Nigeria’s generational electric power challenge has thrived on crony capitalism, reports Awwal Abubakar
Successive governments have come up with various policies and programmes to revitalise the power sector, and yet recorded no significant progress in ensuring the promised stability. Experts believe this failure is more prominent in the present democratic dispensation, where so much money has been spent on modernizing power generation and distribution infrastructure, amounting to about N11 trillion since the return to civilian rule in 1999.
President Olusegun Obasanjo’s administration was hit by a scandal when an estimated $16 billion was frittered away through the awarding of dubious contracts, cronyism and a lack of oversight in a proposed bid to revamp the power sector. In 2007, for instance, a new set of power sector reforms was initiated by late President Umaru Musa Yar’adua, with the objective of propelling Nigeria into an advanced industrial nation by 2020. Upon his death in 2010, the framework was adopted by his successor, President Goodluck Jonathan. In 2013, supervised by the Bureau of Public Enterprises (BPE), Nigeria opted for privatising and commercializing the power sector in a last resort. This exercise gave birth to eleven electricity distribution companies (DISCOS) and six electricity generation companies (GENCOS).
Since then, however, the reality has been far from the policymakers’ multi-billion dollar illusion of finally solving the generational dilemma that has frustrated both industrial and domestic life in the country. The only improvement since then has been the amplification of citizens’ cries as power generation retreated from the average of 4000 megawatts before privatization to an average of 3800 megawatts about six years later. The private stakeholders have attributed this challenge to the government’s opposition to promoting cost-reflective tariff, and settling for a subsidized tariff scheme, which has frustrated rate collection and investment in improving the infrastructure.
The citizens have differed with the stakeholders, though. For Mohammed Adamu, a resident of Gwarinpa, “They (DISCOS) have continued to exploit us under this new power regime, even worse than when the government ran the power sector.” This was corroborated by Bagudu Liman, the National Chairman of National Electricity Customers Association, who offered that privatization has not been able to change the fortunes of Nigeria’s power sector “because of the corruption that was involved in the process of the privatization.” He further noted that “the sector was sold to investors who have no cognate experience in the sector. Before the privatization, the competencies of the investors should have been considered, but the government did not do that. How do you expect any improvement when the handlers are technically lacking? The worst of it all, the whole privatization has been hijacked by the political and economic elites. All those investors you are seeing are fronts for some high-ranking government officials, how then do you expect things to work?”
Liman added that the result of all the funds injected in the power sector and all the programmes carried out by the successive government to make power a constant feature in Nigeria is more darkness and high electricity bills.
On a monthly basis, Nigerians are made to pay expensive bills which are not commensurate with the amount of power supplied to them. According to the 2018 Journal of Social Sciences in Africa, power distribution companies in Nigeria in the year 2013 collected about N1.04trillion annually from households in Nigeria, N2.074trillion annually from Micro Small and Medium Scale Enterprises (MSMEs); N2.86billion from the 22 federal airports across the country and N3.4billion from banks and other large scale enterprises.
The journal observes that households pay an average of N3, 000 monthly as electricity bill, whether there is power supply for the whole month or not. MSMEs pay an average of N10, 000 monthly, branches of banks pay an average of about N45, 000 per month, while big businesses pay an average of about N100, 000.00 per month. All these figures put together show that the N3.41 trillion earned by the power distribution company annually is 110.5 per cent higher than the N1.62 trillion budgeted for capital expenditure in 2013 and 43.28 per cent higher than the N2.38 trillion budgeted for recurrent expenditure. This amount, however, is 31.62 per cent less than the total 2013 budget figure of N4.987 trillion. Despite the huge sum generated by the power distribution company annually, the organisation still complains of inadequate funding and lack of funds to carry out projects capable of ensuring steady power supply in Nigeria.
Incidences of corruption in power sector
Apart from the money spent by Nigeria’s successive governments in the name of reforming the power sector, which many commentators believe are often frittered into private pockets, many other corruption allegation cases abound. The first one is the $16 billion scam that rocked the power sector during Obasanjo’s government. It has not been probed till date, even though the Buhari government pledged to “look into it” in 2019. In February 2019, the Economic and Financial Crimes Commission (EFCC) reportedly arrested four people in an attempt to investigate the missing fund, but nothing has been heard of it ever since.
Secondly, there was the alleged N5.2 billion fraud involving top management staff of the Rural Electrification Agency (REA), some officials of the Ministry of Power and some members of the National Assembly. This scandal led to the suspension of REA in 2009 three years after it was formed through the Power Sector Reform Agenda in 2006.
The third case was the N88 billion PHCN workers’ pension fund that accrued from the 7.5% deductions from workers salary, which caused distortion in the power reform process. Another case was the corruption allegation against Prof. Barth Nnaji, the Minister of Power during Goodluck Jonathan’s administration, which includes receiving N395 million from PHCN (allegedly for the media for 3 months), N280 million from PHCN (allegedly for the Nigerian Army), N200 million from PHCN for an unknown project in the Power Ministry, N86 million from PHCN for the purchase of a bullet-proof car, among others.
There has been the contentious belief in many quarters that the bidding process that led to the selection of preferred bidders for the privatization of 10 power distribution and 5 power generation companies in October, 2013 was characterized by fraud and malpractice. This belief took a strong dimension when Governors of Delta, Edo and Ekiti states publicly criticized the choice of Vigeo Power Consortium as the preferred bidder for the Benin Electricity Distribution Company over other companies that were more qualified and had a good knowledge of the area.
Buhari’s power reform
President Muhammadu Buhari came into office in 2015 with a 54-page energy-revitalisation blueprint designed to solve Nigeria’s power problem. The document revealed plan to increase power generation from 3600 megawatts to 20,000 megawatts by 2020. Reviewing the document two months after he assumed office, Reuters said the president’s dream was not “remotely realistic.”
To achieve his dream, in three years, N1.7 trillion was spent on power in three years, according to statistics. Yet, power outages and consequent laments persist across the country.
“Certainly, that money did not enter the right hand. Smaller countries in the third world have been able to do more with less,” Liman noted. “Like in the previous administrations, the money has been frittered into private pockets,” he added
Seeing that his dream is on the brink of dying, Buhari formed a committee to review the ownership of the companies, among other roles. The committee is headed by Vice President Prof. Yemi Osinbajo. The committee further created a sub-committee headed by Nasiru el-Rufai, the governor of Kaduna state to review the ownership of the DISCOs.
After a series of meetings with the officials of the companies earlier in the year, an announcement was made on the downward review of the price of the electricity per unit across the country. But only a fraction of households across the country are metered. The companies prefer estimated billing which experts say is to perpetuate and mask dubious rating and corruption. The committee and the sub-committee have not rounded off their tasks before the COVID-19 pandemic set in. Nigerians, therefore, have to wait a little longer before they know what is next.
For the country to get out of the quagmire, various experts have argued the need for the government to embrace renewable energy. Some also called for the rehabilitation of obsolete power equipment.
“To address the problems, stakeholders including the federal government must try and invest in key infrastructure such as gas pipelines, equipment used in the distribution, generation and transmission of electricity, and other facilities,” Marcel Hochet, President, Green Elect, said in an interview.
For Liman, “the previous corruptions must be probed. It will send a message that it is not business as usual otherwise the problem will be recurring.”
Liman also suggested that the government should take over the sector from the private hands because, “things were fairer when it was with the government.”
*Awwal Abubakar reports from Abuja, Nigeria.