Despite its immense size in both economic and demographic aspects, Nigeria, the largest economy in Africa, continues to face persistent infrastructure and public services challenges. These deficiencies become more apparent in the power sector, where about 200 million Nigerians struggle with periodic access to electricity despite the nation’s abundant energy resources. More than 90 million Nigerians endure the frustration of living without electricity, as reports indicate. It is disheartening that the consistent occurrence of national grid failures has become prevalent. The year 2022 witnessed eight instances of grid collapses, emphasising the long-standing problem that past governments have struggled to find a solution for.
Even with the Federal Government’s investments of over ₦1.51tn in the power sector since President Muhammadu Buhari assumed office in 2015, the national grid experienced 98 instances of collapse during his administration. These occurrences are accompanied by the alarming fact that Nigeria, home to a rapidly expanding population, currently generates a mere 5,000 megawatts (MW) of electricity. Nigeria’s power capacity seems trifling when compared to relatively smaller African countries like Ghana with 5,300MW, South Africa with 56,000MW, and Egypt with 32,000MW, considering Nigeria has a population of more than twice these nations. Aside from enduring constant darkness in households and commercial spaces, Nigeria faces an alarming annual loss of $29 billion due to electricity deficiencies. This arises from the massive expenses incurred by both enterprises and households in acquiring diesel/petrol generators and resorting to temporary remedies.
NERC approves tariff review for DisCos, balancing consumers’ interests.
Loss of productivity, investment, and jobs are the unfavourable outcomes of the economic costs endured. Despite repeated attempts at reforms, Nigerian governments have persistently struggled to resolve the power dilemma. Currently, the responsibility for electricity supply lies mostly with 11 distribution companies (DisCos), who are expected to enhance effectiveness in their interaction with the public. Unfortunately, the pace of improvement has been sluggish, and the DisCos have faced considerable backlash due to their poor service, unfair billing practices, and indifference towards consumers. The Nigerian Electricity Regulatory Commission (NERC) has recently given its approval for a tariff review, intending to find equilibrium between the interests of the DisCos and the electricity consumers in Nigeria. The increase in cost-reflective tariffs for DisCos by NERC is a result of adjusting the rates with respect to the inflation and forex rates.
To address the burden placed on the public by the rising cost of living, the FG will provide extensive financial support amounting to N1.6 trillion in 2024, enabling consumers to meet previous tariff rates. Although these government subsidies offer momentary respite, they lack long-term viability. The funds utilised for subsidies could have been more effectively allocated towards enhancing and expanding the electricity infrastructure. Nigeria’s need for financial investments amounts to over $100 billion, aiming to enhance its deteriorating power infrastructure and augment electricity production to satisfy industrial and residential demands. Also, the Minister of Power, Adebayo Adelabu, set a rather ambitious objective of elevating the national grid’s capability to 20,000 MW within the upcoming three years. Ensuring reliable access to power for underprivileged communities remains a commendable goal, as it addresses the sector’s major hurdles of dependability and establishing universal accessibility.
Nigerians have valid concerns about the awaited resolution.
In order to accomplish this objective, a thorough and persistent endeavour must be undertaken, along with tackling the fundamental issues behind the power crisis. Electricity challenges cannot be examined without acknowledging the Siemens deal, an initiative that presented hope for enhancing the nation’s power infrastructure. Regarded as a possible catalyst, the Siemens deal sought to revolutionise and modernise the power sector. Yet, concerns persist regarding the current state and advancement of this endeavour. Nigerian citizens are justified in their inquiries regarding the fate of this eagerly awaited resolution. Similarly, President Bola Tinubu, during his New Year address to all Nigerians, voiced his dedication to a fresh agreement aimed at expediting the implementation of the Siemens Energy power project, which will ultimately provide a dependable source of electricity to households across the nation.
Additionally, it is imperative to enhance the efficiency of the electricity supply chain, implement effective metering and billing systems, and enhance the operational effectiveness of the Distribution Companies (DisCos). The present situation lacks adequate regulatory oversight as NERC struggles to enforce established standards. To ensure accountability, DisCos’ performance and service provision should be monitored according to predetermined benchmarks and consequences for non-compliance. The present framework provides an unjustified advantage to ineffectively-run DisCos, allowing them to accumulate profits without making corresponding investments. To rectify this, the government can consider revising DisCos’ contracts in order to incorporate additional rewards for their performance. In case of consistent underperformance, their licences should be revoked and transferred to competent private sector entities.
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It is crucial to incentivise independent power producers to generate and distribute electricity to consumers directly instead of relying on DisCos. Nigeria must have unwavering political dedication at the highest ranks to enhance investments in power generation, transmission, and distribution. Vital reforms are necessary to revamp the power sector for better efficiency, transparency, and service provision. The persisting mismanagement and shortcomings in the power infrastructure cannot be ignored or concealed any longer, even with the aid of subsidies. It is high time Nigerians receive an uninterrupted supply of electricity to fuel the growth of their homes and businesses, leading to greater socioeconomic development. There can be no more room for making excuses, taking inadequate actions, and practising favouritism.
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NERC: Website
