allAfrica.com: Nigeria: Power Supply - Doing Last Things First (Page 1 of 1)

The perennial power supply crisis plaguing Nigeria almost assumed disastrous proportions last Tuesday when the Murtala Muhammed Airport in Lagos was plunged into total darkness.

For two days, the Power Holding Company of Nigeria (PHCN) could not supply power to the airport. The over-dependence on stand-by power generators owned by the Federal Airports Authority of Nigeria (FAAN) stretched the equipment to intolerable limits and they snapped. The airport was therefore plunged into total darkness.

At first, air traffic controllers resorted to procedural system through which they manually guide incoming aircraft into the airport relying on a wild estimation. The system is prone to disaster as there could be mid-air collision as aircrafts make their final approach to the airport. When things appeared to be running out of control, the air traffic controllers decided to divert flights to Port Harcourt Airport. That again was prone to disaster because any aircraft that did not have sufficient fuel for the compulsory emergency one hour journey imposed on it by Nigeria's chronic inefficiency could crash on the way.

In all, thousands of passengers bound for Lagos were stranded at various airports across the country as the power failure ultimately compelled the authorities to shut down the airport. The Nigerian economy may be entering a major phase of its gradual wind-down if the near-collapse of the public power supply of the last three weeks is not reversed immediately. Power supply from the Egbin Thermal Station with the capacity for 1,350 megawatts dropped precipitously due to a combination of inadequate gas supply and poor-maintenance. Other thermal power stations across the country are in various state of incapacitation due to inadequate gas supply. The nation's total generation capacity dropped last week to an agonizingly low level of 900 megawatts. The 300mw which a privately owned thermal power company located in Lagos used to generate to bail out the nation could not be harnessed last week because the system was said to be under maintenance. Besides, the hydro-power plants in other parts of the country that the PHCN said would achieve peak output in July when the rains set in are still at their abysmal state of performance.

Consequently, corporate bodies and individuals now depend fully on power generators at a time when the cost of diesel has escalated to N155 per litre. Many parts of the country have been in darkness for more than seven days. PHCN is in dilemma on how to share 900mw of electricity to a country that needs 6,000mw at the lowest. In fact, the announcement last week that the company was embarking on load shedding to avoid a system collapse was absolutely unnecessary because what has happened is no longer load shedding but total darkness as some communities have remained in the dark for weeks. Ironically, the private generators that the economy depended upon in the last six months are packing up one after another as they are being unavoidably over-stretched. Average power supply to all parts of the country has dropped to less than three hours a day and in many organisations the cost of fuel and maintenance of over-flogged power generators have pushed production cost beyond tolerable limits with dire consequences on inflation and employment generation.

Disgustingly, the federal government has maintained a studied silence on the issue even as total darkness descends on the land. No one is interested in the grandiose plans for power generation touted by the administration. What Nigerians want now is regular power supply, not rhetorics. Ironically, they are not getting it and may have to wait for a long time to realize this dream. The reason is that the Nigerian power sector is something of an enigma. The PHCN, a company which, true to its name, is withholding power from the hapless citizens of the country, does not know how much it spends to generate one unit of electricity. Its tariff is, therefore, based on guess work. It hardly reads the meters in consumers' homes and worst still, it does not even know how to collect its debts. As at April this year, the company was being owed N91 billion, with residential consumers accounting for N71 billion while government ministries and parastatals owe the balance.

PHCN is probably the only power company in the world that compels consumers to pay for the purchase of its distribution equipment when they breakdown. The Amje community in the outskirts of Lagos has been in darkness in the last two months since their transformer blew up. Each household in the community has been levied the sum of N2, 000 for the acquisition of a transformer. By the time they pay for the acquisition of the transformer, they would have to make another contribution for its installation.

