Threatens FG’s Economic and Recovery Growth Plan
Experts call for govt’s intervention
By Emma Ujah, Udeme Akpan, Sebastine Obasi & Ediri Ejoh
THE Federal Government’s Economic and Recovery Growth Plan, ERGP, set for realisation between 2017 and 2020 appears to have been scuttled by a drop in power supply from 4,000 megawatts to 2, 546 mw.
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This is a deficit of 7,454mw from the envisaged 10,000mw target set for the economic recovery plan.
Data obtained by Vanguard from the daily briefing on the Nigeria Power sector, Advisory Power Team, Office of the Vice President, stated: “On November 9, 2019, average energy sent out was 2,546 MWH/hour (down by 1,262.47 MWH/Hour from the previous day). 1,356 MW was not generated due to unavailability of gas.
“1,12.5 MW was not generated due to unavailability of transmission infrastructure, while 2,842.6 MW was not generated due to high frequency resulting from unavailability of distribution infrastructure.
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“The power sector lost an estimated N2,069,000,000 on November 9, 2019, due to constraints from insufficient gas supply, distribution infrastructure and transmission infrastructure.
‘’The dominant constraint on November 9, 2019 was due to high frequency resulting from unavailability of distribution infrastructure – constraining 2,842.6 MW from being available on the grid.”
A compilation of data obtained from the Advisory Power Team for September and October, 2019 also indicated that power supply has not increased above 4,000mw, even though the Electricity Generation Companies and the Transition Company of Nigeria, TCN, said they had capacities to generate and transmit in excess of the 4,000mw.
The ERGP, a medium-term structural reform targeted at diversifying Nigeria’s economy, including expanding power sector infrastructure, was drawn based on the assumption that electricity supply would continue to grow, hitting 10,000 megawatts, MW, by 2020.
However, a copy of ERGP obtained by Vanguard, yesterday, stated: “Nigeria has 13,400MW of installed power generation capacity, of which 8,000 MW is mechanically available.
‘’Less than 4,000MW was dispatched on average over the last two years due to constraints in gas supply, electricity transmission and distribution.
’As a result, the lack of constant electricity supply has discouraged consumers’ willingness to pay, driven industries to pursue off-grid alternatives and contributed to an inherent shortfall in the tariff and the accrued sector cash deficit.”
Reacting to the current drop in power supply, Lagos Chamber of Commerce and Industry, LCCI, stated: “The Power situation remains a major burden on business. The trend since independence has been that of progressive decline in one area.
“Power supply has consistently lagged behind the pace of economic activities and population growth. This development impacted negatively on investment over the past few decades with increased expenditure on diesel and petrol by enterprises. This also comes with the consequences of declining productivity and competitiveness.”
Similarly, the chairman of Manufacturers Association of Nigeria, MAN, Rivers and Bayelsa states chapter, Senator Adawari Pepple, stated in his reaction: “The continuous power outage is impacting negatively on investments because manufacturers are feeling the pains. ‘’There must be constant power supply for any business to thrive. A lot of companies and small businesses are shutting down and moving to Ghana where there is adequate electricity supply.
‘’There is no way any business can be run successfully without regular electricity supply. The manufacturing sector is the leading employer of labour.
“If investments are shutting down, the fact is that the rate of unemployment will be high; there will be youth restiveness and crime rate will also increase.
‘’Currently, we are not even there as far as the power sector is concerned. There is need for government to tackle this problem. If there is enough power supply, Port Harcourt and Bayelsa will be booming.”
Professor Wumi Iledare, Ghana National Petroleum Corporation, GNPC Professor & Chair in Petroleum Economics & Management, Institute for Oil and Gas Studies, Cape Coast, Ghana, said access to energy is essential requirement for economic growth and development. “They are contemporaneous, it is an empirical fact that low economic performance for any nation more so for emerging economies””, Iledare said.
On advice to government, he explained that “government lacks capacity both funding and technical competence to manage energy supply. More so, a populist government with tendency not to distinguish economic goods from public goods.
“Thus, decentralizing the sector is a good way to begin. Creating captive markets with institutional governance that is autonomous in financing and regulatory autonomy with zero political interference.
“In fact, it is time to revisit the electric power act including revocation of underperform disco licences! Drastic yes, but tough and complex problems require tough sanctions to resolve such problems.”
Director General, Manufacturers Association of Nigeria, Mr Segun Ajayi-Kadiri said: “Manufacturing requires much power which is not forth coming in the right quality and quantity. This has compelled manufacturers to generate power at additional cost, thus making their goods and services not to be competitive in the market.
“The government needs to address all the issues that affect generation, transmission and distribution. The government should also remove the hurdles currently preventing us from buying power directly from the GENCOs. With constant and adequate power, manufacturers will be in a position to contribute more to the economic development of the nation’s economy.”
Under its reform programme, the government had created 18 successor companies from the former Power Holding Company of Nigeria, PHCN, to improve power supply in the country.
They include Abuja Electricity Distribution Company Plc, Benin Electricity Distribution Company Plc, Eko Electricity Distribution Company Plc, Enugu Electricity Distribution Company Plc, Ibadan Electricity Distribution Company Plc, Ikeja Electricity Distribution Company Plc, Jos Electricity Distribution Company Plc, Kano Electricity Distribution Company Plc, Kaduna Electricity Distribution Company Plc, Port Harcourt Electricity Distribution Company Plc, Yola Electricity Distribution Company Plc, Afam Power Plc, Egbin Power Plc, Kainji Hydro-Electric Plc, Sapele Power Plc, Shiroro Hydro-Electric Plc, Ughelli Power Plc and Transmission Company of Nigeria.
The government privatised Electricity Generation Companies, GENCOs, and Electricity Distribution Companies, DISCOs, but entered into a four-year contract with Manitoba Hydro International, MHI, to manage TCN.
However, experts who spoke with Vanguard, urged the government and its agencies to address all issues in order to stimulate the sustainable development of the sector and, by extension, Nigeria’s economy.