Lack of electricity undermines Nigerian president's
Last Updated: 27 March 2015|08:02 GMT
Nigeria's electricity shortages persist and the
underperformance is a major political issue.
Nigerian president Goodluck Jonathan's election campaign has
trumpeted his reform of the power sector as a crowning achievement. But
electricity shortages persist and the underperformance is a major political
Jonathan took the bold step in 2013 of selling parts of the
moribund state electricity firm and says the privatisation has bourne fruit.
"Power supply in many parts of the country has improved to a consistent
level of 15 hours a day," a presidential website says.
That is not the experience of most Nigerians, and the opposition
has given him little credit, focusing instead on $16 billion allocated to
improving power under previous president Olusegun Obasanjo that has yielded no
Saturday's vote between Jonathan's People's Democratic Party
(PDP) and former junta leader Muhammadu Buhari is expected to be the closest
since the end of military rule in 1999 and could see the PDP and Jonathan lose
Both leaders have made a point of saying voters should look
at their achievements and policy goals, putting the electricity issue at centre
stage in Africa's top energy producer.
The wealthy and businesses can afford generators and market
places buzz with their sound, but the average Nigerian suffers no light or
water for days at a time, since the pumps stop working if the electricity is
out for a long period.
The only place in the capital that never seems to blink is
the Transcorp Hilton, the unofficial centre of politics.
Nigeria has a population of 170 million but an installed
capacity that fluctuates between around 6,000 to just over 7,000 MW depending
on which plant turbines are down, according to a daily report by the
transmission company. South Africa's capacity is almost seven times greater for
a population less than a third as big.
PRE-ELECTION PRICE CUT
Six new power plants have been built and another four are in
the works, but output remains woeful as the plants do not get sufficient
supplies of natural gas and the transmission lines cannot handle the power.
"The most serious constraints that were impeding power
supply improvement are still there: gas and transmission and they are still in
the government's hands," said World Bank energy specialist Muhammad Wakil.
"The privatization was successful but the reform agenda
hasnít been achieved ... nothing has changed on gas."
Since privatisation, the amount of power produced has
stagnated at around half total capacity. It has not topped a 2012 peak of 4,500
MW as the grid battles "gas constraints", plant outages and tripped
circuits, according to the transmission company's report, which showed just
3,346 MW were sent out to consumers on March 23.
The government also blames gas pipeline vandalism.
Older plants, privatised two years ago, are in dire need of
an upgrade but the fledgling generating firms lack the cash as distributors
struggle with non-paying consumers and sophisticated theft. In some cases, they
pay only 40 per cent of the monthly bill.
The funding situation is likely to worsen after a shock 50
per cent tariff cut two weeks ahead of the polls.
The regulator's decision to slash tariffs has broken the
trust with investors, occurring outside the agreed schedule in a five-year
tariff freeze intended to help the sector settle.
The central bank stepped in with a $213 billion ($1 billion)
loan in September to keep the system afloat and allow the power firms to access
credit, but more will be needed as the oil price slump continues to pressure
"Electricity companies took dollar denominated
loans," said Yinka Balogun, a central bank adviser. "They are
import-dependent for equipment so they have currency exposure."
The power plants rely on gas for 80 per cent of their energy
but have no say over the gas sector, which is handled by the state oil company
whose primary focus is the far more lucrative crude sector.
Gas prices were raised to a level closer to a US gas
benchmark last year to incentivise investment, but an equally big problem is a
lack of gas pipelines.
Bolaji Osunsanya, head of the Nigerian Gas Association, said
the economic climate and grid constraints meant gas would only be available to
power 9,000 MW by 2020. It takes 4-5 years to build a gas pipeline and 8,500 km
were needed, he added.
The government has also still not decided how to offload the
monopoly grid operator, the Transmission Company of Nigeria (TCN), whose
dilapidated condition is likely to send a shiver down the spine of even the
hardiest private investor.
"They have an investment plan to spend $1 billion a
year over an 8 year period," the World Bank's Wakil said. "They have
quite an ambitious plan to increase capacity to 20 gigawatts. It's unlikely
that they will get all the funding."