When last week Grand Minister, Babs Fashola (SAN), claimed his now-famous incapacity to revamp the Nigerian electric power sector was partly due to the inadequacies of Nigeria’s population census agency, he knew he was lying. Another grand act of blamocracy engendered by the Buhari administration. Nigeria’s electric power problems are primarily that of money (investment) and transparency (incorruptibility); it has nothing whatsoever to do with population census. Fashola did not even have to lie about Nigeria’s electricity development backwardness even though he lied about giving Nigerians an ‘electricity miracle’ in just 18 months if President Muhammadu Buhari won the 2015 general elections. Any fiens?
In 2000, Nigeria’s electric power sector had an underinvestment backlog bill of a minimum of $5 billion, $10 billion was more like it. That bill accrued during the period, 1984 to 1999, tacitly under the leadership of Generals Buhari, Babangida, Abacha and Abdulsalami according to the United States Trade and Development Agency. Olusegun Obasanjo squandered the best opportunity Nigeria had to invest in the electric power sector (2000-2007). Goodluck Jonathan also squandered a fair chance and blackouts were interestingly put up for privatisation. Now in 2017, the bill stands at about $20 billion minimum. The reality of electric power development is straightforward – if you do not have several billions of dollars to invest transparently and diligently, forget about it altogether. Nigerians should bravely accept they will not get constant electricity (24hrs all-year) for many years to come.
Does Fashola’s ministry have even just $5 billion to invest, a quarter of the minimum sum required to revamp the sector?
One of the big lies trumpeted of the electric power sector in Nigeria is the spectacle of “installed capacity”. For over 40 years Nigeria has been struggling hopelessly with 6000 MW installed capacity. Installed capacity is the generation capacity of the sector. Capacity is only a potential and does not automatically translate in electricity delivered to end-users. Despite Nigeria’s installed capacity Prof J B Akarakiri published a paper in 1999 in Energy titled ‘Private Electric Power Generation as an Alternative in Nigeria’. The paper was just three pages, but its implications were visionary and devastating; Nigeria should forget about the centralised electric power National Grid for its constant and sustainable electricity supplies; people should opt to their own generators if they wanted stable or on-demand supplies of electricity. Less than a year after the publication, Nigeria witnessed it’s first “zero installed capacity moment”, total national blackout.
Fashola has had a few “zero installed capacity moments” of his own since he became the Grand Minister.
Going back in time, in 2000 the National Electric Power Authority (NEPA) had on its books 1.6 electricity customers with 51% residing Lagos State even though, Nigeria had a 150 million population and Lagos State had 11 million. These figures indicated that just over 1% of Nigerians were electricity customers and Lagos State only 7% of the national population. It is evidence of gross nonfeasance and inefficiency by NEPA and the government. Research by the author carried out in 2002 demonstrated that in Lagos State, electricity customers were about 400% greater than what NEPA had recorded. Electricity meters for customers were scarce and expensive, power theft was rife, illegal (mostly unsafe) connections (to whole communities) rampant. Furthermore, tenement buildings (face me, I face you) that litter Lagos had ten to twenty families as tenants. Many tenants used microwaves, TVs, VCD recorders, boiling rings, electric irons in them using one meter and registered as “one customer”. How can peak demand and average daily demand for electricity supplied be appropriately calculated with such grossly underestimated customer data?
How many electricity customers does Fashola say the regulators claim they had on their books in 2017? Ask him.
In a properly run society, every regulator like energy corporations conducts its own customer-based census. It is called market research. Guinness Nigeria plc knows how many customers it has and uses it to determine growth areas, supply chain approaches, marketing strategies and more. It even uses such information to determine how many people are not drinking Guinness stout because they drink Star, Gulder, Trophy or other beers. If Guinness data management cannot be handled by itself, it would outsource the job to a reputable market research firm like RMS.
Fashola’s advisers should tell him the difference between per capita and per customer in market/sector analysis or planning.
