A recent report by electricity Think tank Group, comprising the Society for Planet and Prosperity, GCA Capital Partners Climate Advisors, indicates that about 75 per cent of electricity consumed in Nigeria, comes from diesel and petrol-powered generators. The damning report is a reflection of the poor state of the nation’s power sector. Despite the huge investment in the sector, there is little light at the end of the tunnel. The power supply situation across the country is worsening. The situation undermines investment and development.

According to the President, Society for Planet and Prosperity, Prof. Chukwumerije Okereke, Nigeria must do a lot of work in power generation and transmission, both on-grid and off-grid for the economy to grow at optimal level. South Africa, with less population than Nigeria, generates over 40,000MW.  Lack of adequate power supply in Nigeria is crippling the economy. That is why many manufacturing companies have relocated to other countries in West Africa, where power supply is stable.

A recent data from the Manufacturers Association of Nigeria (MAN) revealed that over 300 manufacturing companies shut down operations and others left the country because of the unstable power supply.  Diesel and petrol-powered generators are reported to account for about 25,000MW, while the national grid provides about 4,000MW. This is far less than what is needed for economic growth and development. Research has shown that generators as a source of energy supply is one of the most polluting sources of electricity generation. Sadly, such pollution comes with many health hazards.

According to recent statistics, business owners have spent about $14 billion or N6.05 trillion on generators. The economic loss due to grid collapse is 2 per cent of the nation’s Gross Domestic Product (GDP). The 2020 Ease of Doing Business report showed that 47 per cent of Nigerians lack access to electricity supply. This has drastically reduced the contribution of the private sector to the economy.  Also, most of the MSMEs have identified unreliable electricity as a major challenge to their businesses. A survey of the MSMEs found that business owners are willing to switch to renewable energy.

Figures from the Nigeria Electricity Regulatory Commission (NERC) show that in one year, electricity consumers paid N750billion as tariffs, while the national grid reportedly suffered system collapse up to 50 times. According to the World Bank report, due to poor power supply in Nigeria, businesses lost in excess of N96.4trillion in the last nine years, at a yearly estimate of $29billion. Data from the Manufacturers Association of Nigeria (MAN) showed that between 2015 and 2019, about 320 firms shut down operations as a result of erratic power supply, while scores relocated to other countries. Small and big businesses that depend on diesel for their operations are struggling to survive due to high cost of the product. If recent reports are anything to go by, the power supply will not improve. The deal to generate 5,000MW by the Nigerian Electricity Regulatory Commission (NERC), the Generating Companies (Gencos) and the Distribution companies (Discos), the Transmission Company of Nigeria (TCN), Gas suppliers and the Nigerian Bulk Electricity Trading (NBET) Plc, has apparently collapsed. The NERC had on June 15, 2022, announced that all the market participants had signed a contract that would ensure that at least 5,000MW of power supply was generated with effect from July 1, 2022.

Unfortunately, that did not happen, as the participants complained that the terms of the contract were imposed on them by the NERC without their contribution. This is why the power sector has underperformed despite all measures to revamp it. Since power is very vital to economic development, government should collaborate with private investors to improve the power infrastructure.  Regrettably, the power sector Reform Act 2005, which resulted in the unbundling of the Power Holding Company of Nigeria (PHCN) in November 2013 into 18 successor companies, six Gencos and 12 Discos, under the supervision of the TCN, has done little to improve the nation’s  power supply.

It is paradoxical that Nigeria endowed with gas, hydro and solar resources with the potential to generate over 12,000mw from existing power plants is facing acute power shortage. In spite of almost N3trillion the federal government reportedly invested in the privatised electricity companies, the country is still experiencing frequent power outages.

Let the government harness other sources of power such as hydro, solar and wind to improve the nation’s power supply.  We urge the incoming administration to address the challenges of the power sector. For improved power supply, the emphasis should now be on renewable energy sources. Without steady power supply, Nigeria can hardly achieve the much-needed economic development.