“THE ROLE OF ELECTRICITY IN NATIONAL DEVELOPMENT”
- by Arc. Nuhu Somo way,fnia (B.2007)
(former Honourable Minister of State, Power and Energy)
Being a paper presented at the YEAR 2013 ANNUAL LECTURE OF THE BAREWA OLD BOYS ASSOCIATION (BOBA)
I feel deeply honoured to be invited by our distinguished and highly respected Old Boys Association to be this year’s Guest Speaker.
Not only am I opportuned to share my experiences in the critical subject of electricity in our dear Nation, but a unique privilege to meet with some of my elders, classmates and younger ones we last met many years ago.
The role of electricity to National Development could be likened to the importance of water to human life or indeed oxygen to mankind. It is a well known fact that the economic strength and growth of any nation is correlated with its energy, especially electricity power consumption.
Nigeria has had many development plans, the most current of which is the vision 2020 plan. In this plan, it is envisaged that Nigeria needs 40,000 mega watts of electricity to be ranked among the 20 most developed economies in the world by the year 2020.
To put Nigeria on a sound path of economic development requires adequate generation and distribution of electricity as electricity acts as the engine for all economic development activities. From the foregoing, the most frustrating and disturbing economic development issues in the Nigerian economy and society is that of the inadequacy of electricity supply and distribution.
Poor performance of SMEs as major drivers of national development
has been hampered by poor electricity supply (Agriculture, Education, Telecoms and Transportation)
STATUS OF ELECTRICITY IN NIGERIA
Nigeria built its first power plant in 1896 with a 20 mega watts power station at Ijora, Lagos. Until 1951 there was no government entity to regulate or manage electricity generation and supply in the country. This necessitated the establishment of ECN to oversee the electricity sector. In 1960 the Niger Dams Authority (NDA) was set up to build and manage dams in Nigeria with total installed generation capacity of about 50 mega watts. In 1972, the Federal Government of Nigeria merged the ECN and NDA to form NEPA as a vertically integrated (monopoly) power utility responsible for generation, transmission, distribution and trading of electricity in Nigeria. NEPA was renamed Power Holding Company of Nigeria (PHCN) for its imminent unbundling and later privatization. By the year 1999 the civilian government under the leadership of Gen. Olusegun Obasanjo revisited the very chronic issue of inadequate electricity supply and its adverse effect on our National Economic Development efforts. The administration therefore put in place mechanisms to totally reform the power sector for better power supply. This culminated in signing into law the Electricity Power Sector Reform Act in 2005. This act essentially removed state monopoly and allowed private participation in generation, transmission and distribution of power.
POWER SECTOR REFORM
The Electricity Power Sector Reform Act called for unbundling of NEPA into 18 successor companies i.e. 6 Generation, 11 Distribution and 1 Transmission company. Ownership of these companies was given to BPE and Ministry of Finance with a clear mandate that the BPE should privatize them. In addition the act provides for development of competitive electricity markets and establishment of the Nigerian Electricity Regulatory Commission.
The present administration realized the urgency of implementing the
reform and of course the stiff resistance associated with most reforms. Presidential Action Committee on Power chaired by the president with all relevant ministries and agencies as members was established. A Presidential Task Force on Power which serves as an engine room to drive the reform process was also established with the relevant MDAs as members.
A roadmap on power was unveiled by Mr. President on 10th August 2010 in which a programme of action for the reform and privatization was outlined. Thereafter, the BPE swung into action and advertised the sale of shares to core investors in the 6 generation companies, 11 distribution companies and contract management of the only transmission company whose ownership remains wholly the Federal Government.
