In the
beginning
Electricity
in Nigeria predates the amalgamation of the Northern and Southern Protectorates
in 1914. As most utilities, the initial purpose of electricity was to cater for
the growing interest of the colonial administration in Nigeria.
The
first step towards establishing electricity in the country was the in 1898 when
the first electricity generating plant was established in Lagos. There
was no coordinated central plan for the development of the utility but
individual generating plants were established to cater for several parts of the
country.
The
first coordinated approach towards electricity development in the country was
in 1950 when the colonial government passed the Electricity Corporation of
Nigeria Ordinance 15. The ordinance established the ECN which took over the
work of the electricity department as well as the generating plants that had
been established in different parts of Nigeria.
National
Electric Power Authority
For
many Nigerians, no organisation captures the progress as well as the
frustration of the citizenry with electricity better than the defunct National
Electric Power Authority.
NEPA was an
amalgam of the Niger Dam Authority and the Electricity Corporation of Nigeria.
Although
the authority was proclaimed by the Military Administration of General Yakubu
Gowon on April 1, 1972, it started operation in January 1973 when the first
General Manager was appointed.
With NEPA and
the process of galvanisation of power resources, the nation experienced a boost
in electricity supply. However, this was not for a long period of time. Some of
the power generation stations that NEPA had to manage include the Ugheli Power
Station constructed between 1966 and 1975 and the Kainji Dam constructed in
1968.
Others
include the Sapele Power Station constructed between 1978 and 1981, the Jebba
Power Station constructed in 1985, the Egbin Thermal Power Station constructed
between 1985 and 1986 and the Shiroro Dam constructed in 1990.
As the
population of the country was growing, there was no commensurate investment in
power plants. According to the Presidential Taskforce on Power, by May 1999
when the country returned to democratic rule, the total power production in the
country stood at 1,850 Megawatts.
The
inefficiency of the electricity monopoly had become so apparent that Nigerians
had to dub NEPA Never Expect Power Always.
Power Holding
Company of Nigeria
There
was no doubt that one of the issues that rattled the government of Chief
Olusegun Obasanjo when he assumed office in 1999 was the epileptic power
situation in the country. This showed in the nature of the appointments and the
magnitude of expenditure in the power sector.
The
liberalisation of the telecommunications sector embarked upon by the
administration so much exposed the inadequacy of the power sector that the new
service providers that rolled Global System for mobile communications networks
had to roll out their own power system.
It was
therefore apparent that the state had to do something differently if the power
sector was to be rescued from the ‘powers of darkness’ that was holding it
captive.
The
Electric Power Sector Reform Implementation Committee was set up in 2000 with
the key mandate to proffer an appropriate legal and regulatory framework for
the sector.
This gave
birth to the National Electric Power Policy which was approved by the Federal
Executive Council in September 2001; followed by the passage of the Electric
Power Sector Reform Act of 2005.
The passage
of the Act gave the National Council on Privatisation and the Bureau of Public
Enterprises the legal impetus to set up the Nigerian Electricity Regulatory
Commission, according to Director General of BPE, Mr. Benjamin Dikki.
The
passage of the Electric Power Sector Reform Act of 2005 specified the vertical
unbundling of NEPA into transmission, generating and distribution facilities.
This also led to the transformation of NEPA into a transition organisation now
known as the Power Holding Company of Nigeria (to be declared defunct soon).
National
Integrated Power Projects
As the electricity sector was being transformed from a monopoly utility,
attempts were also made by the government to increase the generation capacity
through massive investment in gas generation plants.
The exact
expenditure on the NIPP plants had been shrouded in controversies. The NERC, on
its own, started licensing independent power producers. Although many had been
licensed, most had been unable to take off as a result of poor pricing of
power. This was another area of reform that the NERC had to undertake.
Following
the assumption of office by President Umaru Yar’Adua, the reform of the power
sector suffered two setbacks. The governors of the 36 states of the federation
contended that it was wrong for money to be taken from the federation account
and invest in the power plants without due consultation with the units of the
federation.
