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Frequent Power Grid Collapses And Nigeria’s Exhausting Economic Struggles

Austyn Ogannah Column
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There was a real threat of a nationwide power outage on Wednesday, July 20, when the perennial epileptic power supply that has dogged the nation’s progress, or lack thereof, from decades past returned in the sixth national power grid collapse in 2022 alone. A situation as dire as the grounding of every economic activity that is dependent on electrical power supply from the country’s generating capacity has become as commonplace as the announcement of weather reports.

At a time when the skyrocketing prices of refined crude oil products are making them beyond the reach of the average Nigerian, the frequency of these collapses means that, without warning, not only are homes and businesses plunged into the daily standardised distribution of darkness, there is often the despondent feeling of uncertainty about when the supply of power will be restored. The by-product of these intermittent shortages in electrical availability is a prolongation of our economical regression, developmental stagnation and the nation’s continued wallowing in the economic backwaters of the continent while countries outside our bracket of capacity and weight outstrip us in developmental indices.

The cause of the latest installment of the collapse of the Osogbo-based grid that is managed by the Transmission Company of Nigeria (TCN), which is reported to have occurred at precisely 11:27am on July 20 and dropped the generated capacity from 3,922 MegaWatts to a measly 50MW, was not immediately disclosed when the Eko Electricity Distribution Company (EKEDC) publicly acknowledged the reason for the outage being endured by their customers.

A tweet originating from the official account of the EKEDC (@EKEDP) was specific about the source of the problem. It read: “Dear customers, we regret to inform you of a system collapse on the national grid at precisely 11:27a.m. today, July 20. We are in talks with the Transmission Company of Nigeria to ascertain the cause of the collapse and a possible restoration timeline. We will keep you updated on the situation.”

The facts were indisputable as they were corroborated by the Kaduna Distribution Company, which confirmed the collapse and stated that, while it was regrettable, the company was hopeful that the TCN was going to resolve the collapse promptly for the quick resolution of electricity. So, not only was the common Nigerian burdened with epileptic supply of overall generating Megawatts insufficient for regular supply, the little being generated was at risk from these collapses.

The cause of the collapse was later put down to a nose-dive in system frequency that resulted in the type of system instability responsible for the Wednesday collapse. According to the official statement from the desk of the General Manager, Public Affairs of the TCN, Ndidi Mbah, work to restore the grid to proper functioning was underway by Thursday, June 21, to rectify the “sudden drop in system frequency from 49.94Hertz to 47.36Hz” and brought about the latest in the series of grid collapses that have occurred this year.

The statement explained further that the collapse “was precipitated by the tripping of a Unit (with a load of 106 MW) in one of the generating stations due to exhaust over temperature. This unwholesome event, which pulled out other grid-connected Units in the plant, resulted in aggregated generation loss of 457MW. In its wake, a train of events ensued – culminating in the collapse of the national grid. As obtainable in all systems, when a component of the electric power system is defective, the entire configuration is vitiated. However, in-spite of setbacks encountered at the initial stage, grid restoration had almost been completed as at 11:00pm when this report was filed.”

While the TCN General Manager appreciated the understanding of the government and consumers of their electricity supply, it is worth noting that his words were insufficient to ameliorate the consequences of the latest collapse. There is a dual-pronged concern when the issue on the hot burner is power generation and distribution. The first is that all stages of the economic process depend largely on power supply for smooth operational runs, which conversely reduce the costs of production and provide more value for less. The second is related to the subject of cost. The absence of power, which forces manufacturing industries and production companies to source for other forms of power generation, comes with an increase in costs of production, which translates to a corresponding increase in related costs forcing consumers into paying more for less. It means that there are a series of knock-on effects that these series of collapses dump on the already suffering swathe of Nigerians.

The most debilitating effect for the common man or woman is that the value of the money in his or her pocket suddenly loses more of the little value it previously weighed. This is not helped by the present economic situation in a country with a shrinking and largely unproductive economy like Nigeria.

Due to the inseverable relationship between a country’s productivity output and the value of the country’s currency, the continued lack of capacity to be a productive country has stymied any chance for the naira to appreciate against other currencies and the vexatious nose-dive in value of the currency currently cannot be avoided. At this stage of our existence as a country, after 61 years of independence and 23 years of return to civilian rule, we still cannot have functional refineries and have not grown the capacity to be a manufacturing country for the most mundane and easy-to-manufacture daily use items, such as toothpicks and matches. With our over-reliance on imports of everything that we consume, we cannot have a strong economy and by implication cannot have a strong currency. The constant inflationary indices do not help the value of the naira either and the Nigerian, who is a victim of the poor power supply is also the victim of this devalued naira.

