Monday, 24 June 2013

LET THERE BE LIGHT!

You know that feeling. It is late evening and you’re on your way home, and the most significant prayer on your lips is: “Dear God, let there be light at home.”

Because life is just so different – quieter, more relaxed, not to say cleaner – when there’s government-supplied electricity.

The statistics are dismal, and well-known. Nigeria generates only about 4,000MW of electricity, for its 160 million people. That quantity of electricity is not sufficient for even Lagos State alone. In fact, it has now become a fad to compare Nigeria’s electricity generation with elsewhere in the world. From that comparison “game”, we now know (according to Renaissance Capital) that Japan’s Narita Airport consumes about as much electricity as the giant of Africa generates, and that (according to the Economist magazine), “Nigeria has as much grid power as Bradford, a post-industrial town in the north of England.”
We also know that South Africa, with a third of our population, generates 10 times as much electricity as we do. And that Brazil generates 20 times as much electricity for its population which is only slightly more than ours.

It is scenarios like this that make you wonder if Nigeria isn’t a cursed country. (Of course, the “speak-no-evil of your country” cabal will disagree. Good luck to them.)

Even countries such as Ghana, Kenya, Uganda, and Cote d’Ivoire, with far less wealth than us, do not have it this bad; in fact, they’re doing a far better job of maintaining and improving their power utilities. Friends who live there speak of much shorter outages, often accompanied by advance notification – a scenario that would definitely alarm the average Nigerian.

The problem certainly didn’t start yesterday. What we have on our hands is a culmination of decades of neglect and mismanagement. The 1980s and 1990s were a “Things Fall Apart” decade for Nigeria’s public infrastructure. As the Coordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, writes in her book, “Reforming the Unreformable”, when Olusegun Obasanjo became President in 1999, “a review of the (power) sector showed that no new plants had been built and no major overhauls of existing plants had taken place for a decade, that only 19 of 79 generating units were in operation, and that no transmission lines had been built since 1987.”

Even with that realization, it seems the Obasanjo government underestimated the urgency of the crisis. It took six years for the power sector reform to get the much needed legal backing, with the passage of the Electric Power Sector Reform Act in 2005. And then, in the twilight of his administration, a feverish bid to build new power plants, under the National Integrated Power Project. He now says funding was the problem –sometime last year, I attended an event where he said: “If I had money, I would have started work on power earlier.”

No use crying over spilt milk. Bottom-line is, apart from that legislative framework – and as a foundational reform element, we cannot afford to discount its significance – that administration made little or no “last-mile” dent on our darkness.

Enter President Umaru Yar’Adua, who devoted quite a bit of his attention towards reversing some of Obasanjo’s policies. In some cases, this was the right thing to do, considering how, in his final days Obasanjo oversaw the award of a good number of questionable contracts.

The NIPP– which would have been the biggest electricity sector legacy of the Obasanjo and Yar’Adua governments –virtually went into limbo under Yar’Adua. All the while, Yar’Adua kept promising transformation. He assured that Nigeria would enjoy 6,000 MW by 2009. We only managed to get halfway, not surprising, considering that we had been hearing lofty promises for a long time – as far back as 1986 the defunct National Electricity Power Authority was promising an end to the issue of blackouts in Nigeria.

By the time Yar’Adua died, this was the situation: After 11 years of democracy, Nigeria had, in spite of billions of dollars spent, spectacularly shown the world how to snatch darkness from the jaws of light!

Now, it has fallen on President Goodluck Jonathan to inherit the mess, and the deep frustrations of millions of Nigerians. Three years on, what’s the scorecard? Interestingly, or rather most strikingly, the three administrations were produced by the same political party, the Peoples Democratic Party.

In theory, we’re progressing. The government has managed to build significantly on the legislative framework. We now know that power sector reform is as much about the economics (tariffs/pricing, purchase agreements, government guarantees, etc) as it is about engineering. The government is working to get the economics right – a new, more realistic, pricing regimes (the most recent went into effect on June 1, 2012), setting up the World-Bank backed bulk-trading company that will guarantee payments to the new owners of the generation companies on behalf of the distribution companies until the DISCOs can improve on their currently dismal collection rates. (As one industry expert put it, “None of Nigeria’s DISCOs is credit-worthy”).

The transfer of privatised/concessioned plants is on course, and the deadline for full payment is fast-approaching. Finally, we seem to have put to rest the controversy surrounding the transfer of the transmission grid to a management firm.

On the engineering side, a number of the NIPP plants are due to come on-stream soon– one estimate has it that as much as 10,000 MW may be added to the grid in the coming months, from a combination of the NIPP and private generation projects.

But, we’re still suffering from the failings of the past. The grand narrative of the construction of new power plants contains examples of some impressive feats of stupidity – gas-fired power plants built without any one thinking about how to transport gas to them; giant turbines imported without thinking about the logistics of moving them from the ports to the construction sites.

There’s a transmission challenge as well, that we haven’t solved yet. Experts say the existing grid cannot sustain much more than the 4,000MW we’re currently generating. So, even if we were to increase generation to 6,000MW – and we’re now closer to that goal than at any other time in our history – we do not have the capacity to transmit it, and will only be setting ourselves up for a season of system collapses.

On the whole, we’re still quite some distance from dawn – but at least the clock seems to be ticking again.

One can’t discuss the power sector without focusing for a bit on the flip side of the dysfunction: The fact that a multi-billion dollar alternative economy, which I call the “Generator Economy”, has been created. One estimate has it that Nigerians spend as much as $10bn annually buying and maintaining their generators.

Electricity Solutions firms have arisen to fill the huge gap between supply and demand, selling generators and inverters and solar panels and providing employment to tens of thousands of consumers who are in dire need of power. A significant part of the country’s informal economy is made up of generator technicians – making a living off installing, repairing – and damaging – generators. There’s an ancillary economy as well, which would include diesel merchants, trucking businesses, and artisans who build generator-houses (our own equivalents of dog kennels) and install those “PHCN-is-back!” alarm systems.

When power supply improves, we might have to do something regarding this alternative economy – knowing Nigerians, you might want to patiently await the inevitable suggestions of a “Bailout Package” for generator and diesel merchants. Then, again, the size of the Economic Opportunity Lost to a dysfunctional power sector (the businesses that have shut down or relocated abroad, the fuelling costs, the fuel subsidy costs, etc) obviously dwarfs that of the Economic Opportunity Created (the Generator & Inverter Economy), and the gains of ending dysfunction would more than offset the losses from dismantling the Generator Economy.

Analysts have indeed suggested that a marked improvement in Nigeria’s power situation could easily push our economic growth into double digits.

The problem is I’m not sure Nigerians are seeing their government demonstrate a sense of urgency in the bid to light Nigeria up. Let’s learn from the aggression of the Chinese, who are adding, on the average, 100 MW of generation capacity every week. China knows that electricity is no laughing matter, and that any country that aspires to be taken seriously in the world will race against itself and its personal demons to keep the megawatts flowing.

In true Nigerian style, we’re content with boasting and promising, and at another time praying, while simultaneously cutting deals that undermine true progress. And you shouldn’t forget our penchant for “divine intervention” – I can’t imagine what it must be like to be God, having to deal with millions of nightly “let there be light” mutterings from an improbably dark corner of West Africa, when there are far more pressing concerns to be dealt with across the world.

Until we show a greater sense of desperation to fix this problem, and to build capacity not merely for today but for tomorrow, we might as well keep the prayer candles burning, and blissfully forget all those dreams of selling off our generators to scrap factories, or Museums of Odd and Improbable Things.
By Tolu Ogunlesi 
(to4ogunlesi@yahoo.com)

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