Let there be light

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… Power supply hovers below 4,000 mw
… Sector faces depleting infrastructure
… Operators lack liquidity to tackle issues
… Consumers groan, pay high estimated bills

By Udeme Akpan, Ediri Ejoh & Prince Okafor

 WITH the handing over of Nigeria’s Electricity Generation Companies (GENCOs) and Electricity Companies (DISCOs) to private investors in 2013, expectations were high that they would invest resources, build capacity and provide adequate and stable electricity to consumers nationwide. The reason for that optimism was not farfetched. First, generally the private sector was known for resources, capable of turning around the misfortune of the sector which suffered a serious setback under public ownership and management.

Shiroro hydro power plant

Second, the private investors were expected to have the capacity and discipline to make positive impact more than their public sector counterparts. Moreover, the private investors had succeeded in some other sectors, especially telecommunications, thus raising hope that the feat would be replicated in the power sector.

But this was not to be. Barely, four years after, Nigeria does not appear to have made much progress in transforming its power sector. The latest Presidency report showed that power supply stood at below 4,000 megawatts, mw.

“On August 26 2017, average power sent out was 3167 MWh/hour (up by 106 MWh/h). The reported gas constraint was 544MW. The reported line constraint was 0MW. The reported frequency management constraint due to loss of DISCO feeders was 2455 MW. The water management constraint was 0MW.

“The power sector lost an estimated N1, 439,000,000 on August 26 2017 due to constraints. There was also increasing high frequency constraints leading to reduced generation. Reported gas constraints at Omotosho II, Trans Amadi, Geregu II, Alaoji II reducing generation at these plants.’’

Also, the nation has witnessed several system collapses in recent times. For instance, the system collapse recorded on May 8, 2017 culminated in a significant drop in generation, transmission and distribution of electricity to many parts of the nation.

The Presidency disclosed in its report that, “System Collapse on May 8 2017 at 1429hrs. System frequency suddenly and sharply dropped from 51.06Hz to 43.37Hz leading to system collapse. Prior to collapse, Benin/Egbin 330kV line (cct B6N) was out on fault due to cut sky wire between towers.”

Before then, the nation recorded two system collapse incidents in April, 2017 alone, which also affected supply to consumers. Besides, a study by NOIPolls, an Abuja-based research outfit disclosed that power supply to households in the nation dropped to 30 per cent of installed capacity in the first quarter of this year, from the 37 per cent obtained in last quarter of last year.

The new aggregated power poll results released by NOIPolls for the first quarter of 2017 showed that the lowest power supply to households in Q1, 2017 was put at 21 per cent. The drop was attributed to the shortage of gas to the power generating companies and low water levels at the hydro power stations.

Investigations showed the federal government had embarked on several power sector interventions in the past, which have failed to yield much sustained positive impact. According to the World Bank report, “Nigeria is one of the least electrified nations and its current power generation, which continues to hover between 3,000 and 5,000 megawatts, cannot keep up with the population growth.”

The report stated that, about 75 million Nigerians lack access to adequate electricity and Nigeria was ranked highest among the countries with electricity access deficit when energy access, efficiency and renewable are on the rise in many developing nations.

Why power is weak

The poor state of Nigeria’s power sector is attributed to many challenges. The Executive Director of Association of Nigerian Electricity Distributors, ANED, Barr. Sunday Oduntan, has identified liquidity, huge debt, vandalism and others as the problems of the sector.

‘’There are some challenges that need to be tackled by many stakeholders, especially the Federal Government, the DISCOs and gas suppliers. These include: lack of liquidity that hampers our operations. Another challenge is energy theft which culminates in leakages and losses.

“The vandalism of facilities that occur too often is also a serious problem that leads to huge deficit. No bank would lend you money unless your business is bankable. Let me re-state for emphasis that this liquidity crisis is a major threat to the power sector. The revenue shortfalls adversely affect the ability of the Discos to make capital investments in metering, network expansion, equipment rehabilitation and replacement that are critical for service delivery.’’

Also, the Minister of Power; Works and Housing, attributed it to lack of sufficient financial investments in the power sector. According to Fashola, although the country has expended what may appear sizeable, the money so far spent was inadequate to address the current challenges. He also noted that in spite of the already installed 12,000MW power capacity, the country is only enjoying about 6,000MW because of sabotage resulting from broken gas pipelines, poor planning of gas supply and evacuation.

