• Generation crashes as 36 states, FCT ration 2,994mw
• No policy yet to instill confidence, promote investment under Adelabu, says Powerup
• Decouple NGC from NNPC to ease gas challenges – Kunle
• Minister inherited current challenges, Elatuyi insists
Nigeria’s electricity sector is rapidly going from bad to worse as power generation, which was hovering around 4,600 megawatts (MW) on May 29, last year, when President Bola Ahmed Tinubu assumed office, now stands at a meagre average of 3,000MW.
The Minister of Power, Adelabu Adebayo, an accountant and graduate of Harvard Business School, appointed to manage the industry, has come under serious criticisms including calls for his resignation as the sector seems to lack direction nearly seven months after he assumed office.
Most stakeholders, who spoke with The Guardian yesterday, said they were yet to have confidence in the capacity of Adelabu as well as the Tinubu government to give the sector the leap it requires. They insisted that leadership and political considerations were the primary factors worsening the Nigerian Electricity Supply Industry (NESI).
Privatised about 10 years ago, it was expected that by now, over 40,000MW of electricity will be supplied to homes and industries, but the sector has remained in ruins as most electricity companies are already at the verge of bankruptcy.
Between Friday and Saturday last week, the grid performance was between 3,500WM and 2,500MW. Load allocation to the DisCos yesterday was 2,944MW to the 36 states and the Federal Capital Territory (FCT). Abuja DisCo had the highest of 454MW; Benin DisCo had 241MW; Eko DisCo had 381MW; Enugu DisCo had 213MW; Ibadan DisCo had 355MW; Ikeja DisCo had 448MW; Jos DisCo had 167MW; Kaduna DisCo had 192MW; Kano DisCo had 199MW, Port Harcourt DisCo had 210MW while Yola DisCo had 84MW, the least.
Many stakeholders believe that Adelabu was appointed as power minister to resolve the liquidity crisis in the sector knowing well that he once functioned well in the accounting and financial sector and as such could use his experience to provide policy direction that will address the liquidity crisis and drive more investment in the sector.
There are, however, indications that Adelabu, who failed in his bid to be elected as Oyo State governor in 2019, is still much more interested in what becomes of his 2027 political plan than the burden of a sector that requires urgency and best brains.
In the last seven months, Adelabu has not unveiled a single policy document; most of his pronouncements regarding license revocation, sales of gas in Nigeria, unbundling of the Transmission Company of Nigeria (TCN), focus on off-grid solutions, among others, always announced from Ibadan, the Oyo State capital, were not only accidental but also having a reactionary negative impact on the volatile market.
Meanwhile, President Tinubu’s decision to retain electricity subsidy after the poor handling of the removal of petrol subsidy has made Adelabu’s job even more difficult and returned operators, especially the distribution companies, to a comfortable zone where they can push their excesses on subsidy and still evade necessary sanctions.
With metering, which has been hijacked by the All Progressives Congress (APC)-led government also remaining a mirage, most stakeholders predict that the current gas challenges and TCN induced bottlenecks may worsen power supply in the next three years of the Tinubu administration.
Over 80 per cent of Nigeria’s electricity generation comes from gas. With the price of gas going for $2.18 and about 75 per cent of the Multi Year Tariff Order going in for gas, most DisCos are allowed to charge an average of N60 for every kilowatt per hour (KWH) when in real sense their actual power end-user tariff should be about N200 for every KWH.
In 2023, out of the N700 billion accumulated from subsidy in the last seven months of the year, only N300 billion was paid. This year, the subsidy has moved to N2 trillion, which is about N167 billion monthly. Last week, the Federal Government paid $120 million out of the $1.3 billion indebtedness to gas companies for the supply of gas to run gas-fired power plants.
With gas selling for over $8 at the international market, it is more competitive for oil and gas companies to trade their commodity at the international market than supply to plants.
These issues, alongside the frequent collapse of the grid, stalled metering programmes, weak enforcement of market rules and contracts on DisCos, TCN and GenCos, regulatory loopholes and energy theft, requires a decisive actionable plan and policy for Adelabu and Tinubu to earn the confidence of stakeholders in the sector.
Former President of the Chartered Institute of Bankers of Nigeria (CIBN) and Professor of Economics at Babcock University, Segun Ajibola, said the leadership of the sector should be more aggressive in seeing the immediate review of the GenCos and DisCos architecture, and a more faithful implementation of the reviewed terms otherwise the power sector may continue to witness so much motion without movement.
Ajibola, who admitted that the whole concept of DisCos and GenCos was poorly conceived, added that players have failed to live up to expectations either in terms of power generation, transmission or distribution.
