Calls for President Bola Ahmed Tinubu to suspend the licenses of distribution firms, or discos, are growing among Nigerians.
This is due to the worsening epileptic power supply, which has caused the residents’ lives to be unbearably difficult during the last three months.
Consumers of energy pay for power supplies they rarely receive in addition to the unsuccessful post-privatization power sector that lasted for more than ten years.
Electricity distribution firms, generation companies, and transmission corporations have made darkness a common feature across the country, regardless of the state—Lagos, Enugu, Abuja, Edo, or Kaduna.
For Nigerians, the appalling power supply has become the norm, regardless of their service bands.
Nigeria’s power problems have continued to severely affect the country’s population for more than ten years.
Nigeria rapidly overtakes other nations as the nation with the least amount of energy access worldwide, with 92 million of its 200 million citizens lacking access to electricity.
In spite of its 22,000 megawatt producing potential, the nation has long struggled to produce 4,000–5,000 megawatts.
The fact that generation has decreased to less than 4,000MW in recent months for a population of over 200 million is concerning.
Nigerians have endured a great deal of suffering due to inadequate energy supplies, even with President Bola Ahmed Tinubu’s renewed hope agenda. Businesses are more severely impacted.
The electricity sector crisis, according to the Manufacturers Association of Nigeria, costs its members N10.1 trillion annually, or around 2% of the nation’s GDP.
The goals of the federal government to address issues in the power sector have not been clear.
Amidst the ongoing decrease in electricity supplies, Adebayo Adelabu, the Minister of electricity, issued a warning four days ago to cancel the licenses of DisCos.
He has repeatedly pleaded with Nigerians to exercise patience as he mobilizes support for a solution to the nation’s power problems.
The Nigerian government has pledged to pay gas companies N2.6 trillion in arrears; nevertheless, he has also bemoaned uniform power subsidies, which are projected to cost N3 trillion by 2024.
Nevertheless, there is still no clear policy direction for Nigeria’s power industry, over six months after Adelabu was appointed Minister.
Instead, it has been a time of declarations, pledges, and promises with wild blackouts.
Wumi Iledare, Professor Emeritus and Executive Director of the Emmanuel Egbogah Foundation, stated in an exclusive interview the absence of policies, direction, and continuity is the issue facing the nation’s electricity industry.
He asserted that in order to advance, institutions in the electricity industry needed to be empowered and developed.
The Emeritus Professor claims that in order to effectively address the nation’s power sector crisis, the Nigerian government must implement complete power sector decentralization.
“Personalizing the collapse of Nigeria’s power structures is a bad idea. I would prefer to see a shift in the governance of Nigeria’s energy institutions away from a personality-driven approach. In the energy sector, personalizing an institution’s governance continues to be the main issue at stake.
A common vision between political appointees and apolitical team leaders must empower institutions. A transformative leadership attitude with a clear understanding of the inevitable professional team leads can be readily ingrained when institutions are empowered.
“I believe that the transactional leadership mentality is impeding long-term solutions to Nigeria’s energy crisis. This might be cultural in nature.
Professionals in the energy sector will be less obedient to political appointees under such transformational leadership scenarios, without upending the temporary political power structure.
“What I have seen in Nigeria’s power sector is the need for more policy continuity from Bola Ige to Nnaji to Nebo, etc., year after year. Excellent Ministers, but due to policy summersault and a transactional leadership orientation, there have been no advancements in power availability, affordability, accessibility, or adaptability.
At least with the growing decentralization of authority, there is finally light at the end of the tunnel. Complete power decentralization must become a reality for the federal government. Renewal licenses have additional conditions.
“The power sector restructuring and privatization that followed were technically and competitively delimited, and the original restructuring was poorly conceptualized.”
President of the Nigerian Consumer Protection Network Kunle Olubiyo stated that the government should declare a state of emergency in the industry due to the ongoing outage.
For the industry to advance, he argued, a drastic procedural redesign of the whole regulatory ecosystem will be required.
Olubiyo went on to say that the electricity minister ought to withdraw from the Transition Electricity Market and let supply and demand dictate how the power industry is run.
“The entire regulatory ecosystem needs to undergo a surgical procedural overhaul by the government.” It is imperative that the Nigerian Bulk Electricity Trading Company Plc be wound down by the government.
“Power Purchase Agreement, or PPA: The Minister of Power ought to withdraw from the Transition Electricity Market and permit the market to be entirely determined by supply and demand. This will terminate the practice of purchasing electricity in bulk, which goes against the fundamental principles of a competitive electricity market and stifles Nigeria’s aspirations to become a globally competitive market.
The government need to stop making payments for generation capacity since they consistently lead to payments for stranded generation.
“The vicious cycle of mismatches/misalignments in market structure and business modeling would not end with Legacy Debts and Post Privatization Debts to Gas Producers and Generation Companies.”
The market value and pricing of each megawatt of electricity should be set by the interaction of supply and demand, not by the government.
