THE Federal Government has given State governments autonomy to produce own power so as to ensure improved power supply in the country. It said this is because nothing in the Electricity Power Sector Reforms Act EPSRA deter States from doing such.
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Speaking at the 18th monthly power sector operators meeting on Monday at the Kumbotso transmission station, Kano State, the Minister of Power, Works and Housing, Babatunde Fashola said interested States must obtain the necessary permit and licenses from the Nigerian Electricity Regulatory Commission (NERC) depending on the areas it wants to invest in.
His words; “Let me also make this point clear today, I have heard statements made that State governments should be allowed to produce their own power.
“The truth is that there is nothing in the Electricity Power Sector Reforms Act that stops any state from doing so, so the only thing they must do is to get NERC’s permit and licenses depending on whatever categorization of investment they want to do whether it is distribution or generation.“So, let me be clear about that, I will support any state that wants to get involved in generating and also distributing power under its own arrangement.”
The Minister also disclosed that unlike in 2015, there have been improvements in power generation in the country. He said this is as a result of government’s efforts in the areas of repairs of pipelines and gas supply.
According to him, the continuous attack on pipelines in 2015 had led to poor generation adding that this reduced in 2017. “We have made some progress with generation previously, unlike in 2015, damage to gas pipelines and assets has reduced in 2017, this is as a result of government’s efforts and significant progress is now being made with the repairs and supply of gas. “From a generation of about 2690MWs in May, 2016 we have grown to 6863MWs in generation and transmission has increased from 5000MWs to 6700MWs.”
He quickly pointed out that: “Although this does not mean that we have enough gas for all our power plants, we are at least getting closer to where we were in February 2016 when we first crossed the 5000MWs line which was mainly fired then by gas plants before the attacks on the pipelines started.” In his explanations, he said as at 3rd of August, 2017 the total available power which can be put on the grid was 6863MWs while the transmission capacity has risen to 6700MWs.
However, he lamented the inability of distribution companies to take-on power describing this as ‘load rejection’. “Unfortunately, we can’t put all of that power on the grid because the DisCos cannot take the power and this is what we call load rejection.”
He blamed this on old assets inherited, bad debts that have continued to hamper DisCos’ access to credit, insufficient investment by DisCos among others. “We have a new problem and that is inability of DisCos to take power and sell power, but there many reasons for this, old assets inherited, insufficient investments by them, and other factors.
To this end, he stressed the need for joint efforts of all stakeholders in the sector to improve power supply saying:” We need every part of the value chain from gas to generation from transmission to distribution to operate efficiently.”
In another development, the Nigerian Electricity Regulatory Commission (NERC) also launched the mini-grid regulations designed to serve unserved and undeserved communities in terms of availability of power. Presenting the regulations at the event, the NERC’s Vice Chairman, Sanusi Garba said this will cover customers in communities who are not captured in the 5-year development plan of the distribution companies (DisCos).
He said: “The NERC took the initiative of developing a regulation to remove some of the impediments that have sold private investments in rural electrification and the regulations provide for cost reflective tariffs for investors and on the existing tariff methodology.“The regulation also provides for strategies for investors in mini-grids. It is expected that investors in mini-grid will comply with our technical standards. The communities that are expected to benefit are those who are not captured in the 5 year development plan of the DisCos.”
The President Muhammadu Buhari-led administration seeks to eradicate the problem of erratic power supply in Nigeria in the next few years. The Federal Government plans to achieve 10 Gigawatts of electricity operational capacity by the year 2020.
The Minister of Budget and National Planning, Dr Udoma Udo Udoma, said this in a keynote address at the second Kano Economic and Investment Summit in Kano recently. The summit is part of activities planned by Kano State Government to commemorate the 50th anniversary of the creation of the state. Udoma said the Federal Government had also planned to improve the power sector through the renewable energy sources.
According to him, the government is committed to reviving the manufacturing sector, to achieve an annual growth of 8.5 percent to meet 10.6 per cent growth rate by 2020“We also intend to achieve self-sufficiency in petroleum products during the period.
“We also want to be exporter of some key agricultural products such as rice, groundnut, cassava and vegetable oil, among others. He said the Federal Government intended to create no fewer than 15 million jobs for the unemployed persons in the country as part of efforts to fight poverty, particularly among the youth. He said based on the plan, 3.7 million jobs would be created annually to address the unemployment challenges in the country.
It seems the Federal Government is finally coming to terms with the reality in the power sector now, going by President Muhammad Buhari’s statement at an Economic retreat. He was quoted as saying that the poor power situation in the country was no longer a laughing matter. The local manufacturers painted the scenario thus: About 70 per cent rise in cost of operations was recorded as power generation, which rose to above 4.500megawatts, suddenly dropped to less than 1,200mega¬watts, resulting in load shedding by the power distribution companies.
Although generation as at Thursday last week had been restored to about 3,365megawats, getting electricity evenly distributed to the real sector has become a task the Discos have not found funny.
According to a report from the Manufacturers Association, of Nigeria (MAN), members companies in the past three years spent N20.8 billion, monthly on power generation to run production process. MAN President, Frank Jacobs, said the ripple effects of the pow¬er shortages and constant outages were numerous, ranging from cut down in production, job loss to outright closure or relocation to other countries by industries. He added that companies had to bear so much loss as the outage often occurs when goods are in the middle of production. He said: “when you are producing and power is taken unannounced, goods in line of production would be destroyed.”
