In a season defined by harrowing blackouts because national electricity power output has tumbled to about 2,000 megawatts from 4,000MW in March, it is shocking that the National Integrated Power Projects are lying idle. Ten in all, the NIPPs that are supposed to boost national output by over 5,000MW, are generating at an unusually low capacity.
According to the authorities, this is mainly because of gas supply challenges. The gas conundrum is as old as the NIPP initiative, which got under way during the Olusegun Obasanjo administration in 2004. Last week, James Olotu, the Managing Director of the Niger Delta Power Holding Company, the special purpose vehicle superintending the NIPPs on behalf of the three tiers of government, gave a strong indication that the gas issue won’t be resolved in the near future. “As of last week, those plants were running on only one unit each,” Olotu said.
There are two main excuses – or arguments, if you like – for this situation in the plants, which are located in Olorunsogo, Omotoso, Geregu, Calabar, Egbema, Alaoji, Ogorode, Omoku, Ihorvbor and Gbarain. First, when the NIPPs were built, there were no connecting sources of gas supply. The government simply thought the electricity problem would vanish just by erecting the power plants.
This predicament has hindered the government from privatising the NIPPs, which were originally designed to be sold by July 2015. The National Council on Privatisation has shifted the new timeline to January 2016. For a government that is cash-strapped, following the fall in crude oil prices and its own profligacy, the privatisation of the entities, estimated at $5.814 billion, will go a long way in remedying the rot.
However, the fate of the NIPPs is symptomatic of the chaos in Nigeria’s power sector. Timelines have been missed consistently because of half-baked implementation of reforms. Although it is one-and-a-half years since the government privatised the unbundled assets of the Power Holding Company of Nigeria, the successor companies have not fared better. At best, service delivery has been mostly epileptic.
Experts blame the ungainly situation on Abuja’s opaque privatisation process, which facilitated the DisCos and GenCos ending up in wrong hands. Yet, the GenCos put the blame on low tariff, though they employ different means to charge prohibitively (otherwise called estimated billing). But realising their folly, the National Electricity Regulatory Commission and the government have taken turns to defend the new owners over their poor performances.
The bigger picture, which is a pointer to the lingering gas supply challenge, is scarier. Under an agreement signed in 1999 to supply gas to 15 ECOWAS countries, Nigeria recently compensated Ghana with $10 million following its inability to supply gas to it (Ghana). Some reports claim that Nigeria is not honouring the gas supply agreement it signed with 14 out of the 15 ECOWAS countries.
Equally ominous is the fact that the so-called private entities are being spoon-fed by the government. Apart from settling a legacy gas debt for the privatised entities, the government has also packaged a N213 billion Electricity Stabilisation Fund to help them. This credit has done little to ameliorate the situation. The companies have not been able to supply consumers with prepaid meters.
Correcting this error is taking the government too long and taking its toll on a nation wallowing in darkness and its economy wobbling. A survey by NOI Polls that covered the first quarter of 2015 found that 67 per cent of Nigeria’s 170 million population had no access to electricity. It is obvious that there are no quick fixes. Therefore, we need a broad plan to address this omission that is jeopardising the investment in the NIPPs, which has gulped over $5 billion so far.
Second, the gas pipelines linking the NIPPs suffer constant vandalism, resulting in massive disruption. As a result, the NIPPs cannot generate their rated output. The vandalism got so alarming that the government, instead of tackling the menace with firmness of purpose, is adopting tepid, questionable measures. It strangely awarded pipeline protection contracts to Niger Delta militants and the O’odua Peoples Congress ethnic militia. As is to be expected, this has not solved the problem. It has only exacerbated the vandalism.
The incoming administration of Muhammadu Buhari should immediately review the contracts, flush out the vandals by empowering the security agencies to do the job.
There is a lesson to learn from the United States experience. A 500-mile pipeline from Colombia, which supplies 100,000 barrels of crude per day to Occidental Petroleum of Los Angeles, United States, is guarded by specially-trained counterinsurgency officers, who also operate with helicopters to dislodge guerrillas aiming to wreak havoc on the facility. The success of the collaboration between the American and Colombian forces, which deployed six battalions, is seen in the fact that, from 170 incidents of vandalism in one year, the figure crashed to 30 the following year (2012).
Nigeria’s new government should pull out all the stops, including deploying the police, civil defence corps officers and soldiers, to end the vandalism. This coordinated approach will put a stop to the menace.
To get the electricity sector working, the new government should, as a matter of urgency, reassess the privatisation programme of the outgoing government. It should never, on any account, contemplate reversing the privatisation policy, but resolve to re-tune it transparently for optimal performance. Stable electricity is so critical for inclusive economic growth. On no account should it continue to be toyed with as we have witnessed these past years.
With gas and other issues plaguing 20 out of the 23 power plants in the country, the new government should launch fresh initiatives to diversify the sources of power supply into areas like coal and renewable energy.
