The performance of the country’s electricity distribution companies (DISCO’s) since the privatisation of the power sector in 2013 has been, to say the least, woeful and embarrassing. November 1, 2013 marked the beginning of a new era in the power sector. That day, the Federal Government, after decades of failed efforts, finally completed its sale and handover of power generation and distribution companies to private investors. The exercise led to the creation of 18 successor outfits from the Power Holding Companies of Nigeria (PHCN), comprising one transmission, 11 distribution and six generation firms.
The transmission company was not sold like others, but the government hired an international company, Manitoba Hydro International, to manage it. The unbundling of the power sector was informed by the belief that private sector investors would bring in state-of-the-art equipment and machinery to boost power generation, transmission and distribution in the country, as well as ensure appropriate billing and collection. Capital injection and efficiency have been the bane of the power sector over the years. The development had led to gross under-supply of power, with the attendant setbacks for the citizenry and the economy at large. Electricity plays a very critical role in stimulating socio-economic and technological development of nations. Nigeria is no exception. It is no more news that the demand for electricity far outstrips its supply in the country. Pathetically, too, it is always epileptic.
Indeed, there is a strong correlation between socio-economic development and the availability of electric power. Sadly, power supply in Nigeria has been put at 3,800 megawatts for a population of about 170 million people. In contrast, South Africa generates 40,000 megawatts for a population of 47 million, while Brazil generates 100,000 megawatts for its 201 million citizens. As a result, Nigeria has emerged a country with the biggest gap between supply of and demand for electricity worldwide. The country is reputed as a dumping ground for generator producers, at the huge expense of power consumers. Annual generator importation bill has been put at N19 billion, for example.
Electricity generation, transmission and distribution are capital-intensive activities requiring huge resource-outlay in funds and capacity building. Between 1999 and 2007, the government of former President Olusegun Obasanjo spent an estimated $16 billion on revamping the power sector, reports said. Indeed, the FG was said to have spent about N5 trillion ($31.45 billion) on the power sector between 1999 and 2013. Yet power supply has stagnated at 3,800 megawatts till date. Allegations were rife that a lot of the funds were misappropriated, with little or no job done. But Brazil, which reportedly invested $58 billion in its power sector between 1994 and 2008 now produces about 100,000MW of electricity.
It has become clear that the inefficiency and corruption bugs that struck down the PHCN and its forebears have crept into the power sector, though now in the hands of private investors.
With tell-tale signs that Nigeria is in dire financial straits, the FG should return to the drawing board and fashion out creative ways of addressing the incorrigible power supply problem Nigerians are facing. Slowly but steadily, the country is grinding to a halt economically because of poor power supply. Partly due to the abysmal state of electricity in the country, the manufacturing sector contributes only four percent to Gross Domestic Product, (GDP) compared to 20 percent in Brazil, 34 percent in China, 30 percent in Malaysia, 35 percent in Thailand and 28 percent in Indonesia, for instance. In spite of all, consumers have continued to pay exorbitant monthly tariffs that are jerked up annually in the guise of Multi-Year Tariff Order (MYTO). Under the latest increase, electricity consumers, especially those using pre-paid meters, were subjected to 50 percent increase in fixed and maintenance charges, with effect from March, 2013. The Residential 1 (R1) customers that were paying N500 as maintenance charges were asked to pay N750 under the new tariff regime.
Experts have suggested that for efficient power supply, the FG should also sell off the power generation companies to private investors. The government should weigh the option. The required attention should also be paid to transmission and distribution facilities, including proper billing. For, about 35 percent of power generated is lost to technical faults on account of weak networks, reports say. The nation’s outdated power infrastructure should be urgently upgraded.