What is the solution to the problem of electricity in Nigeria, many would ask? $20 billion and meticulously transparent oversight; any other technical explanations will have to start from here on. Where will Fashola find the money and are there enough honest personnel to get the job done? Environmental campaigner, Nnimmo Bassey, has persistently highlighted in the media how Nigeria loses over $1 billion annually in uncollected gas flaring penalties from oil production companies operating in Nigeria and also over $5 billion annually in tax fraud from oil services companies. That amounts to over $6 billion annually lost to the Nigerian purse; legitimate and deserved money. This money if honestly collected and invested, can clean up the Niger Delta and completely revamp the electric power sector in just five years. It is not Fashola’s problem but his boss, Buhari, is Minister of Petroleum. For all his anticorruption messianics, he has done nothing about this particular fraud and inertia.
Fashola does not have to be dishonest about the deplorable state of electric power in Nigeria. He unwitting inherited a disaster. And he can keep his blamocratic excuses for election time. Nigerians should know the realities of their electric power sector even though it is not pretty and “change” is faraway.
Anytime you hear that a new great ‘developmental project’ is being planned and undertaken by the Government of Nigeria (GON), it is important to identify who the short, medium and long term beneficiaries and losers created will be. Consultants, contractors, traditional land-owners, traditional rulers, government officials, board members and special interests groups are the short, medium and long term beneficiaries with a mix of obscene upfront fees, atrociously inflated contracts, preferential job offerings, generous concessionaire privileges under privatisation and convenient abandonment clauses. The 150 million ‘everyday Nigerians’ who the GON take out odious “development debts” on their behalf without asking them (by default) become the permanent losers but projected as winners by GON. This ‘development’ winners/losers dichotomy has now been moved to nuclear power, oil is failing. Continue reading
When President Muhammadu Buhari won the 2015 general elections, he did so largely with the support of neutral and anti-PDP (Peoples Democratic Party) commentators. Everything bad in Buhari’s life history was to be forgotten and everything good was in ascendance. From another perspective, it was very difficult for practitioners of competent thinking to justify the pervasive profligacy behemoth of PDP while in power. The ministerial appointments Babs Fashola, Timi Amaechi and other ‘gubernatocrats’ that took more than half a year to make that was the start of the negation of support for President Buhari. Many thinking men deserted except the likes of Wole Soyinka turned their backs on and pens against Buhari. But many political miracles were promised by the Buhari government. Where are they? Continue reading
The Senate probe into the management or mismanagement of the Nigerian Electric Power Sector (NEPS) is a long awaited and welcome undertaking. However, it is an undertaking that will trigger and sustain a lot of skepticism about its potential success in the minds of innumerable observers of various persuasions, both foreign and local. What will come of it?
There is a lot of chit-chat that one of the ”ministerless” wonders of the Buhari administration’s electricity supply to Nigerians across the nation have “improved”. The question is have the blackouts and brown outs stopped? Or has the kilowatt-hour per capita consumption measurably improved? This is an indictment of successive governments that have for decades underdeveloped the power sector then privatised it expecting magic. Electricity is now an “avoided cost” for the governemnt; is not willing to invest in the power sector, so it has been privatised. The cost of power project development many Nigerians expect the government to shoulder is no longer the its problem but it continues to use electricity as a potent political tool. Continue reading
For many years the Government of Nigeria seems to be managed by a class of “capability pole vaulters”. Government officials tend ‘pole vault’ the nation into many projects they lack the capability, will or wherewithal to execute or sustain effectively. The latest pole vault project is the establishment of nuclear reactors as power plants to provide conatsnt electricity in Nigeria. This is a nation that cannot independently manage its uncomplicated thermal and hydroelectric power plants with any efficacy or credibility. Continue reading
I found Timi Soleye’s piece in the Financial Times interesting. The Financial Times and its editors would have a lot to lose by way of reputation if Soleye produced a story on the privatisation of the electric power sector in Nigeria without facts and which could be readily debunked by counter-facts. Newspaper articles are often constrained by word count limits necessitating summaries. Does one have to represent hidden vested interests to write what they think or observe?
