Tuesday 4 August 2015

Driving A Desirable ‘Change’ In The Power Sector - by Dan Aibangbe

Electricity, globally, is to national development what blood is to the human body. It’s a major stimulant and the bedrock for enhanced productive capacity. So fundamental is electricity that it is indispensable to our daily living.

Unfortunately, challenges in this critical sector appear to have defied all logical solutions in the Nigerian context. At the outset of the new democratic dispensation, the readily available excuse was the long neglect of the sector by successive military juntas in terms of developmental expenditure and maintenance in budgetary allocations.

Today, one and half decades into democratic rule, the story remains the same. Government expenditure in the sector has not been encouraging, with just about $10bn, out of which $8bn came from the National Integrated Power Project. That means, direct government expenditure in the troubled power sector in all of these years is just $2bn despite the huge amount of money at the disposal of the Nigerian government. It’s not surprising that Nigeria has only earned herself less power availability, massive job loss and spiralling unemployment, loss in public collaterals to private entities and massive de-industrialisation.

Twenty five years ago, the country’s power generating capacity was about 6,000 megawatts. This fact, will, no doubt, shock many Nigerians and throw up the question: “How did we get to this sorry state?” The answer is not farfetched. Infrastructural decay, sheer negligence and corruption are the major factors.

At this point in history, it’s crucial and urgent that we take a critical look from outside into the black box called the Nigerian power sector. Aviation experts are quite familiar with this procedure after each crash. So, we can borrow this analogy from them to chart the path for this discourse.

In trying to put into perspective where we are today, we also need to borrow from the experience of countries that are similar in terms of population, level of development and natural resource endowment. India, for example, generates as much as 950,000 megawatts for a population of 1.2 billion people. That’s about 850 kilowatts per person. South Africa currently generates 40,000 megawatts, with additional 11,000 megawatts to come on stream for a population of about 50 million people. That comes to 900 kilowatts for each person. In Nigeria, we have about 4,000 megawatts and sometimes less for the consumption of 180 million people. Comparatively, this goes to one kilowatt for 45 people. What this implies is that the average power available to a single individual in other countries is what 45 Nigerians share. To make it clearer, if this was food, the meal available to one person elsewhere is what 45 people will share in Nigeria. Obviously, these 45 people will become emaciated and probably die of hunger. This is exactly what is happening to our industries and which also impacts on our unemployment rate.

In terms of technology, Nigeria is also highly deficient. The old hydro-power stations were constructed in the seventies by foreign engineers. Presently, the gas-driven thermal IPPs are based on foreign technologies like those of China and Germany. Our transmission technology too is foreign, although our local engineers have made considerable in-roads in the areas of servicing and maintenance. Only recently has the Nigerian government developed the necessary partnership for training power sector engineers and manpower, when the existing manpower gap had become too obvious with the unbundling of the defunct Power Holding Company of Nigeria.

The most reliable component of our power generation mix today is hydro due largely to the natural resources of the Niger River and other rivers. This has afforded us the development of backbone generating infrastructure such as Kanji and Shiroro dams. Unfortunately, this model of power generation is not scalable and has a long gestation period, unsuitable for the Nigerian situation, which has become urgent. The other model which is the thermal generating type, infinitely scalable and of relatively low gestation would have been the ultimate solution, considering our comparative advantage in the sourcing of gas for such plants. Nigeria is endowed with expansive deposit of hydro-carbons such as natural gas and coal. In the last 15 years, the country has invested huge sums of dollars mentioned earlier in pursuit of this apparently beneficial model. The challenges which have stunted the success rate are systemic in terms of corruption and the economics surrounding the procurement and stable delivery of input raw materials such as gas. Nigeria is one of the top 10 gas producers in the world, yet, natural gas is not under the control of the power sector. There are three conflicting interests contesting the use of Nigerian gas: The international market, the domestic market and the energy sector. Here lies the problem.

Because the Nigerian gas production sector is firmly under the control of the multinational oil companies, their focus is to satisfy the international market. The Nigerian regulator, the Nigerian National Petroleum Corporation appears not to have been empowered with the right political will to assert its full influence in securing adequate supply of gas for the energy sector. These are market forces playing out and resulting in the underproduction of the NIPPs and other thermal generating plants.

The supply chain of gas has been subjected to high levels of corruption by the cabal operating Nigeria’s oil sector. The choice facing us as a nation is to confront the corruption system head-on or procure our gas at open market rate and seek other less competitive fuel for our thermal stations such as coal. The Petroleum Industry Bill and other local content bills will form useful tools in addressing the issue of corruption in the power sector as well. Government should also encourage companies to produce gas solely for domestic use in the energy sector. The other option is to explore modern renewable energy technologies such as wind turbines, solar energy and bio-fuel.

Rather than see the power sector challenges in a negative light, we should begin to unwrap the opportunities presented to this current and future generations. Nigeria has the largest power plants in Africa. It’s my belief that if the potential of the power plants are adequately harnessed, there will no doubt be a tremendous improvement in power generation. We must develop world class models for the transport and entire value chains for energy delivery, develop engineering technology and human resource locally as well as research into modern and futuristic energy storage and accumulator systems. I challenge Nigeria’s Ivory Towers, especially the universities of technology to put their act together and syndicate locally applicable solutions, especially in the field of renewable energy such as gas, wind and bio-fuel.

These measures, apart from resolving the age-long power sector challenges, will also boost employment and productivity as well as help in rejuvenating and diversifying the Nigerian economy.

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