Very huge responses were made by both local and international investors. As a result a management contractor for TCN was appointed and has since taken over the company’s operation. On 30th September 2013 President Goodluck Jonathan handed over share certificates to 15 private companies that were successful in the privatization exercise which are as follows:
S/N CONSORTIUM COMPANY
1 KANN CONSORTIUM ABUJA DISTRIBUTION COMPANY
2 INTERSTATE ENUGU DISTRIBUTION COMPANY
3 AURA ENERGY JOS DISTRIBUTION COMPANY
4 VIGEO BENIN DISTRIBUTION COMPANY
5 WEST POWER AND GAS EKO DISTRIBUTION COMPANY
6 NEDC/KEPCO IKEJA DISTRIBUTION COMPANY
7 4 POWER CONSORTIUM PORT HARCOURT DISCO
8 SAHELIAN KANO DISTRIBUTION COMPANY
9 INTEGRATED ENERGY IBADAN DISTRIBUTION COMPANY
10 INTEGRATED ENERGY YOLA DISTRIBUTION COMPANY
11 MAINSTREAM ENERGY KAINJI JEBBA HYDRO POWER
12 TRANSCORP/WOODROCK UGHELLI DISTRIBUTION
13 NORTH SOUTH SHIRORO HYDRO POWER
14 AMPERION GEREGU DISTRIBUTION CO.
15 NEDC/KEPCO EGBIN DISTRIBUTION COMPANY
Only Afam Generation Company, Sapele and Kaduna Distribution Company are yet to receive their share certificates due to none conclusion of their transactions.
It is hoped that when these private companies fully takeover ownership and management of these privatized assets, they will turn around electricity supply to the nation by investing in the rehabilitation of the existing infrastructure and building additional capacities.
NATIONAL INTEGRATED POWER PROJECT (NIPP)
Another milestone action taken by Gen. Obasanjo’s government was the establishment of Niger Delta Power Holding Company jointly owned by the Federal, States and Local Governments of Nigeria. The idea was to deploy part of the excess crude funds for the development of power infrastructure particularly in the Niger Delta region and the country at large. The board of this company is chaired by the Vice President, with six Governors and four Ministers as members. The total power expected from this programme is about 6,000 mega watts.
1. Lack of long and sustainable plan for the power sector, often short term plans that further compound the inadequacy of sup ply e.g. Mambilla, Zungeru, Lokoja etc.
2. Lack of stable polity with visionary and committed leadership.
3. Inadequate, aged and poorly managed infrastructure right from generation to distribution.
4. Lack of access to electricity, over 40% not on the grid.
5. Industry Regulations: NERC still growing with some capacity gaps being a new organization. Its complete independence
needs to be fast tracked for investors confidence.
6. Insufficient gas for power generation especially up country, gas master plan still on the drawing board.
7. Electricity Pricing and Billing.
8. Low level of human capacity development.
9. Radical framework to support private investment particularly foreign. Sovereign guarantee may be necessary due to our oper ating environment.
10. Vandalisation of gas pipelines and transmission/distribution networks through militancy and outright theft.
11. None exploitation of other sources of energy like coal, solar, biomass, hydro and nuclear energy to ensure supply security and appropriate energy mix.
STRATEGIES FOR ADDRESSING ELECTRICITY CHALLENGES
1. The reform and the privatization has been executed well so far, it needs to be concluded to pave way for a private sector driven power management.
2. The Federal Government should reposition itself to the chal lenges of post privatization. This will entail serious capacity building to focus on policy issues and long term plans.
3. Comprehensive load demand study should be undertaken to establish the actual power requirements of various sectors of the economy.
4. The Federal Government must consider granting Sovereign
Guarantee to particular flagship projects that require huge foreign investment in view of our current unfavourable business environment.
5. There must be concerted efforts to stabilize the polity to ensure security and national credibility.
6. Proper regulation and monitoring of the operations and perfor mances of the power sector to ensure efficiency.
In accordance with our vision 2020 document, energy particularly electricity is expected to be the major engine of the nation’s sustainable social, economic and industrial growth, delivering affordable and constant energy supply efficiently to other sectors of the economy.
The Federal Government has shown commitment in the reform and privatization of the power sector thus paving way for massive local and foreign investment which will lead to rapid growth in electricity supply. This will of course lead to rapid economic development.
There is the need for cooperation of Government at all levels, investors, regulators and consumers to address the embarrassing problem of electricity in Nigeria.