Well, let us stick to the claims in Eyo Ekpo’s response. Firstly, that Nigeria’s privatisation was universally acclaimed as the most transparent and comprehensive of its kind ever to take place anywhere in the world despite its size and complexity is highly inaccurate. Privatising a dysfunctional few thousand megawatts of electric capacity for a nation with Nigeria’s income history, massive population and perniciously underestimated electric demand does not make for significant size. A country with a population of 60 million people should have an installed operational electric power capacity 100,000MW. In complex electric networks, electricity is transmitted and pooled by “loop systems”, Nigeria’s network is an archaic “radial system” necessitating endless shedding of electricity. It is essential to note Nigeria has one of the very lowest electricity consumption per capita figures in the whole world. What was privatised was purely power cuts.
Secondly, I presented a document to NEPA/PHCN when J O Makanju was managing director with detailed facts that the Nigerian power sector was operating at less than 10% efficiency. France has the most efficient industry in the world and operates at 35% efficiency under conditions of constant electricity. It was a document I also showed two NEPA / PHCN directors and a minister and former minister of state. They were stunned by the facts and even got senior engineers to the sector to evaluate the facts but assured me the privatisation would go ahead back then. No audit of efficiency or asset conditions of the electric power sector in Nigeria has ever have been conducted since then if it has can we please have details?
Thirdly, the “steady state of NESI” is fancy talk. Where is the steady-state constant electricity the sector is supposed supplying to consumers? Is that not what the privatisation is all about? I guess it is a case of “we are getting there”, hope.
Fourthly, since when has Nigeria been a bastion of rule enforcement? Due diligence and preparatory procedures, especially in the form of meetings and documentation, has never failed to impress observers in any sector in Nigeria. It is when it comes to realisation and operations that the disappointment and failure begin. Market transition rules are primarily legal reform requirements, and they are not a measure or indicator of performance or efficiency of any sector.
Fifthly, the most significant stakeholder in the electric power sector is the consumer. The stakeholders highlighted as necessary to the industry are distinctly “elite”, owners and regulators (and “facilitators”). Dr Lanre Babalola, as a minister, was furious (NERC tasted pepper) with the poor strategies and levels of revenue collection for electricity consumed. While the “electricity elite” were misforecasting and perniciously underestimating daily electricity demand, marketing privatisation as a panacea, promising constant electricity and selling hope. No one took out time to evaluate the affordability of electricity for the customer, the incidence and impact of power theft on revenues or the potential debt burden of non-payment on the sector. Articulated rules are not action(s). Prepayment metering has not provided the magic its beneficiaries promised, and no initiatives for alternative methods seem to be considered. $1 billion unpaid is a lot of money to be owed for any sector anywhere in the world.
Sixthly, the term “discerning investor” is sometimes associated with project finance (participants) which is a consortium of investors who share and spread the risks of investing in financing privatised sector assets and concessionaire BOT (Build-Operate-Transfer) projects. Investors do not like to lose money, and Nigeria has many country risks. The most eager foreign interests in the Nigerian electric power sector are electric turbine sellers like GE and Siemens; they do strictly turnkey business. Operations investors are wary of the Nigerian electric power sector. Enron-AES IPP in Lagos State even has its turbines on barges that can be tugged away when necessary. Senior executives Bureau of Public Enterprises were in unison in the claim that the purchase of Nigerian assets was not undertaken by foreign investors but by Nigerians often with foreign fronts. The NIPP scandal in participation, scale and scope were utterly disastrous for foreign interest in Nigerian electric power sector investment.
Seventhly, is it true that $4 billion’ worth of turbines was imported into Lagos port and left there to accrue huge demurrage because the project principals of the NIPP had not considered the difficulty of transporting them to their riverine destinations? These turbines were then auctioned for peanuts to non-existent buyers because of the unsustainable demurrage accrued. The turbines were recovered, though. I can see the link between ports and the electric power sector slightly in this case.
If see no evil, hear no evil, speak no evil is the motto of NERC, we have to wish it the very best.