Nigeria’s multi-decade long electricity problems have worsened in recent years. This nightmare is further pronounced by corrupt and mismanaged energy practices and policies, causing the country to have had about 8 energy ministers in a 5 year time-span, and not even emphasising the fact that the country has spent over $20 billion dollars in the last 21 years in an attempt to provide a lasting solution to its power challenges.
Electricity is key to the development of nations, as industries, small businesses, and government institutions rely on it for sustainable growth and development. When growth is facilitated by the placement of the reliable energy backbone the country’s capitalists need to build their businesses, economic growth is guaranteed, as capital, labour, and energy goes hand in hand to drive production, which inherently builds economies since local organisations would be working at their full operating capacities.
The poor electricity supply in Nigeria coupled with the high costs and constant scarcity of diesel and gasoline has driven up the costs of production, causing businesses to understaff their organisations and contributing to the build-up in the volume of jobs lost in the nation. It also creates uncertainty in the future of most businesses because poor access to electricity leads to high costs of production, and this leads to higher-priced final goods, which the market may react positively or negatively to upon presentation. It goes on to affect the growth of global trade, as international organisations expect to buy certain items at certain prices and wouldn’t want to spend far more money on what’s coming out of Nigeria because of the country’s electricity problems. For this, they go elsewhere to purchase, and so, our export capacity drops, causing most organisations to only focus on exporting the base materials mined, rather than building facilities that could process it to the next level and provide millions of jobs to more Nigerians in the process.
But then again, Nigeria is not the only country affected by the electricity drought, as about 622 million Africans are estimated to be living with no access to electricity. When further analysed, Sub-Saharan Africa, which is where Nigeria belongs to, has about 32% access to electricity, while North Africa has a 99% access to electricity, proving that they have better energy policies, and so, more leverage to sway investors who have interests on making investments in Africa.
See Also: Why African Nations Are Poor, And Others Are Wealthy
But Where Exactly Is Nigeria Right Now With Power Generation?
Based on a World Bank report, the per capita consumption of electricity in Nigeria is 142 kWh. This is quite saddening as the average per capita consumption of electricity in China as at 1971 was 151.98 kWh, which is higher than where Nigeria is 47 years later. In 2013, China’s per capita consumption of electricity sat at 3,762.08 kWh, with 2018’s estimate expected to be far higher. No wonder the country comfortable sits at the number 2 spot with the second highest GDP in the world and is a haven for the facilitation and growth of the global trade industry.
While Nigeria’s average electricity consumption per head is 142 kWh, the generation capacity of the national grid is around the region of 12,522 Mega Watts against South Africa’s over 50,000 Mega Watts, but about 4,000 MW and less is what is widely distributed to the whole nation which is in an energy crisis and is desperately looking for a saviour to solve its energy needs for its over 190 million people.
But Didn’t The Country Try To Fix The Electricity Problem By Privatising The Sector? If Yes, What Then Is The Core Reason We’re Still In An Energy Apocalypse?
In 2015, a privatisation approach was introduced by the Federal Government of Nigeria on the expectation that the distribution companies (Discos), the generating companies (Gencos), and the Transmission Company of Nigeria (TCN) would be fully privatised, but what most Nigerians don’t know is that’s not the case.
The generating companies were privatised, and most of them fully own their own assets. The distribution companies were partially privatised with the government still retaining ownership of 49% of the assets, and the Transmission Companies still remained owned by the government but with its management contracted out.
But now the problem is while fully privatised, the generation companies cannot work at full capacity because the transmission companies which is still owned by the federal government cannot transmit more than a certain amount of power, meaning that if the generating companies (privately owned) generated 10,000 MW of electricity and the transmission companies (government owned) cannot transmit it to the distribution companies (partially privately owned), the real power that the country could work with would be impossible to achieve.
Another problem is when the distribution companies were privatised, the electricity tariffs were increased before the privatisation occurred. Then right after investors had poured in money to become key players, the court reverted the prices and they suddenly operated at a loss with the tariffs being pegged at below market price.
Analysts could argue that the government tricked investors, but then again, no one who committed to the privatisation practice on the distribution end would be willing to sacrifice any extra penny in the form of investment to the Nigerian government. It simply showed the system is completely untrustworthy.
Since distribution companies are now operating at a loss, it only makes sense that the distribution of pre-paid meters too would suddenly stop with an endless excuse, so that the distribution companies can use estimated billing to cover for their losses whether a household used electricity in a month or not.
