Sentiments Aside – Ijeoma Nwogwugwu

Sentiments aside, I am now hard-pressed to join the likes of Mr. Ikem and millions of Nigerians who are deeply disappointed with the slow pace of progress in the electricity sector. Even more painful is that the December 6,000MW target remains a mirage. From investigations carried out, findings show that from an installed capacity of 8,634MW, the country currently has the capacity to actually generate 5,000MW of electricity.

Sentiments Aside by Ijeoma Nwogwugwu

Last October, a Venatius Ikem contacted me via e-mail. He reminded me of an article I wrote in January titled: ‘Babalola Has to Hit the Ground Running’ in which I endorsed the Minister of Power, Lanre Babalola. He went further to seek my assessment of Babalola’s performance to date and expressed disappointment in the current pace of work in the power ministry and government’s inability to meet the target of 6,000MW by December ’09.

Mr. Ikem was not the first person to contact me in this regard. A few days after the said article, I got a phone call from someone who has a keen interest in the economic and developmental trajectory of this country. The person agreed that Babalola was possibly the most qualified person for the job in terms of technical know-how but had reservations about his capacity to step on toes and take on the establishment.

In the caller’s opinion, Babalola was too much of a gentleman and lacks the fire in his belly to see through much needed reforms in the power sector, of which coincidentally, he is the chief architect. To be honest, I agreed with the caller’s opinion but held the view that since President Umaru Yar’Adua had taken the first step of appointing the right person for the job, Babalola would have to find the courage and political fortitude to remove the stumbling blocks to the attainment of stable electricity in the country, because they are legion.

Ever since, I have given the power sector and Babalola a reasonably wide berth, and watched events as they unfolded. I must confess that my personal bias played a role in the decision not to comment on the power sector for almost 12 months. But sentiments aside, I am now hard-pressed to join the likes of Mr. Ikem and millions of Nigerians who are deeply disappointed with the slow pace of progress in the electricity sector. Even more painful is that the December 6,000MW target remains a mirage.

From investigations carried out, findings show that from an installed capacity of 8,634MW, the country currently has the capacity to actually generate 5,000MW of electricity, 1,000MW short of the December 31 deadline. In the area of distribution and transmission, some work has also been carried out by contractors to reinforce the transmission and distribution grid and cut down on the degree of technical and non-technical losses, through the installation of a total of 750MVA and reinforcement of 383.5MVA at the injection substations and 1590.71MVA at the distribution substations operated by PHCN.

Effectively, if all systems and processes in the generation, transmission and distribution network are working at optimal capacity, PHCN should be able to generate and transmit a little over 4,500MW of electricity to homes and industries across the country. This assumption takes into consideration technical and non-technical losses which are unavoidable in all electricity networks worldwide. The rule of thumb is to regularly maintain, upgrade and reinforce the grid to keep losses to the barest minimum of 5 to 10 per cent. At its most inefficient, PHCN has recorded losses of over 40 per cent.

Of the 5,000MW of electricity currently available for generation, about 80 per cent of the stations, comprising privately-run independent power stations and PHCN power stations, require gas as feed stock to produce electricity. Only three power stations in this country are dependent on water to power their turbines. These are the Shiroro, Kainji and Jebba hydro power stations, which owing to their location in the north and poor water management on the part of PHCN during the dry season will soon start operating epileptically.

From all indications, the generation system is heavily skewed towards thermal power stations located in the south, which if well maintained, can only produce electricity with adequate availability of gas. But this has not been the case for several years. Further findings indicate that for the power stations to produce 5,000MW consistently, they would require 1,200 million standard cubic feet of gas daily that must be supplied by oil companies through the Nigerian Gas Company, a subsidiary of the Nigerian National Petroleum Corporation.

But gas supply constraints from Shell and Chevron, two of the major gas producers in the domestic market, and other international oil companies, has made it impossible to meet local requirements. Since the repair of the gas pipelines, following the cessation of hostilities by militants in the Niger Delta, supply from IOCs to the NGC for onward distribution through the pipeline network has hardly exceeded 500mscf a day. When it did briefly, in the month of November, a noticeable improvement was experienced in electricity supply in most major cities owing to the spike in generation to over 3,000MW. The brief reprieve consumers experienced last month was unfortunately short-lived when Shell reduced gas supply to effect repairs, yet again, to its gas gathering and compression units. Additional work is also being carried out by NGC to plug leaks in the Escravos-Lagos gas pipeline.