When this is juxtaposed with the disturbing waste of millions of dollars that have been buried in past and present attempts to improve power supply, the mediocrity that is the country’s bane is laid bare. Spending over $25billion to keep the lights on overtime has done anything but solve the problem.

In February, the Central Bank of Nigeria revealed that it had disbursed $3.2bn to support power supply to Nigerians in the last five years alone. The money was given to the generating and distribution companies to acquire equipment, buy metres and improve electricity supply. Yet, Nigerians continue to resort to self-help efforts for their power needs.

As these regular grid collapses continue, with the epileptic daily cuts, power generators have been the go-to alternatives to continue to make ends meet amid the rising cost of living. This also has consequences for the country. A 2019 International Monetary Fund country report on Nigeria estimated that the country’s economy lost an estimated $29bn annually from these incessant power cuts and lack of power supply. Even when it is available, it is on record that only about 47 per cent of the country has access. It is another consequence of a history of inefficiency and corruption at the very top of the country’s government that cascades down. It is what happens in an environment that promotes mediocrity over merit.

What is required to get out of the power imbroglio and by implication, improve other sectors that are interrelated and interdependent on power supply, is for the power sector to be fully liberalised. The example where a complete volte face has been witnessed with the onset of a liberalised system is the telecommunications sector. Until the privatisation programme of the Olusegun Obasanjo administration that liberalised that sector, telecoms remained stuck in the Exclusive List as the sole preserve of the Federal Government such that the Nigerian Telecommunications Limited (NITEL) maintained a monopoly in the telecommunications sector and delivered often poor services. The enactment of the Nigerian Communications Commission Act allowed private investments in the sector and the difference in service delivery and related developments in technological advancements for banking, finance, virtual economy, crypto developments cannot be clearer. It is our lived experience that whatever is left in government control suffers. The example of telecoms may have been the same with the Nigeria National Petroleum Corporation (NNPC) operated petroleum refineries after Obasanjo’s attempt at privatising them but for the U-turn that his successor, Umaru Yar’Adua, effected upon his resumption of office.

Today, there is a fall in the power of the naira largely because the NNPC is no longer remitting petro-dollars to the treasury due to a combination of organised crude oil theft, low production and the fraudulent subsidy payments, which it services through crude swap with the importers of refined products.

One major reason President Muhammadu Buhari gained so much goodwill when he emerged, as an alternative to the perceived weakling that Goodluck Ebele Jonathan was thought to be, was that he prefigured a strong-willed personality that could stand up against the inefficiency, wastage and corruption in government and change the slide towards systemic failure. It was expected that the retired general renowned for discipline would evoke a radical change in the system and bring responsibility, accountability and efficiency to government. Unfortunately, he has not been able to do enough to bring about this.

The Petroleum Industry Act (PIA) has been instrumental in bringing about a new definition of the running of business in the oil and gas sector, going forward. Yet, only a full liberalisation of the sector will do. The fraudulent subsidy regime must go immediately and even if Buhari, who campaigned against it, still budgeted trillions of naira to it in his final year as President, then it will overshadow whatever legacy the PIA or his strides, in terms of agricultural revolution, will attach to his two terms in office.

The only silver lining in this subject is that there is a current bill before the National Assembly that has passed third reading, which proposes to consolidate on existing legislations in the electricity industry and provide an ideal institutional framework to guide the post-privatisation phase of the industry by allowing States and individuals, who possess the capacity, to generate their own electricity as mini-grids of their own. Included in the bill is the freedom to generate one megawatt or less and not requiring a licence to distribute, as long as it does not exceed 1MW. A bill like this will promote policies and regulatory measures that will expand power transmission networks in the country and address the gap between the power that is available and what a country the size of Nigeria requires to run smoothly. As some companies and financial institutions go off-grid in their own self-help process of power generation, it is about time that the full liberalisation of the sector is engineered to satisfy the energy needs of the country.

I have always maintained that the Nigerian government (Federal, State, LGA) has no business operating critical infrastructures (power, oil and gas, telecommunication, railway, shipping, aviation, etc) because they are inefficient and incapable, don’t have good corporate governance structure and fiscal discipline required to make the assets work for the benefit of the country and Nigerians. Instead, governments, if they so desire, can own equity in these infrastructure, but have zero control over their day-to-day operations.