See Also: How To Make A Country Rich With the Right Trade Policy
So What Can Be Done To Fix The Electricity Problem?
1). I suggest a full privatisation of the full structures, with the government acting simply as the regulator.
When investors can control a critical part of the energy sector, which is the transmission end, we can be better safe to know that investments can come in to build transmission capacities of over 10,000 MW in a short period of time. Also, the transmission shouldn’t be limited to a certain group of people but should be an open bidding system for any company with a great track record in the global energy industry. This way, the generating companies can also be given the opportunity to generate and transmit by themselves.
The critical role the federal government should then play is regulating the industry to ensure consumers get great quality services and are not over-priced. It would work more like the telecommunications industry with the government being the primary body ensuring everyone is fulfilling their obligations in the fairest possible ways for the consumers.
2). There should be special incentives by the government to enable people to get affordable access to renewable energy in the form of solar panels and their counterparts. In the western world, companies like SolarCity sells solar panels to homes with a 25-year repayment plan, and the panels sold have the capacity to carry every appliance in the various homes they are used in.
When acquisition programs like this are made available based on key requirements that ensure it’s only reliable people that can actually be a part of it, the burden on the national grid can be reduced. And just as excess generated solar power is contributed back to the national grid in western countries, people who are a part of the program would have the excess generated energy contributed to the grid.
See Also: How To Diversify The Nigerian Economy Successfully For Growth
To Sum It Up
While these may not be a lasting solution to the present problems the Nigerian energy sector faces, it would take us through leaps and bounds and provide between 18 to 20 hours of guaranteed electricity daily for people, businesses, and much more living in the country, and in the process, would drive growth and development for Nigeria.
God bless Nigeria!
About The Article
This is an opinion and analysis posted by Stan Edom, a Nigerian citizen and Editor In Chief of Startuptipsdaily.com.
The Opinion and Analysis section is committed to nation building efforts through empowering expert writers to air their views on the best ways to solve national issues and move nations forward.
Opinions and Analysis will be published every Friday.
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What are your thoughts on how to improve Nigeria’s electricity supply problem and drive the growth of businesses? Let me know by leaving a comment below.
I support full privatization of the whole system… this in my opinion will enable us grow faster as a nation and as people!
Thank you for the comment, Gbenga.
Transmission Company of Nigeria cannot and should not be fully privatised. Find out.
Thank you for the comment, Sandra.
Partial privatization could work, but I don’t support the government fully controlling anything because history has taught has that what they know how to do best is to disappoint the people.
The government can’t handle businesses they are to regulate businesses and provide incentives where necessary. simple..
Thank you for the contribution, Lasisi.
I mean thank you sir this is the best article I have read on the electricity problem in Nigeria and posdible solution.It’s amazing how in 2018 we still dont have steady supply but my question is this if a business can solve the problem of electricity as in I see inverters everywhere n other forms of electicity solution but the truth is most of them don’t offer enough value for the amount of money it involves an speaking from the average Nigerian although the average Nigerian truth be told is happy n used to the light situation.so my question sir is if someone comes up with a solution for this electricity situation and is a cheaper alternative to what we already have available what are the possible challenges that kind of business faces?
Hi Chisom,
Challenges are widespread and depend on a wide number of factors.
You can’t fully determine them until your product hits the market.
Thank you for asking.
Great article. let me begin here by saying that i have always been an advocate of full privatization and proper regulation by the government, thanks for citing the telecommunications company as a perfect example, we all know how well the telecommunications industry is thriving in Nigeria. But then again, Full privatization in a nation like Nigeria might be very difficult to achieve because of the corruption that has consumed the system, its so sad that everything in this country has been politicized, even the well being of the people. Every minister before coming on board always seem to have a perfect solution to the problem. Before his appointment as the Minister for power; In 2014, Babatunde Raji Fashola said and i quote “A serious government will fix power problem in 6 months”. and in the same year, he said again and i quote “The only way to have stable electricity is to vote out PDP”. Over two years after his appointment as minister for power, the power problem seems yet unfixed. A lot of public servants gain a whole lot from the electricity issues in Nigeria, more importantly because a big chunk of them are big importers of generating sets, or receive bribes from big importers, so u don’t see them making laws that will bring about solutions to electricity issues because it therefore means a great loss for them as they are only legislators to satisfy their pockets. Which brings me to my proposal, until Nation builders like us start taking decisive steps to vie for executive but more importantly legislative positions for the sole purpose of enacting laws that will not just ensure positive growth and development for our nation but also ensure the well being of the people, i’m afraid, Nigeria will continue to suffer in the Hands of this Corrupt people.