“The Nigerian transmission company should be unbundled, and the government should support recapitulation of equity stakeholding in upstream and downstream electricity business concerns.” It ought to be divided into sub-regional centers as well.
“The government should finish the ongoing leadership makeover of Nigeria’s transmission corporation with three unique features: commercial, technical, and operational. He suggested that the federal government declare a state of emergency in the electricity sector as a last resort.
According to Adetayo Adegbemle, Convener and Executive Director of PowerUp Nigeria, money, or liquidity, is the main issue confronting the nation’s electricity sector.
He pointed out that because they promote inefficiency, electricity subsidies herald a significant threat to the power industry.
Adegbemle said that the Minister of Power ought to be replaced since he had fallen short of expectations.
In light of the difficulties, he continued, the industry needs a visionary leader.
“You see, money is the crux of this problem. We have been selling the same commodity on credit, operating our electricity sector in debt, and subsidizing what little we have.
Since over 80% of Nigeria’s power is generated using gas as fuel, you will remember that this has caused severe illiquidity issues that prevent us from being able to pay the gas suppliers. We have only recently settled $120 million of the $1.3 billion that suppliers are due.
“We also have significant difficulties with the power tariff subsidy we pay. This has made the power industry more inefficient.
As I mentioned before, we have to realize that energy is now a commodity and that its sales value and production costs must make it lucrative for investors.
If this isn’t addressed sufficiently, the power industry is still in risk.
“There are fire events happening all around the country, which is another attack on our transmission assets. Hold the TCN leadership accountable for this, in my opinion, and they will find a solution.
Sadly, we haven’t been endowed with inspiring leadership.
“We have to exercise caution in the type of overhaul we ask for.
“Human resources and capacity are our concern, not the structural issues facing the electricity industry.
“Yes, I support the Minister’s replacement since, at any rate, the majority of the power sector hinges on his “visionary policy leadership,” which he has not been able to demonstrate.
“Even all of his public statements have not been encouraging.”
The nation’s power sector is in a bad shape, according to another specialist in the field, Engr Yesufu, who wished to remain unnamed.
But he asserted that any change had to be structural.
He pointed out that greater funding from the government was needed to support generation through targeted subsidies.
“The current electricity situation is dire, and switching to a new source will make things worse. In the short, medium, and long terms, the strategy needs to be implemented methodically and gradually.
“Year 0 to 3: In order to lessen pain for Nigerians, the majority of whom are suffering as a result of the Fuel & FX policy changes, the government must inject enough funds to sustain generation through some targeted subsidy, either through gas or other payments.
“There needs to be a method to begin reorganizing the Discos through FGN and States in the near future so that greater private participation can be made in pushing existing models like franchising or embedded generation.
“Improve TCN operations and investment—more generational promotion needs to be supported by laws and financial incentives to draw in capital.
“Years 3 to 6: The restructuring will proceed to implementation and the removal of any obstacles, and the subsidy in Year 1 above will begin to be reduced. The PPI must have begun to effect the Discos and TCN by allocating the necessary dividend to more of their projects.
“The appropriate policy incentives should be used to promote integrated power solutions. At this point, we also require well-thought-out implementations that will guarantee appropriate oversight of the scheduled phases in the near future. At this point, the suitable candidates ought to have been found and placed.
Year 6 to 9: During this phase, the goal will be to increase return on investment and make the electrical industry profitable. The government needs to make sure the plan it implements is effective. If not, adjustments based on real-world experience may be made.
“Whether a continued subsidy is necessary or a significant reduction is required will depend on the particular circumstances. But every effort needs to be strengthened, and backing for the actual execution of projects needs to come from the private sector.
“All value chains need to be covered by tariffs, and the government should make sure the entire economy makes sense before focusing on tax recovery to help the industry and others.
Furthermore, metering would have been far better for increased collection to sustain and lessen government intervention in the industry (if still ongoing).
“I’ll stop right now. Despite its length, the recovery process still requires government assistance to be successful, he said.
In the meantime, to address the issues facing the nation’s power industry, Chinedu Amah, CEO of Spark Online, a sector investment forum, advocated for the complete elimination of electricity subsidies.
According to him, a sector shakeup won’t work unless the underlying issues are resolved.
The elimination of subsidies and a clear route to employment creation via incentives for manufacturers and service providers are crucial.
We wouldn’t have had an impact if you had shaken things up without addressing the basics.
“We must reopen the factories and bring in service providers who will create jobs for more people,” he declared.
Eze Onyekpere, Lead Director of the Center for Social Justice, stated that the problem goes beyond Disco’s licenses being revoked.
He pointed out that the issue affects every stage of the electricity industry’s value chain, from distribution to generation and transmission.
The Minister of Power is incompetent in regards to him, that is the point.
“It’s not about taking away Disco’s licenses; there are better ways to handle this situation and get outcomes. You give them a standard to follow. You fire the ones that don’t show up.
“Are we producing 10,000 MW and transporting the 10 MW, and is the distribution issue now present? Instead, he claimed that there was an issue with each link in the value chain: generation, transmission, and distribution.