The Trouble With Nigeria’s Electricity Sector

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LESS than a half of Nigerians have access to the national electricity grid. Businesses across Nigeria have resorted to the use of generators to power their facilities. Drivers who drive at night have accepted the reality that there will be little or no street lighting. Some Nigerian homes have acquired two or more generators as back up for electricity access. The electricity reality on ground in Nigeria is not friendly.
The government even replaced the National Electric Power Authority with the Power Holding Company of Nigeria but it did not solve the problem. The Power Holding Company of Nigeria has being unbundled into Generation, Distribution and Transmission Companies but the reality on ground has not improved.
One major reason for the inadequate power supply across Nigeria is the loss along the various value chains of generation, transmission and distribution. Nigeria’s installed generation capacity can be defined as the total available generation capacity assuming that all her power plants are working at 100% efficiency.
The reality on ground is that Nigeria is able to generate only about one-third of its installed generation capacity. This means that a huge installed capacity is lost along the actual generation value chain. These lost megawatts of energy would have improved the social and economic well being of Nigerians.
As the generated energy is being transmitted, a sizable percentage of energy is lost and as the transmitted energy is being distributed, another sizable percentage of energy is lost. The reality on ground in Nigeria is that the transmission and distribution loss is about one-fourth of what is actually generated. These value chain losses that have reduced the quantity of electricity available to the common man on the street can be attributed to two main factors. The first is limitations in technology used and the second is use of outdated infrastructure. When dealing with electricity generation, the quality of technology being used is vital. This is because the capacity utilization rate of power plants depends on the technology used as well as the age and condition of the electricity infrastructure.
The reason why some developing nations are doing better than Nigeria in terms of electricity generation is because they have being able to attract investments in electricity technologies that reduce the losses along the various value chains of generation, transmission and distribution. These value chain losses are more in rural areas because the infrastructure used there are usually older and maintenance is irregular.
Another major reason for inadequate power supply across Nigeria is limited transmission network and coverage. Generation and distribution infrastructure is in the hands of the private sector but the transmission infrastructure is in the hands of government. The Transmission Company of Nigeria is the government institution that is in charge of the installed transmission infrastructure. The reality on ground is that Nigeria’s transmission grid cannot service even half of the entire nation.
This is a massive shortcoming of the electricity scenario in Nigeria accounting for why many Nigerians still live in darkness. This has a negative effect on the economic prosperity of Nigeria because no community will be able to contribute 100% of its quota to the economic growth of Nigeria if it does not have access to electricity.
Another reason for the inadequate power supply across Nigeria is the destruction of the supply facilities. Militants in certain parts of the country who feel short-changed by certain actions and inactions of government are quick to attack oil and gas installations of the country and in the process the supply network is disrupted. The consequence of this is that investors are reluctant to put their money in electricity installations in Nigeria because they have no guarantee of the long term safety of their investments. If we cannot attract adequate investment into the sector, then the chances of improving the nation’s electricity coverage will remain a mirage. Corruption is also another reason why Nigeria’s electricity sector is unable to function optimally.
This is very pronounced along the distribution value chain. Illegal connections which is the order of the day in Nigeria not only reduce the profit that distribution companies make but also reduces the amount of electricity available to law abiding citizens who pay their electricity bills. If distribution companies cannot make profits which they will plough back into the business to keep it going, then Nigeria’s electricity industry is in trouble. If citizens who pay their bills cannot receive the electricity they have paid for, then Nigeria’s electricity sector is also in trouble.

Source: Nigeria Today

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