Thank you for the in-depth insight, Ogogo.
Do have a great time.
the problems is lack of true and fair deal in goverment,when you talk of privitazation,incompetent persons at top will hajack the programme which he or she has no capacity to carry on there by leading to low performance and waste of nation resources,that is the root of nigeria problems,coruption and nepotism
Thank you for the contribution, Benjamin.
This is a very good contribution from you Mr Stan i commend it and what i would like to say is this ; in as much as we need full privatisation of the power sector, can we call a spade a spade and do the needful which is giving full support to any state that can increase the power generation of the country, as i recall in about 12-15 years ago during the Obasanjo administration, the then governor of Enugu state went and visited a site where two big rivers meets in Enugu state and it was clear that electricity can be generated from there, which may be able to serve at least the south east, but in the end, the federal government did not even consider it and yet they claim to have the people’s interest at heart, do they even care? After all they always have light and they don’t really care about us
Hi Peva,
Policy making ultimately lies in the hands of the government.
Let’s hope that someday they’ll choose to make the rigt decisions.
Thank you for the comment.
You are straight to point Stan, full privatization would do a lot of good. I think another solution to this menace is using waste to generate electricity, I mean we have tons and tons of waste littered all over the country causing more harm than good.
Hi Daniel.
Sure we can explore other ways of generating more power, but even if we generate 50,000 Mega Watts and can’t transmit it to the distribution companies, then there’s still a problem.
I believe the transmission lines should first be expanded to a very wide capacity before generating what cannot be transmitted.
Thank you for the contribution.
Very good analysis. Weldone sir!
Thank you for reading, Oscar.
Hi
I patent a load reducer device, can i send it, the working discruption to you to get your inputs on this. This is not a smart meter bet a device that can save up to 60% of energy to residential areas, so that more energy can be distubute to the buiseniss segment so that the econemy can grow without the total loss of energy.
Regards
Roelof Louw
South Africa
Hi Roelof,
Do you have a website with the prototype displayed?
Hi Stan
I did not have a website, i did have a DVD of it that i can send to you, or the working discription that i can mail to you.
Roelof
Hi Stan
I am busy to create a Webside, will let you know you when its ready so that you can give me your inputs of the Remotely Actuated Energy reduce Device.
With this any Country can solved their energy crisis, this is not the smart meter, but even better.
Regards
Roelof
Founder of LSNM.
Okay Roelof.
Good luck.
Hi Stan
The website is http://www.LSNM.co.za.
Will await your comments on this device, I realy think this is the solution that can resolved the Energy crisis in Africa.
Regards
Roelof
There’s no explanation on how it works.
Hi Stan
Sorry for that, DVD is also now on the website, so you can go through it.www.lsnm.co.za
Will wait for your comments.
Regards
Roelof
Good day Sir
Did you perhaps look at the website?
Regards
Roelof
Hi Stan
Did you read the working of the lsnm device? what are you thinking?
Al that we need is investors to implement it in Africa.
Regards
Great read; for the love of Nigeria. Good Stuff sir.
Thank you for reading, Michael.
Hi Stan
Did you read the working document of http://www.lsnm.co.za.
We need investors on this to solve this electricity problems of Africa
Regards
Roelof
Thank u for this article,my contribution would be for individual state to try and see how to do it ,at least the Abuja is not as bad as d rest of other states ,they should allow Each states government to source their own power,.And again we should stop looking outside without first try to do it by ourselves,,We have trained Engineers,,we can ask for help but we should make effort first,I know Nigeria has a lot to deal with,we can resolve a lot by starting small.
Thank you for the contribution Nikky.
Hi Nikky, Stan
I believe what you said, we must look at our own source in Africa, this LSNM device is there for Governments in Africa to buy into it. My question is if the Governments of Africa realy interested to solve our electricity needs. With this device their will be no load shedding, the user will rather have lessor electricity than no electricity.
I wish we can make appointments with Governments in Africa so that they can look at this device. Regards Roelof
I like your behaviour.