From the look of things, there is a serious disconnect between the power and oil and gas sectors in this country. The move taken by the Yar’Adua administration to de-link the power and petroleum ministries in November last year was ill-advised. Prior, former President Olusegun Obasanjo had seen the need to merge both ministries, knowing fully well that the country had reached the point where it had to harness its natural resource, in this case gas, in a coordinated, effective and efficient manner that would guarantee regular electricity supply.

This strategy was not unusual. Whereas it is always desirable for countries to diversify power sources, in a locality struggling to upgrade and build new power infrastructure from scratch, administrators seek to fully harness available natural resources found in abundance before resorting to alternative means. This was evident during a visit to Brazil where 90 per cent of electricity is generated from hydro sources, even though the country is an oil producer. In other words, given the high preponderance of rivers, lakes and rain in the Amazon region – the Amazon River is the second longest river in the world – Brazil has found a way to utilise its natural resource optimally to make electricity available not just to its towns and cities, but also some of its remotest villages deep in the rain forest belt.  

This goes to show that Nigeria is a non-starter as far as gas utilization is concerned. That the petroleum ministry, IOCs, NNPC and NGC have been recalcitrant and grossly inefficient in making gas available to the domestic market, makes the situation more bleak. The argument in the past was that the pricing regime for gas discouraged oil producers from investing in gas infrastructure for the local consumption. But the issue was addressed this year when a new commercial framework was introduced as an incentive to reduce gas flares in the Niger Delta and enhance the gas to power scheme.

The zeal on the part of the oil industry, however, has been lacking in every respect. For instance, save for the Soku gas plant operated by Shell which was attacked by militants early this year and resulted in the declaration of a force majeure, all other plants and infrastructure that supply gas to the Nigerian Liquefied Gas plant on Bonny Island, operate efficiently. Gas supply agreements to off-takers overseas are adhered to round the clock. The same cannot be said of gas supply meant for thermal power stations badly in need of the feed stock.

But this does not in any way exonerate the power minister, Babalola. His focus since assumption of office in January has been limited to the 6,000MW target set by the federal government and the award of contracts for the completion of power infrastructure under the National Integrated Power Programme. Meanwhile, sorely needed reforms to make the power sector more efficient and increase capacity to well over 10,000MW have been left unattended. For someone, who while at the Bureau of Public Enterprises, masterminded the power sector reform programme leading to the enactment of the Electric Power Sector Reform Act and the establishment of the Nigerian Electricity Regulatory Commission, his effectiveness in pushing forward his own reform programme has fallen short of expectations.

One of the few things he accomplished shortly after becoming minister was to get the approval for the Multi-Year Tariff Order of which N177.95 billion will be used to subsidise the cost of providing electricity in the country over a three year period. He also ensured that PHCN reverted to the horizontal integrated structure comprising six generation companies, 11 distribution companies and one transmission company, as stipulated under the EPSR Act. Yet, all 18 companies still report to the centre – PHCN. The lack of autonomy and properly constituted boards make them uncompetitive, compelling them to seek PHCN’s approval for very inconsequential decisions and projects. Even the NERC whose chairman and commissioners were removed over nine months ago for alleged graft have still not been replaced and is run by a caretaker committee.

Indeed, Babalola’s slow pace at seizing the initiative and effectively starting the transfer of some of the generation and distribution companies to private management/ownership has left a vacuum which BPE’s current managers are too inept to fill, while the newly established Infrastructure Concession Regulatory Commission is completely out of depth to take on. His seeming reluctance to engage the public regularly through the media, National Assembly and other stakeholder forums where he can draw the attention of Nigerians to the bottlenecks to the attainment of 6,000MW, among other challenges, has served to swell the ranks of critics on his stewardship and ability to deliver. Essentially, his taciturn nature and inability to multitask have boxed Babalola into a tight corner.

Still, it is a corner from which he can extricate himself. From the few interactions this writer has held with Babalola in the recent past, his whole attention has been focused on attaining 6,000MW come December 31. It is quite glaring that this is a target he will not meet, owing to circumstances beyond his control. He can still redeem himself, nonetheless, if he can put up a good fight in the weeks and months ahead. This is not the time for platitudes or being politically correct any longer. As a tactic, it has fallen flat on its face. Babalola must hound the oil and gas sector with all the resources and arsenal he has at his disposal. Whip up sentiments and galvanise the presidency, legislature, state governments (which are part owners of the NIPP) and the public to get the petroleum sector to meet its end of the bargain. Of greater importance, for the nation to move beyond 6,000MW, he must push through wider reforms in the power sector.