 24 months in jail without the option of fines for convicted persons, instead of the present obnoxious 21-year prison sentence, which lets all criminals off the hook.” He has also assured that cases will be heard in magistrate or other judicial courts, not in the trademark tribunals of military rule.
Finally, the ministry will undertake to make an accurate estimate of the projected national energy demand in order to better forecast consumer demand and ensure more reliable planning and expansion programs.
Restructuring and decentralization of NEPA are likely in preparation for future privatization. This is a highly contentious issue as many Nigerians view privatization as an entrée for foreigners seeking profits at the expense of the rural poor – those who have suffered the most from NEPA’s poor showing.
The nationwide rural electrification scheme designed to bring power to the villages and outlying regions has not come near the halfway mark of its projected goal, 846 projects. Only some 186 projects are near completion.
But, despite its poor showing in the past, people still fear that without the government playing a role in the parastatal, rural electrification will remain elusive. Many are willing to give President Olusegun Obasanjo’s government the chance to make good on promises to clean up the corruption that had become synonymous with the behemoth and get it back in working order. The ministry has committed itself to making amends by enlisting state governments, inviting local and foreign investors to sell to NEPA, and strengthening overall management of the program.
To date, policy proclamations have been inconsistent, but it would appear privatization is inevitable. Again, the only question remaining is when?
At a recent press conference, Ige blasted a local newspaper for a report claiming NEPA’s privatization was on the way. He said the ministry first wanted to assess the situation and restore some value to the company. He offered the analogy of a broken down car: If you have a car sitting in your garage that is broken, you can either make some repairs, sell it and get good value, or you can sell it as is for scrap. “It would be an unpatriotic Nigerian that wants NEPA, which has billions of Nigerians’ money invested in it, to be sold as scrap to some hungry new capitalist.
“We want to rehabilitate NEPA so when the president decides to sell it, people will be scrambling for shares. At the moment no sane man, unless a thief, would buy shares. We will not let people chop down Nigeria’s investment.”
For now, Ige has made his opinions clear. “The present government is nationalistic,” he said. “Our minimum goal is to provide light to the people and if we sell NEPA now, we won’t achieve our goal.” His goal, he says, is first and foremost to change NEPA’s nickname to Now Expect Power Always.
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Table of Contents (1) It's a new dawn over Nigeria |
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So when on July 29, two months after the inauguration of Nigeria’s new democratic government, Minister of Power and Steel Chief Bola Ige promised Nigerians 100 percent power supply within 24 months his aggressive timeline was well received.
But Ige has pledged to change all that. The target for the power sector is to cut power outages by 50 percent in 6 months, by 75 percent in 12 months and by 100 percent in 24 months. “No excuses will be accepted or acceptable,” warned the minister. “Meet the target or be fired.”