Power failure: A metaphor for all that ail Nigeria

Power failure daily disrupts business, economic and social transactions in Nigeria. The magnitude of the challenge can be gauged by the cost of power failure to businesses, and by comparisons of power supply to selected foreign entities and to the population to power supply ratio of South Africa – the most advanced industrial and second largest economy in Africa.

In its seminal report on Africa’s development released in 1989 titled “Sub-Saharan Africa: From Crisis to Sustainable Growth –A Long Term Perspective Study,” the World Bank noted that “poor infrastructure services have imposed heavy cost on manufacturing enterprises in Nigeria…although all 179 of the firms studied were connected to the power grid, all those with more than 50 employees had their own standby generators….and that the capital value of private facilities (light, water and communications services self-provided by the firms] was about 10 per cent of the total value of machinery and equipment for large firms.” Thirty years later, Nigeria’s industrial and commercial enterprises continue to spend significantly on their self-provided power supply, increasing their cost of doing business. In its issue of October 23, 2010, The Economist assessed that “the entire population of Nigeria – (then) around 150 million – is said to use as much grid power as the area around Narita Airport in Tokyo.” Nine years later, in its issue of June 1, 2019, The Economist noted that “Nigeria’s electricity firms produce about as much power as the city of Edinburgh”in the United Kingdom.

Meanwhile, South Africa with a population of 58.7 million produces an estimated 52, 600MW (including from the Medupi and Kusile coal-fired plants). Even so, South Africa still periodically experience black outs. However, Nigeria with a population recently put at 201 million by the United Nations produces about 2,500-6,500MW, depending on the season. It is no surprise that Nigeria’s power output is compared with Narita airport and the city of Edinburgh. The Government’s Transmission Master Plan had aimed to achieve 10,000MW capacity by 2020 and 15,000 MW capacity by 2025. If Nigeria produced power in proportion to South Africa’s population to power supply ratio, Nigeria ought to be generating and distributing about 180,112MW to meet its agricultural, commercial, residential, industrial and military needs. The multiple collapses suffered by the national grid in early 2019 provide striking illustrations of Nigeria’s continuing power problems.

The completion of the privatisation of the power sector in 2013 had raised public expectations about regular power supply. This has not happened. Instead, series of explanations have been adduced for continued power failure in the country. These include unprofitable pricing structure that discourages investment; inadequate power generation relative to overall demand; insufficient transmission capacity relative to output produced by the generation companies; and government agencies indebtedness to power companies. Indeed, many knowledgeable industry experts believe that limited transmission capacity is the major weak link in the national electricity supply chain, resulting in idle or stranded power from the generating companies. Nonetheless, the shifting explanations for power failure are emblematic of the broken promises on power supply by successive administrations since the return to civil rule in 1999 and a metaphor for all that ails the country.

Here is why. As I argued in my book Africa in Transition: A New Way of Looking at Progress in the Region, Nigeria’s “national political process, whether under a military regime or a civilian administration, has suffered from leadership indifference to evolving public policy problems; tardiness in policy response; and insufficient commitment to address policy challenges. Each of these public policy dysfunctions has manifested in different ways.” To test this analytical insight, one needs go no further than apply it to major public policy challenges that confront Nigeria: Niger Delta crisis; herdsmen-farmers conflicts; the rise of Boko Haram; and persistent power failure itself. On the last point, committed policy makers and pro-active strategic planners should have long realised that Nigeria’s increasing population combined with the desire to diversify the economy would require huge and sustained investment in power supply.

Nigeria has gone full cycle in its adoption of various approaches for increasing national grid power supply: from full state ownership to commercialisation, partial privatisation, complete privatisation, and renewed Federal Government’s investment in power sector despite privatisation. None of the approaches have risen to the challenge. Suspicion for the persistent power failure falls heavily on corrupt practices as well as vested interests who benefit from sale of private generators. While corruption may have been a constraining factor under state-ownership of power, it is difficult to believe that vested interests in private generator sales can explain the systemic and continuing dismal performance of the power sector under privatisation.

There is a growing sense that two critical success factors have been lacking in the privatisation era: efficient power purchase arrangement, and adequate funding. On the first point, strengthening of the Nigeria Bulk Electricity Trading arrangement must be a priority. Concerning funding, according to a recent analysis by Ettu Mohammed, published in Sahara Reporters, based on data from Central Bank of Nigeria and other verifiable sources like the Budget Office, government expenditures on the power sector since 1999 have been as follows: Obasanjo administration, N374.65 billion ($2.88 billion); Yar’Adua administration, N442.4 billion ($3.28 billion); Jonathan administration, N293 billion ($1.89 billion); and so far under the Buhari administration, N900 billion ($2.95 billion).The dollar conversions in the analysis used prevailing official exchange rates during those periods. Mohammed asserts that “at no time did the Obasanjo [administration] spend $16 billion on power or the Nigerian government spend $16billion in the last 46 years. It is outright falsehood”. He calculated that Nigeria has spent a total of $12.38 billion between 1973 and 2019.

Into this breach steps the House Representatives which decided in July “to carry out a comprehensive investigative hearing on how much money was spent on the power sector over the years”, covering all administrations from 1999 to the present. The House had undertaken a similar investigation in 2008 over the alleged spending of $16 billion. At a time when the power sector is largely privatised, any government’s new investment in the power sector should be treated as emergency bailout measure, which the private firms must refund with interest, as happened when the United States government bailed out some automobile and banking firms during the great recession of 2009-2009. Unless Nigeria is able to fix its electricity supply problems, it will be difficult to take the current and subsequent administrations seriously, when they promise diversifying the economy or improving the quality of lives of the citizens of the Federal Republic of Nigeria.

•Otobo is a non-resident senior fellow at the Global Governance Institute, Brussels, Belgium.