The
second setback was the bias of the administration for the power monopoly. This
put the unbundling of the PHCN on a reverse gear.
The
first setback was resolved when the federating units agreed to be part of the
integrated power projects as shareholders and a structure was worked out for
their investment.
Presidential
roadmap on reform
To recover
the reform, President Goodluck Jonathan in August 2010 inaugurated the
Presidential Roadmap on Power Reform with two key advisory organs, namely, the
Presidential Action Committee on Power and the Presidential Taskforce on Power.
The
presidential roadmap is a comprehensive plan aimed at the reform and
restructuring of the power sector to achieve stable electricity supply.
Privatisation
With
the inauguration of the Presidential Roadmap on Power Reform, the unbundling of
the PHCN proceeded unhindered. A total of 18 companies were carved out – the
Transmission Company of Nigeria (one transmission company to serve the entire
nation), six generation companies and 11 distribution companies based on
contingent geographical areas of coverage.
While
the Transmission Company of Nigeria has been handed over to Manitoba Hydropower
of Canada to manage for the country for a period of three years in the first
instance, four generation companies and 10 distribution companies have been
successfully sold to private sector investors.
A total
of $2, 525,824,534 has so far been realised as proceeds from the ongoing
privatisation process. Out of the amount, $1,256,000,000.00 came from the
distribution companies while the generation companies raked in $1, 269,824,534.
The Federal Government has equally set aside about N384bn to settle labour
liabilities.
After
privatisation; what next?
For
ardent believers in privatisation, the handover of the power firms to private
sector investors signifies a great milestone that would usher in light as had
never been seen before. This expectation is logical but can also be
exaggerated.
The
view of some experts is that Nigerians need to moderate their expectations.
Although
Nigeria’s generation capacity will soon increase tremendously as a result of
the 10 NIPP plants that are scheduled to be completed and handed over to
private sector operators by June 2014, there is the issue of availability of
gas. The 10 new power plants are to be fired by gas and there is shortage of
gas for the power plants.
Dikkii
agrees that the issue of gas needs to be resolved. Otherwise, it has the
potential of reducing the much expected higher generation capacity.
The
contracts for some hydropower plants including Zungeru and Mambilla have been
awarded. These are renewable sources of energy. However, these power plants are
not going to be completed in the next three years.
Even
when the generation capacity has been raised (as it would be), there is also
the problem of transmission. There is the need to invest massively on
transmission and the government has not been keen on putting much money in the
power sector recently. Poor transmission capacity has the tendency to moderate
what power gets to the people.
Another
factor that can moderate what happens in the power sector is the capacity of
the new operators. Most of the investors are new consortia that were formed to
buy into the successor companies. The implication is that they need to learn
and some will have problem to get funds to expand their facilities.
Given
these scenario, Chairman of Electricity Distribution Roundtable, Mr. Ransome
Owan, asked Nigerians not to be expect rapid results immediately.
Owan
said, “Everybody that is buying into this business is buying into a business
that has not been performing in the past. So you cannot immediately be
expecting results.
“And
because there was a lack of shadow management for six months, people don’t
actually know what they are buying. So, six months to one year will largely be
used to understand the business and also to re balance their plans.
“So the
first one year, understand the business and see you can recast your plans. In
the midterm, I will say, in the next 24 to 36 months; you will now begin to see
marked improvements. By then, what the core investors had implemented will
begin to take shape. That is the midpoint of this process.
“Thereafter,
according to the contract, everybody is expected to meet the obligations within
the next five years. There is a contract signed and it is what they are going
to be measured against. In that horizon, we shouldn't have any issue at that
point.”
The nation
has put so much money into power sector reform. The dividends have not been
coming speedily. But they will surely come, all things being equal.
by EVEREST AMAEFULE
(Punch nEWSPAPER)