As a result of this, Jacobs said many members of MAN have resorted to generating power privately and completely cut off their operations from the national grid. “Most companies, like Coca cola, Wempco, Nigeria Flour Mills and especially the multi nationals self-generate their power. They don’t rely on the national grid. And for the last three years, our study showed that our members spent averagely in a month, N20.8 billion, he said.
Corroborating this, the Director General of the Nigeria Employers Consultative Association (NECA), Mr. Segun Oshinowo, said generating alternative power to run the manufacturing sector is expensive and invariably increases the cost of production. Oshinowo said as Nigerian companies operate in the global market, the consequence of incurring high cost on power generation undoubtedly would make the nation’s industries less competitive.
His words: ”The products which our companies would be churning out would be competing with others coming from abroad whose countries have good infrastructure. Definitely, the prices of those products com¬ing from outside will be cheaper, while ours will be higher and less competitive due to cost of production. The same goes for those companies exporting their products, it will still be less competitive and it’s really a serious problem.”
On his part, the Director Gen¬eral, Lagos Chamber of Commerce and Industry (LCCI), Mr Muda Yusuf, said members of the Chambers, be it multi nationals or Medium, Small or Micro Entrepreneurs (MSMEs) have all resorted to alternative source of energy, ranging from gas, diesel or PMS, which he said is affect¬ing their cost of operation and overall effectiveness. “Some of the big companies have completely cut off from national grid to private gas sup¬ply as means of providing power for their operation. This is because some of their operations and productions cannot work with the epileptic power we are experiencing in the country.
All the multinationals are generating their power themselves right now.” Yusuf said though some of the companies still manage to oper¬ate on public electricity, but noted that they have to revert to diesel to power their generators any¬time there is an outage, which he said is more expensive.
He lamented that with the present scenario of fuel scarcity, companies expenses on alternative source of power have doubled.
“Those that suffer most now are the SME and the micro operators that rely on generators, more so now that the fuel is not even available, their problems have been compounded”, he said.
With a remarkable increase in operational cost and poor purchasing power of consumers, the manufacturing companies have had to lay off thousands in the last six months, with about three million still to go.
A 2015 report of the Good Governance Initiative (GGI), a non-governmental organization advocating uninterrupted power supply in the country, says Nigerians spend N3.5 trillion on fuelling their generators annually.
Its President, Mr. Festus Mbisiogu, said an intensive research conducted by the body to ascertain the negative multiplier effects of unsteady power supply last year showed that the manufacturing sector spends over N800billion yearly on genertors. He added that this is apart from about N2 trillion spent on running generators by over 17 million Small and Medium Scale Enterprises (SMEs), banks, other corporate entities and traders across the country.
He explained: “In the bank¬ing sector, each branch spends over N4million on diesel in a month. When you multiply that figure by the number of bank branches in Nigeria, it could be colossal. An average family man spends between 60,000 and N100, 000 in a month on fuel, apart from the maintenance.
“With over 6,133 bank branches and each expending N4million on diesel a month, N48million will go down the drain in a year, and this will amount to N294.4billion per annum across all the branches. This means that not less than N1.5 trillion must have gone into diesel purchase in the past five years. This is outside the amount spent on powering ATM points located outside banking premises and maintaining the generators, among other critical banking infrastructure”, he stated.
Financial experts say the amount spent on fuel and generators by manufacturers and SMEs will increase remarkably this year as 2016 is clearly the harshest since the 2008 global economic meltdown. The rough business climate has forced many companies to close shops, while the surviving ones are retrenching workers daily.
Recently, the Organized Labour raised an alarm that the food, beverage and tobacco sector of the nation was on the verge of shutting down and that over three million jobs were at risk due to the inability of companies to meet the crippling cost of production.
Already, leading companies in the sector such as Nigerian Flour Mills, Nigerian Breweries, Guinness, Nigerian Bottling Company, 7-UP Bottling Company, Friesland Campina Wamco, among others, have written to labour for discussions on planned sack of workers.
The companies listed their challenges to include acute forex shortage, poor power supply from the generation and distribution companies, scarce and costly fuel to run their generators, among others.
In the last three months, no fewer than 1,500 workers had been sacked in the food and beverage sector as employers seek ways of coping with strangulating operational costs.
At a recent press conference in Lagos, the leaders of Food, Beverage and Tobacco Senior Staff Association (FOBTOB) called on the Federal Government to intervene and save the industry and over three million jobs that are under threat.
The President of FOBTOB, Quadri Olaleye, claimed that employers in the sector had devised every opportunity to sack workers, adding that be¬tween the 2012 and the first half of 2015, over 3,000 workers were sacked in the guise of re-engineering, restructuring, right sizing, downsizing, redundancy and re-organization.
Although, the present administration is doing a lot to fix the challenge in the power to ensure uninterrupted power supply, but it is important to state that much more still needs to be done by government to actualize its plans; there is no doubt that government must take advantage of all sources of energy and key into them to put paid to epileptic power supply in the country.
If the government can guarantee to full power supply, then the country will be out of recession as soon as possible and this is a feat that is realizable with the active support of all relevant stakeholders as well as enabling policies by government.
Ayobolu, a public affairs analyst contributed this piece from Lagos State.
