Nigeria’s power sector takes centrestage at symposium

One of the major challenges facing Nigeria today is the lack of regular supply of electricity for domestic and industrial purposes.  For decades, the power sector has been hit by this crisis which has meant that the nation is yet to meet its power aspirations. This has had fundamental outcomes on the country’s socio-economic productivity and development vision.

The deficiency in generating capacity relative to installed capacity is one of the fundamental reasons for the incessant power outages. Industry watchers have said that the country is unable to meet consumers’ demand because of its policies, regulations and management of operations.  The impact on commercial and industrial sectors and the constraints on the overall economy are well-documented.  Low electricity supply affects production chains leading to a collapse of small and medium enterprises (SMEs), as well as large-scale industries. Indeed, it is known that several industries have moved their operations way from Nigeria. The knock-on effects are far-reaching: mass retrenchments, unemployment and social malaise and instability.

Indeed, Nigerians have become reliant on generators with the nation reputed to be one of the highest importers of generators in the world. As recent as January 2022, the United Nations revealed that Nigeria spent $2.4bn on generator in two decades.  Certainly, there are numerous other constraints in the sector including infrastructure deficiencies, which prevent regular electricity to be the engine to drive industrialisation and economic growth.

Over the past three decades, Ogun State has become the hub for large scale industries. The Agbara and Ota industrial zones are household names on Nigeria’s industrial landscape and due to the state’s unique position of being the Gateway to the nation’s heartland, it has the potential to attract many more investors and expand its commercial corridors. Thus, proffering solutions to the crisis in the power sector is imperative.

It was in view of the current situation in the power sector, that the third Ladi Adebutu Good Governance Symposium Series with the topic ‘Power for Sustainable Development in Ogun State’ took place last month.

The speakers at the Symposium were Mrs Folake Soetan, Chief Executive Officer, Ikeja Electric Plc, Mr Sunday Oduntan lawyer and Executive Director, the Association of Nigerian Electricity Distributors (ANED) and Barrister EhiUwaifoh.

Soetan, who also co-chaired the event with Sunday Oduntan, set the tone by identifying some of the challenges in the sector. She observed these to include: “Challenges affecting power generation and distribution in Nigeria include shortage of gas supply and high Aggregate, Technical, Commercial and Collection (ATC& C) losses. According to her, “Others were: High ATC& C losses include non-payment for electricity consumed by residential/ maximum demand customers (Ministries, Departments and Agencies) of government across the three tiers and leads to depletion of revenue meant for the entire value chain.”

She identified the following as solutions to addressing some of the problems: “ Meeting the energy demand implies that ATC & C losses must significantly reduce prepaid meters must be available to customers to ensure they pay for electricity consumed; while energy theft and vandalization is curbed drastically.”

She added that “Customers have to pay for electricity in line with the service based tariff (SBT), while players in the value chain must abide by the service level agreement (SLA).

She, however, said the Ikeja Electric had forged ahead with its vision to increase power supply by introducing “new thinking on how to empower lives and businesses across their network. This was being realised through reducing ATC&C losses and expansion of their network and maintaining infrastructure.”

On his own part, Oduntan provided a background to the power-needs of the state: “Electricity supply is a very critical catalyst for economic growth and development in Ogun State. Without steady, quality electricity supply, manufacturing activities will suffer. Even agricultural production and processing is reliant on the availability of electricity. What is currently delivered to the state is not enough to sustain social and economic development. The state needs at least double of what it currently receives daily to meet the needs of customers connected to the grid within its boundaries. The many industries and commercial entities in the state therefore must source electricity from alternative- usually more expensive-sources for them to remain in business and this cost is eventually passed on to the customer.” Of course, what applies to Ogun State also affects the rest of the country.

He thus recommended that the way forward for the entire country is:“ For all stakeholders to give electricity value chain the necessary support in ensuring Technical Alignment, Commercial Alignment and Risk Alignment and Regulatory & Policy Consistency.” He said the alignment of the value chain will attract investments into the sector; increase generation, transmission; lower tariffs and improve electricity supply and quality of life.

The final speaker for the day, Ehi Uwaifoh, a lawyer, reminded the audience which comprised stakeholders from the public and private sector including community development associations,  chambers of commerce, industrialists, civil society, trade unions, professional bodies, academia, women’s and youth groups, energy solution experts, media, and the general public that: “The 1999 Constitution and the National Power Policy of 2001 provide that power generation, transmission and distribution in Nigeria is a shared responsibility between the federal government and the state governments. Yet, the state governments have left it solely for the Federal Government.” He drew attention to the relevant provisions are in Sections 13 and 14 of the Concurrent Legislative lists Part II, Schedule 2 of the 1999 Constitution as amended.

He noted that: “In view of the foregoing, it is baffling that with the severe incapacity of the Federal Government to satisfy the electricity needs of the country, states have not taken advantage of these provisions of the constitution to step in to bridge the gap in the provision of electricity within their states to drive their socio-economic developments. This may be due to ignorance, a lack of understanding or an unwillingness to test the boundary of these sections in our Constitution. It is appearing that many state governments are not aware of these provisions or their import to take advantage of them in the provision of power to their people. Uwaifoh concluded by saying: “A state like Ogun should have a legal and regulatory structure for power generation, transmission, and distribution within the state. It is this structure that has the capacity to attract investment into the sector.”

In his own contribution to the discourse, the host of the symposium, Honourable (Dr) Ladi Adebutu said based on all that he had heard, especially from the perspective of the constitution, “Every state must ensure they have the capacity to generate, transmit and distribute electricity effectively in order to support development.” He added that the importance of power to socio-economic development still remains a central plank in our national discourse and we have a large percentage of micro, small and medium-sized enterprises, thus the power sector must be well positioned for economic progress and address youth unemployment.

.Orekoya writes from Abeokuta, Ogun State and he is a media consultant to Honourable Ladi Adebutu