Nigeria’s available power generation capacity fell by 981.8 megawatts between 2015 and August 2022 despite the over N1.51tn intervention in the sector by the Federal Government since the current administration came on board in 2015.
This came as the national grid collapsed 98 times under the regime of President Muhammadu Buhari.
A document on Power Generation Trend (2013 – August 2022), obtained in Abuja from the Association of Power Generation Companies, the umbrella body of electricity producers, indicated that while available power generation capacity was 6,616.28MW in 2015, it dropped to 5,634.47MW as at August this year.
It was also gathered that the total power generation capacity loss for the sector between 2015 and August 2022 rose to N1.76tn, as operators and experts decried the sorry state of the industry since it was unbundled in November 2013.
Although further analysis of the document showed that the available generation capacity fluctuated between 2015 and 2022, data from the report indicated that the quantum of available generation in Nigeria was not impressive, particularly since last year.
It must be noted that the available generation capacity is different from the average utilised generation, as the latter is constantly lower than the former.
In fact, data from the document indicated that Nigeria’s average utilised generation during the review period hovered between 3,600MW and 4,118MW, which were, of course, lower than the least available generation capacity of 5,634.47MW recorded between January and August this year.
The available generation capacities in 2015, 2016, 2017 and 2018 were 6,616.28MW, 7,039.96MW, 6,871.26MW and 7,506.23MW respectively.
For 2019, 2020, 2021 and 2022 (January – August), the available power generation capacities of electricity producers across the country were 7,381.67MW, 7,792.51MW, 6,336.52MW and 5,634.47MW respectively.
On the annual capacity payment loss in the sector, the report indicated that in 2015, 2016, 2017 and 2018, the industry’s losses were N214.93bn, N273.32bn, N236.47bn and N264.08bn, respectively.
In 2019, 2020, 2021 and 2022 (January – August), the sector’s annual capacity payment losses were N256.97bn, N266.10bn, N159.86bn and N88.13bn, respectively.
The above figures therefore showed that despite the interventions by the Federal Government in the power sector, estimated at over N1.51tn, available generation capacity did not appreciate much, rather it had been decreasing since last year.
FG’s N1.51tn Interventions
The Federal Government, aside from its annual budgetary allocations to the Federal Ministry of Power, undertook a series of interventions in the power sector in a bid to revamp the industry.
This, however, was despite the fact that the distribution and generation arms of the business were unbundled and officially sold to private investors in November 2013.
On September 30, 2014, the Federal Government announced a loan of N213bn to the privatised power firms.
On March 1, 2017, the Federal Government approved the sum of N701bn as a power assurance guarantee fund for the Nigerian Bulk Electricity Trading Plc to pay for the electricity produced by the generation companies for the period of two years.
It provided the fund to tackle the monthly liquidity challenges faced by generation companies, following the inability of power distributors to adequately meet their obligations in terms of remittances to the sector.
The government also provided another N600bn payment assurance facility to the sector in 2019. The fund was secured from the Central Bank of Nigeria.
Aside from these direct interventions from the Federal Government, the sector has also received funding from international financiers such as the World Bank, African Development Bank, among other development partners.
Operators in the sector also confirmed that the funds invested in the past years were currently in abysmal state, as the industry had failed to live up to expectation.
They, however, stated that the Federal Government must provide functional leadership, enabling laws, among others, for the sector to be revived.
“The bankability of projects is the key to any investment and keeping faith with the established terms of the Multi Year Tariff Order enables investor confidence that guarantees funds for project financing,” the Executive Secretary, Association of Power Generation Companies, Dr. Joy Ogaji, stated.
She added, “The most important requirement to revive the Nigerian power sector, which despite the huge investment in the past years is currently in abysmal state, is for the executive arm of the Federal Government to take functional leadership in amending the identified shortfalls in the implementation of regulations to build investor confidence.
“The key gaps include incomplete implementation of power sector reforms and regulations; dearth of appropriate man-power in the sector; lack of laws to stem activities of energy thieves; and strong political leadership in exercising the Act.”
Also, the President, Nigeria Consumer Protection Network, who served in the National Technical Investigative Panel on Power System Collapses/System Stability and Reliability (June 2013), Kunle Olubiyo, said the power sector lacked the required governance structure.
He said, “Not much would be achieved in an electricity market that is deliberately skewed to fail and lacks the requisite governance structure, fiscal discipline and responsibility.”
He called for adequate follow ups through monitoring and evaluation, stressing that there were near zero performance indicators in the industry.
“We cannot succeed nor progress without enforcement of market rules and extants rules that promote probity and accountability to upscale revenue and collection efficiencies,” Olubiyo stated.
He added, “That is the essence of having the NBET, Market Operator and the Nigerian Electricity Regulatory Commission that should follow up the commercial components optimally. But there are lots of deliberately skewed loopholes.”
Meanwhile, data sourced from the Nigerian Electricity Regulatory Commission indicated the country’s power grid had been recording incessant partial and total collapse since 2015, despite the funds pumped into the sector.
Figures from the commission showed that grid collapse cases in 2015 were 10. In 2016 it rose to 28, while 21 cases were recorded in 2017.
The power sector regulator outlined the number grid collapse cases in Nigeria in 2018, 2019, 2020 and 2021 as 13, 11, four and four, respectively.
Although the NERC had yet to compile data on system collapse in 2022, the performance of the grid and various updates from power distributors showed that Nigeria’s power grid had collapsed about seven time this year.
The most recent grid collapse occurred on September 25, 2022, when power generation on the system crashed from over 3,700MW to as low as 38MW.
On July 20, 2022, Nigeria’s power grid saw the sixth collapse in 2022, while on June 13, Economic Confidential reported a grid collapse. The nation’s power system collapsed twice in March and twice again in April this year.
Power generation on the grid had continued to fluctuate due to various concerns such as gas constraints, water management challenges, and gas pipeline vandalism, among others.
In April, it was reported that the quantum of electricity on the grid crashed from over 3,000MW on April 8, 2022, to as low as 10MW around 21.00 hours the same day.
The report further stated that another collapse of the grid occurred on April 9, 2022, as the nation’s power system collapsed to 33MW around 01.00 hours after it had earlier posted a peak generation of 3,281.50MW at 00.00 hours the same day.
In its recently released Fourth Quarter 2021 Report, the Nigerian Electricity Regulatory Commission stated that to ensure grid stability, it would continue “to enforce and monitor compliance by Discos and TCN with respect to the execution of Service Level Agreements to ensure further grid discipline.
▪︎ By Economic Confidential