“When I hear that we have spent a lot of money on the power sector, I say that we haven’t spent enough money and that is why we are still talking about the need for investments to come in. Yes, what we have spent may look sizeable but it doesn’t provide enough power for our consumption as a nation. But I must say that what some people have said about federal government spending on the power sector is not accurate – maybe because we think in our native language and speak in English.”

Ibom power plant

Role of corruption

Socio-Economic Rights and Accountability Project (SERAP) has partly attributed the nation’s woes to corruption. Consequently, SERAP has asked Mrs. Fatou Bensouda Prosecutor International Criminal Court (ICC) to use her “good offices and leadership position to investigate whether the allegations of widespread, systematic and large-scale corruption in the electricity sector since the return of democracy in 1999 and under the governments of former presidents Olusegun Obasanjo, Umaru Musa Yar’Adua and Goodluck Jonathan in Nigeria amount to crimes against humanity within the jurisdiction of the International Criminal Court, and to prevail on the Nigerian government to surrender all suspected perpetrators for trial by the ICC.”

In the petition dated 16 August 2017 and signed by SERAP deputy director Timothy Adewale the organisation disclosed that, “allegations of corruption in the electricity sector in Nigeria have had catastrophic effects on the lives of millions of Nigerians, akin to crimes against humanity as contemplated under the Rome Statue and within the jurisdiction of the Court.”

According to SERAP, “The Rome Statute in article 7 defines ‘crime against humanity’ to include ‘inhumane acts causing great suffering or injury,’ committed in a widespread or systematic manner against a civilian population. The common denominator of crimes against humanity is that they are grave affronts to human security and dignity.  Therefore, the staggering amounts of public funds alleged to have been stolen over the years in the electricity sector create just these consequences. Crimes against humanity are not only physical violence; allegations of corruption in the electricity sector hold a comparable gravity, which the Prosecutor should examine and thoroughly investigate.

“The elements that need to be established to prove a crime against humanity under article 7(1)(k) of the Rome Statute are that, the perpetrator inflicted great suffering or serious injury by means of an inhumane act; that the perpetrator was aware of the circumstances, and that the act was committed within a widespread or systematic attack on a civilian population; and that the perpetrator knew of that link.

“The consequences of allegations of corruption in the electricity sector are similar to those of the offences in article 7(1). Corrupt officials and corrupt contractors in the electricity sector know well that their conduct is criminal and injurious, and the denial of human dignity coupled with a radical breach of solemn trust, aggravate their alleged crime.

“SERAP considers these allegations of widespread and systematic corruption in the electricity sector as amounting to crimes against humanity and therefore clear violations of the provisions of the Rome Statute of International Criminal Court. SERAP believes that these allegations have given rise to individual criminal responsibility of those suspected of perpetrating corruption in the electricity sector, as entrenched in the Rome Statute of the International Criminal Court.

“SERAP considers the apparent failure of successive governments and high-ranking government officials to prevent widespread and systematic corruption in the electricity sector as amounting to complicity under the Rome Statute. SERAP therefore believes that the widespread and systemic nature of large scale corruption in the electricity sector fits the legal requirements of a crime against humanity.

“The 2006 Commonwealth working group on asset repatriation specifically refers to corruption including in the electricity sector being defined as an international crime. SERAP believes an international investigation by the ICC would complement the anticorruption initiatives by the current government and contribute to ending a culture of impunity of perpetrators.

“SERAP believes that substantial grounds exist to warrant the intervention of the Prosecutor in this case. Pursuant to the Rome Statute, the Prosecutor has power to intervene in a situation under the jurisdiction of the Court if the Security Council or states parties refer a situation or if information is provided from other sources such as the information SERAP is providing in this case.

“SERAP is seriously concerned that the instances of corruption highlighted above and details of which are contained in the enclosed From Darkness to Darkness report are not isolated events, but illustrate the widespread and systematic nature of large scale corruption in the electricity sector under the governments of former presidents Olusegun Obasanjo, Umaru Musa Yar’Adua and Goodluck Jonathan. This level of corruption has limited access to and affordability of electricity in Nigeria.

