Businesses have suffered N96.4 trillion in damages as the power outage intensifies.

Businesses have suffered N96.4 trillion in damages as the power outage intensifies.

If the World Bank’s projections are correct, Nigerian businesses may have lost no less than $232 billion (N96.4 trillion) in the eight years that the Federal Government and sector operators have been dragging their feet on getting the sector to function.

While government ministers in charge of power, the Transmission Company of Nigeria (TCN), and the Nigerian Bulk Electricity Trading Company (NBET) trade new accusations with the Distribution Companies (DisCos) and the Generation Companies (GenCos), industries and homes across the country are completely dark.

This is despite the continual tariff increase established under the Service Based Tariff (SBT), which Zainab Ahmed, the minister of finance, budget, and national planning, stated is being implemented.

Meanwhile, there are indications that the liquidity problem, which has prevented new investment in the sector, has risen to almost N3.7 trillion.

The situation in the electrical industry has recently deteriorated, with the 11 distribution companies writing notes to end-users accusing TCN of failing to supply adequate energy to dispatch.

The TCN retaliated against the GenCos, claiming that 14 electricity producing stations were shut down across the country. In a dramatic turn, NBET accused DisCos, claiming that “the DisCos have reneged on all performance commitments and have put the sector in a bind.”

However, at a press conference yesterday, the GenCos insisted that illiquidity caused by the huge sums owed to them by NBET “continued to frustrate the GenCos and keep them incapable of meeting their obligations, which are extremely necessary to keep their power plants running and make capacities available.”

While this is going on, the Federal Government is borrowing more money to pump into it, despite the fact that stakeholders have warned that the sector is structurally deficient, necessitating the resolution of foundational issues such as getting the sector’s regulator, the Nigerian Electricity Regulatory Commission (NERC), on the right track before expecting results in the industry. Ahmed stated that the Federal Government would spend no less than $2.7 billion on electrical infrastructure.

Ashish Khanna, the World Bank’s Practice Manager for West and Central Africa Energy, stated that the country’s electricity industry has not kept up with demand or provided dependable service to existing consumers.

READ ALSO:  Singer Seyi Shay welcome first child

Khanna went on to say that unstable electricity costs Nigerian firms $29 billion each year. This number has risen to almost $232 billion in the eight years since the sector was deregulated. That amounted to N96.4 trillion when converted to naira using the country’s current exchange rate. From 2015 to 2022, the losses nearly doubled the N76 trillion total national budget under Buhari’s administration.

According to a French Development Agency (AFD) report, liquidity losses in Nigeria’s electrical industry have been steadily increasing by N474 billion per year, or N1.3 billion per day. In eight years, the sector’s liquidity crisis has thus hovered at N3.7 trillion.

Donor agencies such as AFD have stated that they have donated approximately €2 billion to support the sector, which is viewed as a sector where more money means less power.

Between 2015 and 2018, the Obama Administration’s Power Africa, a USAID effort, invested around $1 billion to revitalize the power sector. The World Bank stated that it had provided $1.25 billion in assistance to the country’s power industry in the last two years.

While the $2.3 billion Nigerian/German deal through Siemen’s has not spurred excitement in the sector, the Central Bank of Nigeria (CBN) is currently lending N1.5 trillion in the sector.

Power and Aviation Intervention Fund (PAIF) at around N300 billion, Nigerian Electricity Market Stabilisation Facility (NEMSF) at around N213 billion, N140 billion Solar Connection Intervention Facility, over N600 billion tariff shortfall intervention, and a recent N120 billion intervention designed for mass metering are among the CBN interventions.

While the Federal Government stated that N30 billion was paid daily to subsidize electricity after the sum was dropped from N50 billion due to the implementation of SBT, the government also stated that the subsidy on electricity tariff is around N1.0 trillion between 2019 and 2021.

In a virtual conference over the weekend, Zainab informed the International Monetary Fund that the period of subsidy for power customers has finished, implying that consumers will see a gradual hike in tariffs through 2025 based on the SBT’s design.

READ ALSO:  Peter Obi Raises Alarm Over INEC Move To Manipulate Results

Remember that in 2016, the Federal Government established a N701 billion payment assurance guarantee for NBET through the CBN, while the Japanese government invested about 1.3 billion yen, or $11 million and N2.2 billion, towards the growth of Nigeria’s power sector.

While the NBET stated that Nigerians utilized approximately N720 billion in energy per year, the figure converts to N5.7 trillion in eight years. When combined with the N1.3 trillion paid by the Federal Government for similar purposes in recent years, the payment for energy bills would have totaled N7 trillion.

With tariffs rising, the assertions made by various authorities to explain the worsening status of supply do not make up.

“A summary of the power generating profiles in the last two months, for example, clearly shows that 14 gas-powered stations were either not generating at all or had limited generation at various times during the period, further depleting the quantum of power generation available for transmission into the grid on a daily basis,” said TCN spokesperson Ndidi Mba.

“Power generating stations in this category include: Omotosho units 5 and 6; Olorunsogo units 3, 4, and 6; Omoku units 3 and 6; Omotosho NIPP units 3 and 4; Delta units 15, 17, and 18; Afam VI units 11 and 12; Olorunsogo NIPP unit three; Ihovbor NIPP unit two; Sapele Steam unit three; Sapele NIPP unit three; Odukpani NIPP units one and three;

She noted that Jebba Hydro and Shiroro Power Generating Stations were either out or had limited generation, causing an additional 232MW loss from the grid, while other power generating plants such as Omotosho units three and four; Olorunsogo units one; Delta units 10 & 20; Afam VI unit 13; Ihovbor NIPP units 4; Geregu NIPP units 22 and 23 and Odukpani NIPP units 2, 4 and 5 were also out

According to data obtained by The Guardian from the Association of Power Generation Companies (APGC), average generation capacity in January was 4,81.18MW, 4,457.22MW in February, and 3,687.67MW today. In the current generation, 4,263.70 were stranded in January, 4317.39 in February, and 1,739.74 in March.

READ ALSO:  Dare to Believe! By Pastor Chris Oyakhilome (Sermon)

Data from 2015 to 2022 revealed that around N1.6 trillion in losses were sustained by the investment as a result of transmission infrastructure’s inability to pick enough load.

Dr. Joy Ogaji, the association’s Executive Secretary, claimed that around 80% of power plants in the country employ gas-fired turbines, and that the GenCos have repeatedly battled with interminable gas-related difficulties that impede effective generation.

“From 2013, when the power sector was partially privatised, to the present day, weak and insufficient infrastructure (transmission and distribution) has continued to render insignificant a significant portion of the generation capacities recovered or added by GenCos through massive investments made by them to increase their respective generation capacities.” While the owners of the GenCos pledged to investing and increasing generation capacity across the country by up to 13,000MW, no matching investment or upgrade was made at the transmission and distribution ends.

“The outcome was significant stranded capacity of GenCos, which Nigerians, paradoxically, need need but cannot obtain.” Given that capacity utilization is frequently employed as a measure of productive efficiency in any market, decisions about investments in power generating capacity are influenced by expected returns and costs,” she explained.

Kunle Olubiyo, a legal practitioner and consumer advocate in the Nigerian Electricity Supply Industry, stated that the government’s claims on payment of electricity subsidies may be incorrect, emphasizing that “it is the consumers who have been short-changed by estimated billing for energy that they did not consume.”

Related Articles

Leave a Reply

Back to top button