In developed societies, electricity bills are calculated based on distance from the power plant. The longer the distance between a consumer's home and the power plant, the higher the tariff one pays. PHCN on its part imposes a uniform bill either out of dubiousness or ignorance. There are fears that no one knows precisely how to restore regular power supply to Nigeria. In fact, the problem has over-whelmed many governments. Former President Olusegun Obasanjo came to power with the promise to fix the nation's nagging electricity problem within six months.

At the end of the six months, he lamented that the period was not even enough to understand the problem of the sector. The problem so confounded the Obasanjo administration that eight years and $13 billion down the drain, Nigeria is now in total darkness. President Umaru Musa Yar'Adua took over from the chicken farmer in Otta with the firm determination to declare a state of emergency in the crippled sector within one month of his assumption of office. Some 14 months into his first tenure, the president is still studying the modalities for declaring the state of emergency. Right now, there are fears that with teachers at war with the federal government, the president may be very reluctant to add electricity workers to the list of labour militants angling for his jugular. The state of emergency is, therefore, bound to wait for quite sometime. The president is said to have been handed a list of PHCN top echelon due to be axed if the sector must perform. The list is being reviewed on daily basis. The president as an analytical chemist is probably waiting for the list to go through the normal chemical reaction before anything could be done. The chemical reaction would probably be completed the day the Supreme Court pronounces its decision on the election petition filed by Muhammadu Buhari against Yar'Adua's victory. Even after that, there is no light at the end of the nation's long, dark power tunnel.

The electricity problem in the country is a thorn on everybody's flesh. No one knows precisely where to start. The Nigerian Electricity Regulatory Commission (NERC) believes that the solution to the epileptic power supply lies in bringing private sector operators into the business. Just about everyone agrees with the commission. But pricing remains a major obstacle to private sector investment in the industry. The general belief in the private sector is that current electricity tariff in the country, like the price of petrol, does not make investment in power plants bankable. Consumers on the other hand believe that with the near-total darkness in the land for which PHCN fraudulently collects normal monthly electricity charges, and the high level of poverty pervading a country that earned close to $60 billion last year in oil exports alone, no one should talk about upward review of electricity tariff.

There is economic logic in the view of the consumers. They see the bid to increase electricity tariff before boosting power supply as an unconventional way of doing last things first. Business organisations have a tradition of improving the quality of their goods or services before effecting price hikes. The reason is that no one wants to pay higher prices for poor or non-existent services. The private sector school of thought, however, argues that no private investment would enter the industry except tariff is reviewed to acceptable market levels. The insistence of this school of thought on doing last things first is based on the contention that the federal government's word can hardly be regarded as its bond. The question, therefore, is which one comes first: stable power supply or tariff hike? A tariff hike at a time of national power gloom is a hard sell to consumers.

In fact it could trigger mass protests reminiscent of the ones conjured by fuel price hikes in the past. But then, investors and their financiers could comfortably shun the power industry the way they did to the invitation to establish private refineries in the country, if nothing is done about tariff hike. However, the federal government has graciously opted to act the script of the private sector. It moved in to resolve the tariff quagmire by ordering a 95 per cent tariff hike from N6 to N11 per unit. To calm consumers' frayed nerves, the increase of N5 per unit would be paid by the federal government by way of subsidy through the power consumer assistance fund.

The subsidy which is to run for three years during which period, power supply is expected to stabilise and make tariff hike acceptable to consumers, would cost the federal government an estimated N177 billion. That is a brilliant way of getting out of the tariff quagmire. However, given the experience with the settlement of fuel subsidies, it is not yet time for consumers to celebrate. The federal government, as liquid as it has been in the last three years, still behaves like an irresponsible debtor. Petroleum product marketers are almost always up in arms before they could be paid the subsidy for fuel imports.

If that practice is repeated in the power sector, the independent power plant operators would simply shut down their systems and throw the country into darkness in a blackmail tactics designed to arm-twist government into paying its debt. The logical conclusion, therefore, is that the darkness in the land may remain for quite sometime.

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