“Unless the entire template that gave birth to DisCos and GenCos is revisited, the parlous state of power generation and distribution may remain. Leadership may have its faults especially in such areas as sluggish prepaid metering, estimated billing, compelling communities to maintain electricity facilities, etc. A more decisive leadership of Nigeria’s power sector ought to have stopped or severely punished such unwholesome practices,” he said.
Executive Director at PowerUp Initiatives, Adetayo Adegbemle, said leadership plays a key role in instilling confidence in a sector and setting policies that show direction for the industry that would pave the way for investments in the sector.
“Our present political leadership has not been able to instill any kind of confidence or show direction for the power Sector. Those asking for the sack or resignation of the Power Minister are also in line, because the minister has not effectively set any policy tone or directive to boost investors’ confidence,” Adegbemle said.
He noted that the statements around sales of gas in naira are among the innocuous comments made by the minister, adding that germane issues like the $1.2 million debt to gas suppliers, which has directly led to unavailability of gas to GenCos, and the World Bank loan for 1.2 million metres that effectively excluded local metre manufacturers, were not being looked at decisively.
“With many government agencies owing electricity bills, the unsustainable subsidy on electricity tariff would only worsen the ever increasing market shortfall. So, if you ask me if leadership is the primary issue affecting the power sector, my answer would be yes.
“The minister should immediately get into talks with gas suppliers and seek how to pay these debts. The leadership should work with the regulators, as they should normally do, to resolve the issue of subsidy. The minister should also speak less without policy papers and stop misleading the sector.
“He promised a policy paper since December. I think he should focus on this, or at the minimum, go back to the Power Sector Recovery Programme that Babatunde Fashola did, review it in line with the present realities and update it for direction,” Adegbemle added.
Renowned energy expert, Dan D Kunle, noted that the foundation of the privatised power sector has been destroyed, pointing out that the new administration has not shown any sign to move the sector forward.
Kunle said the sector is failing both in leadership and management of all the critical stakeholders, stressing that retooling the entire industry structure, funding the industry gaps and decoupling the Nigerian Gas Company from Nigerian National Petroleum Company Limited for privatisation were critical steps that must be taken.
According to him, the power minister has not had proper consultations and was not open to tapping from the best brains to unlock the sector.
“The civil servants cannot reform the industry. Power is capital intensive and requires a dedicated team of midwives. There will be no gas very soon so generation with gas will drop. This darkness may be on for the next three years,” he stated.
Kunle noted that only the President could decide the fate of the sector, adding that it is in his hands to understand that the power sector is not as simple as he might think.
Professor Emeritus, Wunmi Iledare, who specialises in energy economics, said while it could be ill-advised to personalise the failure of the power institutions in Nigeria, the governance of institutions in the country were too individualised and personality focused.
“This remains the primary issue at stake in the energy sector. Institutions must be empowered with shared vision among apolitical team leaders and political appointees. When institutions are empowered, then a transformational leadership mindset can be easily entrenched with glaring awareness of the inevitability of the professional team leads,” Iledare said.
He said professionals in the energy sector under such circumstances would be less subservient to political appointees with transient power.
“What I have observed in the power sector in Nigeria is lack of policy continuity year-after-year from Bola Ige to Berth Nnaji to Chinedu Nebo etc. Brilliant ministers, yet no headways to power availability, affordability, accessibility and adaptability because of policy summersault and transactional leadership mindset,” Iledare said.
He noted that the emerging development on the Electricity Act could offer leeway when power is decentralised.
Energy market analyst, Lanre Elatuyi, said the situation of the market was not surprising because resource adequacy has been on a decline for the past few years as evidenced in the dwindled generation capacity mainly due to mechanical faults and feedstock.
“The low energy off-take by the load serving entities – DisCos – also did not come as a surprise given the average energy off-take in MYTO 2024, which is just 3963MWh, a quantum that is not representative of the energy needs of Nigerians,” he said.
Elatuyi said it would be unfair to lay the blame on Adelabu, adding that the problem did not start with him but he has found himself in the sector at this critical time.
“This is a regulated industry with a regulatory entity and many market players. The work of the minister is to provide policy guidelines and the minister hasn’t spent up to a year in the sector. Bringing someone else now will not solve the problems of NESI in all honesty,” he noted.
According to him, the quickest intervention is for the government to clear the debts owed the GenCos so that they could carry out maintenance and also pay gas suppliers’ debts.
He admitted, however, that there is no policy direction, saying the sector is not sure if it could transition the electricity market from single buyer model to wholesale competitive electricity market or balkanise the grid and have state electricity markets.
To him, the immediate financial intervention would not automatically lead to improved energy off-take by the DisCos, stressing that market rules have to be adhered to so that market participants fulfill their obligations, otherwise the sector would continue with these problems in years to come. (Guardian)