“Widespread, systemic and large-scale corruption in the electricity sector and the lack of transparency and accountability in the use of public funds to support the operations of Discos have resulted in regular blackouts and disproportionately affected the most disadvantaged and vulnerable sectors of the population who cannot readily afford expensive generators in order to have a reliable power supply. The situation is not likely to improve considering that the production of electricity is not proportionate with the rapidly growing population.

“The African Commission on Human and People’s Rights has adjudged the failure of the States “to provide basic services such as (…) electricity” as violating the right to health.” SERAP argues that Nigeria is bound to make full use of the resources available to ensure regular and uninterrupted supply of electricity, even in times of resource constraints. Under international law, vulnerable members of the society must be protected by the adoption of relatively low-cost targeted programmes even in times of severe resources constraints.

“SERAP also notes that allegations of corruption in the energy sector have resulted in the epileptic and interrupted supply of electricity and corresponding deprivation and denial of the citizens’ access to quality healthcare, adequate food, shelter, clothing, water, sanitation, medical care, schooling, and access to information.

“The total estimated financial loss to Nigeria from corruption in the electricity sector starting from the return to democracy in 1999 to date is over Eleven Trillion Naira (N11 Trillion Naira). This represents public funds, private equity and social investment (or divestments) in the power sector. It is estimated that may reach over Twenty Trillion Naira (N20 Trillion Naira) in the next decade given the rate of Government investment and funding in the power sector amidst dwindling fortune and recurrent revenue shortfalls.”

Geregu power plant

Impact on economy

Mr. Muda Yusuf, the Director General of the Lagos Chamber of Commerce and Industry, indicated in a telephone interview that the nation’s poor power situation has crippled operations in many sectors of the nation’s economy. He said that investors in many sectors, especially manufacturing, telecoms and agriculture have been compelled to generate their independent power at higher cost. Yusuf had pointed out that the high cost of generating power has culminated in the high cost of goods and services, making locally produced goods uncompetitive in the global market.

This is mainly because Nigerians depend more on generators to generate power than the power companies at higher cost. The Speaker of the House of Representatives, Yakubu Dogara, has said it is unacceptable that Nigerians spend $5 billion on generators yearly, stressing that the House of Representatives will support the Executive to find a permanent solution to the power problem in Nigeria.

The poor power supply has crippled operations in almost all sectors of Nigeria’s economy. According to the Association of Telecommunications Companies of Nigeria (ATCON), telecom subscribers lose an average of N730 billion to poor quality service yearly. For instance, MTN Nigeria spends N30.5 billion yearly on the purchase of diesel alone.

The CEO of Airtel Nigeria, Mr Segun Ogunsanya, had said, “The power costs of a site connected to the power grid are only about 1/6th those of a fuel-powered site, but only about 10 per cent to 15 per cent of base transceiver stations are connected to the electric power grid.

“Primarily, because of fuel costs, the average network costs in Nigeria are twice to thrice higher than in a number of other African markets. The implications of such absence of reliable power infrastructure are far-reaching.”

The Executive Secretary, Association of Licenced Telecommunications Operators of Nigeria (ALTON), Gbolahan Awonuga, had also indicated that the Global System for Mobile (GSM) communications, LTE operator and internet service providers have remained the largest consumers of diesel in Nigeria. He said that they spend an estimated N175 million daily or N45 billion monthly on diesel for powering their Base Transceiver Stations (BTSs) nationwide.

Mr. Frank Jacobs, President Manufacturers Association of Nigeria (MAN), said in an interview that: “It is possible to gauge the loss suffered by manufacturers arising from paucity of electricity supply and high cost of alternative energy source.  Capacity utilization in the sector has barely been above 50 percent.

“This implies that the production has been sub-optimal; production value in the sector was estimated at N8.38 trillion in 2016. Another way of measuring the loss to manufacturers as a result of the challenges of electricity supply is by looking at the huge cost of alternative energy which was estimated at N129.95 billion in 2016.

“Even though the sector, especially the distribution aspect has been privatised, it is important that Government should find ways and means of supporting the Discos until a stable, quality and reasonably priced electricity is available to the manufacturing sector. There is need for Government to continue to offer integrated support to all stakeholders on the NESI value-chain i.e. manufacturers, GENCOs, TCN, and DISCOS in terms of finance and expertise.”

It is against these and other pains of stakeholders that observers have called on the government to tackle all the problems currently haunting the nation’s sector.

 

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