Generator economy – The Nation

  • We cannot continue to rely on them to run a 21st century nation

If the report by analysts at the FBNQuest Research on the stupendous amount that Nigerians, both corporate citizens and individuals, spend to import and fuel generators is correct, then we need no further proof that the privatisation of the power sector has failed and should be reviewed. According to the analysts, banks, corporate organisations and individuals in the country spent a whopping $32.6 billion (about N10 trillion) in the last two years on the  importation and fuelling of generators. This translates into about $16.3 billion (about N5 trillion) every year.  The top notch financial institution said: “Our interest, however, is the Nigerian power industry and its many shortcomings such that business spends an estimated N5trillion (US$16.3billion) annually on importing and fuelling generators.”

Among the heavy users of generators are telecommunications giants and banks, whose services cannot survive with the epileptic power supply from the national grid. MTN, for instance, spends about N8 billion annually to fuel its generators nationwide; aside the billions it spends on importation of generators. Reuters once asserted that bank branches in Nigeria rely on generators, with diesel often accounting for 20-30% per cent of their operating expenses. Big bakeries also rely heavily on generators with diesel consumption forming a significant percentage of their running costs. As a matter of fact, some companies have completely abandoned public power supply because of its unreliability while many others run on generators during production to prevent losses that could arise if power suddenly goes in the process.

“In many households and small scale businesses in Nigeria, small business generators are powered by price-capped fuel, the big generators for larger firms, apartment complexes and more substantial homes can only run on diesel,” another report by Reuters said. This heavy reliance on generators by business concerns in the country is one of the reasons why their goods and services cannot compete with imported ones. We thus have a situation where imported items dominate our markets because of their relative cheapness, thus killing our local industries.

Yet, successive governments in the country have spent humongous amounts on the power sector. Indeed, in the Olusegun Obasanjo years (1999-2007) alone, more than $16 billion was said to have been spent with little or no improvement on power supply. Although this figure is being contested, the fact remains that quite a lot of funds had been committed to the sector and the only result remains the epileptic power supply that Nigerians keep grappling with, Indeed, it was in the bid to stop the endless drain on the public till that the sector was privatised in November 2013, when the first phase of the exercise was concluded. In spite of that, the best we could generate so far is about 5,000MW, even though we have the capacity for 12,000MW, which is grossly insufficient for a country of our size.

This situation definitely cannot continue. The problem would seem more with the distribution companies (DisCos) that are impervious to change. Government has to review the process with a view to determining the DisCos that are serious and those that are not. There is no gainsaying the fact that some of the DisCos are far too steeped in the old ways that the idea of reforming them does not seem to gel. They have been doing little to change from the decadent system that they inherited because of the easy revenue it fetches them. This is the reason they are so reluctant to give consumers prepaid meters. Even when the government tries to force them to toe the right path, they find all manner of excuses not to change.

If Nigerians spend about N5trillion annually on alternative power supply, then it means money that should have been spent on other needs is being spent to give themselves light, with serious consequences for the economy. The Muhammadu Buhari government must do everything to reform the power sector with a view to giving Nigerians value for money in the all-important sector.

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