Failure of estimated billing and the need for metering
The country’s ailing power infrastructure and ecosystem are on the brink of collapse, threatening viable industrialisation and sustainable economic growth.
The electricity generation companies are drowning in a sea of debt, owed a staggering N3.17 trillion, with a funding gap of N1.7 trillion.
Liquidity challenges, unfavourable fiscal and monetary conditions, inflation, and foreign exchange volatility have pushed them to the edge.
GenCos are struggling to access forex for spare parts, facing huge electricity debt, and battling gas shortages.
The Federal Government’s failure to harness Nigeria’s robust gas reserves has resulted in underutilisation, with huge volumes flared during crude oil production.
The numbers are stark: despite having 206.53 trillion cubic feet of proven gas reserves, Nigeria generates a paltry 2,944-4,317MW, compared to Egypt and South Africa’s 58,000MW each.
The power sector’s decay is a national emergency, requiring a strategic and seamless solution.
The government must act now to rescue the sector, harness Nigeria’s gas reserves, and unlock the country’s economic potential. The future of Nigeria’s industrialisation and economic growth depends on it.
The government’s sole management of the national grid, ostensibly to protect sovereign assets, has led to persistent grid failures and inefficiencies, creating a dire situation.
The grid collapsed 46 times between 2017 and 2023, according to the International Energy Agency, and it has already collapsed six times in 2024. Privatisation and redesign with effective regulatory oversight are urgently needed.
President Bola Tinubu and his Minister of Power, Adebayo Adelabu, must urgently revisit the gas-to-power initiative of their predecessors to address the gas-to-power deficit.
Engaging Siemens Energy to overhaul the sector and eliminating bureaucratic hurdles, while adhering to global best practices, is essential.
The transmission segment of the power sector is also in disarray, plagued by vandalism.
In April, the Transmission Company of Nigeria reported that four towers on the Jos-Gombe 330 Kilovolt transmission line were vandalised, disrupting bulk power supply to Gombe, Yola, and Jalingo.
The Centre for the Study of Economies of Africa highlights that inadequate transmission lines, poor management, a lack of maintenance culture, and flawed grid design hinder the power sector.
The government’s current plan to split the TCN and create the Nigeria Independent System Operator of Nigeria Limited, another government-run entity, is counterproductive. The TCN should be privatised to ensure transparent management of existing assets, attract new investments, and boost productivity in the sector.
Meanwhile, the Goodluck Jonathan government’s privatisation of the power sector was a well-intentioned but poorly executed move. Local firms with little expertise acquired distribution licences, focusing on profit rather than investment in facilities. This deprived Nigeria of much-needed foreign investment and expertise.
To salvage the ailing DisCos, the Federal Government is repossessing and reorganising them. Some have been taken over by banks, while others are under government control.
Despite privatisation, the government continues to subsidise DisCos with N204.59 billion in the third quarter of 2023 alone.
Nigerians bear the brunt of the sector’s inefficiencies, subjected to estimated billing and exorbitant charges without accountability. The lack of meters has exacerbated the situation, with only 58.37 percent of registered customers metered. The government must mandate DisCos to implement metering, deducting costs from consumer bills. Metering complaints account for 53.40 percent of all complaints, highlighting the urgency for reform.
The power sector’s decay is a national emergency requiring swift action. The government must learn from past mistakes and prioritise expertise, investment, and consumer welfare to rescue the sector and unlock Nigeria’s economic potential.
The situation worsens as various ministries, departments, and agencies (MDAs) owe electricity distribution companies (DisCos) billions in unpaid bills. In February, the Abuja Electricity Distribution Company (AEDC) announced that 86 MDAs owed N47 billion, with Aso Rock alone owing N923.8 million. Following this embarrassing revelation, Aso Rock managed to pay N342.3 million.
On June 3, the AEDC issued another notice to disconnect 23 MDAs, including the Office of the Secretary-General of the Federation, military formations, the Federal Capital Development Authority, the Federal Ministry of Works, and the Federal Airport Authority of Nigeria. Additionally, the states of Kogi and Niger are among those indebted to the DisCo.
President Bola Tinubu should mandate the MDAs to negotiate a payment system with the DisCos and clear their debts using available budgetary provisions. Regulatory agencies and MDAs that fail to settle their bills undermine energy efficiency efforts and set a poor example for citizens, encouraging them to default on bill payments. This must be rectified.
Tinubu and his Minister of Power, Adebayo Adelabu, must develop a comprehensive and unified policy that addresses the sector’s numerous issues. They should offer clear solutions, provide robust oversight, and encourage foreign direct investment (FDI).
State governments should also take proactive measures. They should follow the example of the Aba Geometric Power Plant, which serves Aba, Abia State’s commercial hub. States should leverage the new law that permits them to enhance electricity provision within their domains.
Competent private companies should be encouraged to invest in the industry, and the government should incentivize investments in off-grid alternative energy sources.
