The proposed ban of power generating sets through a legislative framework is not new to Nigerians ElectricityPricing Generator
has grown over time. Also, issues of electricity access are increasingly becoming major electioneering promises ahead of national elections. Despite a 2015 ban on the importation of two-stroke engines due to government’s concerns over rising air pollution, the value of Nigeria’s generator market is estimated to have risen from more than $51m in 2017 to over $450m today. FEMI ADEKOYA and KINGSLEY JEREMIAH write on why the recent move by the Senate is nothing different from the previous attempts.
With the ability to distribute an average of 3, 781MW in 2019, from a yearly average of 3, 807MW in 2018, the Federal Government plans to spend N9.05b on the purchase, maintenance and fuelling of generators across the Ministries, Departments and Agencies nationwide, this year. But the realities playing out from that critical arm of government in recent times have shown that the priority of our lawmakers is in conflict with intervention required to salvage a critical sector such as power.
However, the exempted sectors or services were according to the bill, required to get approval for exclusion from the Minister in charge of Power, who shall brief the Federal Executive Council quarterly on approvals granted. It is important to state that in the past 20 years, while the system operator puts the National Peak Demand Forecast at 25, 790MW for a country considered the most populous black nation, and the biggest economy on the African continent, the highest peak electricity ever generated is 5,375MW. This occurred in February 2019.
The OPSN comprising of the Manufacturers Association of Nigeria , Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture , Nigeria Employers Consultative Association , Nigerian Association of Small and Medium Enterprises and the Nigerian Association of Small-Scale Industries , stated that the unfriendly operating environment is responsible for the oscillatory performance of the real sector in the past few years.
“Is it the fault of Nigerians that they have to rely on generators for power supply? The heavy dependence on generators is a direct consequence of the failure of the power sector. The Director-General of NECA, Dr. Timothy Olawale, while urging restraint, maintained that legislation should focus on ensuring improved infrastructural development that will facilitate efficient distribution of power to offices and homes of Nigerians.
Stressing that there was no gainsaying that the nation is faced with serious energy challenges, which predates the privatisation of the power sector, he affirmed that criminalising the importation and usage of generators is a crude and non-ingenious way to deal with a serious national issue. “If the power sector has been properly conceived and becomes a business that is properly managed, and profitable for investors, generators will die gradually. The system allows that when you have an inefficient power sector network in the generation, distribution, and transmission, then businesses must continue and consumers will have to look for alternatives,” he stated.
According to him, debating the bill, instead of stepping it down on the floor of the National Assembly raises dust on the depth of the knowledge that the lawmakers have about the different sectors for which they make interventions. Olubiyo said gas-fired power plants account for about 70 percent of the total power generation to the grid, adding that the units of gas being sold at $1.20 to other industrial bulk users of electricity, was equally being sold to power generation companies at $2.50, in addition to the corruption variables, which are embedded in investment in critical gas transportation infrastructure, which amounts to $0.80, and brings the total invoice costs of gas per/mbtu to $3.30.
“If there is constant power supply at a reasonable price, then the purchase of power generating sets would generally die. The willing buyer, willing seller policies initiated in some parts of the country or estates are already helping people to move from generators,” he said. Essentially, many DISCOs have been unable to collect a significant proportion of the bills that they hand out to their customers, as total revenue collected by all the companies for energy distributed significantly falls short of total billings.
NERC also acknowledged the shortcomings of the Meter Asset Provider scheme, stating that changes in fiscal policy and limited availability of long-term funding led to the limited success in the meter roll-out. Metering, which is the tool for counting units of consumption in the electricity market, has not attained its objective since the privatisation of the industry.
Continuing, the report said during Q2 2019, out of the total invoice of N180.08b issued to the 11 DisCos for energy from the Nigerian Bulk Electricity Trading , and for service charge by Market Operator , about N55.10b of the total invoice was settled.
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