More than 2,000 megawatts (MW) of electricity remain stranded in Nigeria, despite multibillion-dollar investments designed to enhance the country’s power transmission infrastructure.
These investments include the Nigeria-Germany deal, as well as loans from the World Bank and African Development Bank, intended to enhance the operations of the Transmission Company of Nigeria (TCN).
This situation continues to burden consumers, who are paying high tariffs amid over N2.3 trillion in electricity subsidies in 2024 alone. The ongoing inefficiencies threaten to exacerbate the energy crisis for both homes and businesses.
A monthly analysis of electricity generation data from January to November 2024, obtained by The Guardian, reveals a consistent underutilisation of generation capacity, with significant inefficiencies recorded throughout the year.
In January, the available generation capacity stood at 6,444.05 MW, but Nigeria was only able to generate about 4,000 MW, leaving over 2,000 MW stranded. February marked the weakest performance of the year, with average generation dropping to 3,809.96 MW and stranded capacity peaking at 2,574.39 MW. While March and April showed gradual improvements, both months still recorded over 2,000 MW in stranded capacity.
May saw the highest available generation capacity of the year at 6,574.84 MW, but inefficiencies persisted, leaving a significant portion unused. June witnessed a decline across all parameters, with declared generation falling to its lowest level for the year at 4,227.23 MW.
In July and August, there were some improvements in declared and average generation, though stranded capacity remained high. In September, the declared capacity was 5,460.2 MW, with average generation at 4,540.28 MW. October saw a decline in performance, while November recorded the year’s lowest available generation capacity at 5,765.99 MW. However, stranded capacity significantly reduced to 1,504.33 MW during this period.
Over the years, Nigeria has secured substantial loans to address power sector challenges. In 2018, the Federal Government borrowed $486 million in International Development Association (IDA) credit to rehabilitate and upgrade electricity transmission substations and lines.
In June 2023, the World Bank approved additional financing of $449 million in International Bank for Reconstruction and Development (IBRD) loans and $301 million in IDA credit under the performance-based Power Sector Recovery Operation (PSRO).
This initiative aimed to enhance the reliability of electricity supply, achieve financial sustainability in the power sector, and improve transparency and accountability.
In May 2024, the Federal Government obtained another $500 million loan from the World Bank to support distribution companies in dispatching more power. Similarly, in 2019, the African Development Bank approved a $210 million financing package and an additional $50 million AGTF loan for the Nigeria Transmission Expansion Project (NTEP1), with another $200 million approved in 2020 for the project’s second phase.
Despite these efforts, progress remains slow. President Bola Tinubu recently acknowledged, in the presence of German President Frank-Walter Steinmeier, that Nigerians are growing impatient with the delays in power project delivery.
Nigeria signed a deal with Germany through Siemens in 2021, aimed at increasing electricity capacity to 7,000 MW by 2021, 11,000 MW by 2023, and 25,000 MW by 2025. With just days left in 2024, this target remains far from reality.
As of November 1, 2013, when the power sector was privatised, grid generation stood at 3,427 MW. Yet, as of 6:00 p.m. yesterday, grid generation had dropped to 1,931 MW, with the day’s highest generation recorded at 4,045 MW at 5:00 a.m.
In a related development, Vice-President Kashim Shettima recently described electricity as essential to economic growth, stressing that access to it is a fundamental right.
Speaking at a National Economic Council (NEC) meeting, Shettima noted, “The past few months of collapses in our national power grid compel us to reinforce the pace with which we are adopting and implementing the National Electrification Strategy.”
“Our blueprints must, therefore, strive to expand access, empower rural communities, and drive productivity, especially for Micro, Small, and Medium Enterprises (MSMEs),” he added.
The Vice-President expressed hope that the discussions would inspire solutions to light up homes, power businesses, and drive industrial growth. He concluded, “Whatever path we agree upon, it is clear that a private-sector-led distributed renewable energy generation approach is essential to increasing electricity access for households and small enterprises alike.”
Some experts recently urged the Federal Government to fully liberalise the electricity sector to unlock $10 billion in private sector investments and ensure a reliable power supply.
They made the call during separate interviews with the News Agency of Nigeria (NAN) in Lagos, emphasising that further liberalisation could attract substantial investments.
The Chief Executive Officer of Economic Associates, Dr Ayo Teriba, called on the government to relinquish its monopoly and encourage private sector participation across the value chain.
“Just as the liberalisation of the telecommunications sector over two decades ago transformed it from a few thousand users to over 200 million today, electricity sector liberalisation could lead to a similar boom,” Teriba said. He acknowledged that initial liberalisation might result in higher service costs but predicted that competition would eventually lower prices.
Similarly, Mr Moses Igbrude, National Coordinator of the Independent Shareholders Association of Nigeria, corroborated Teriba’s views. He pointed out that over-regulation and government interference continue to discourage private sector investments.
“For the electricity sector to thrive, the government must step back and limit its role to regulation, as was done with the telecommunications industry,” Igbrude said. He maintained that government control is a significant factor impeding growth in the sector.
Mr Yemi Kolawole, Chief Executive Officer of Topian Energy, expressed optimism about the sector’s potential, provided private investors are assured of reasonable returns. He also urged directing a substantial share of investments towards renewable energy, aligning with global trends and addressing climate change concerns.
“As fossil fuels harm the environment and worsen climate change, it is prudent for Nigeria to follow the global shift towards green energy,” Kolawole said. The Federal Government had earlier stated that Nigeria needs $10 billion in investments over the next five to 10 years to achieve a 24-hour electricity supply.
Source-The Guardian
