Lagos — Regular power supply is the hallmark of a developed economy. For the economy of any nation to grow that country must invest in social institutions and build permanent institutional structures to tackle problems as they arise. Also, the country must invest in agriculture, health care, good network of roads, efficient and reliable transportation system, and must tame financial instability.

Background/Introduction

Any nation whose energy need is epileptic in supply prolongs her development and risks losing potential investors. Almost 50 years after independence, Nigeria, a country of over 140 million people and richly endowed with various sources of energy; crude oil, natural gas, coal, hydropower, solar and wind etc, is still mired in the dark. Poor electricity supply has been a serious problem in Nigeria. Despite the huge amount of money expended by successive administrations to revamp the power sector, not much seems to have been achieved as the country still witnesses frequent and persistent power outages.

While businesses crumble by day owing to this long-running problem, with manufacturing companies spending so much to generate own power pushing up costs and eating into profits, generator dealers are the beneficiaries of the rots and decays in the power sector as virtually every business in the country patronises them. The over $13 billion reportedly spent on the power sector by the administration of former President Olusegun did not translate to an improvement in electricity supply in the country as power generation still hovers around 3,000MW. The Obasanjo administration was alleged to have awarded contracts to 'ghost companies', while some power projects were routinely inflated and over-invoiced. Power plants were built by the Obasanjo regime, without consideration to their sources of gas supply. The result is what we are seeing today, power plants lying fallow because there is no gas to power them.

Efforts by Yar'Adua Administration

On assumption of office, the late President Umaru Yar'Adua unfolded a seven -point agenda, top of which was provision of steady electricity supply. The late president had also promised to declare a State of Emergency in the power sector as part of measures aimed at raising power generation in the country. He said under the emergency, which will be in force for three years, the federal and state governments would set aside $5 billion for the rehabilitation and expansion of Nigeria's power generation, transmission and distribution infrastructure.

According to him, after the three-year emergency period, Nigeria's generation and distribution infrastructure would be privatised, while its transmission infrastructure would remain under the control of a state-owned company.

Yar'Adua had noted that for Nigeria to meet its 20-20-20 target, the country's capacity must reach at least 30,000MW by 2015, adding that the proposed partnership with the private sector will ensure the attainment of that target. The former President also disclosed that Nigeria would seek additional financing from international finance institutions for the rehabilitation and expansion of its power infrastructure, adding that his administration intended to establish a proper foundation for the increment of Nigeria's power generation capacity to about 30,000MW by the year 2020.

In an effort to achieve steady supply, Yar'Adua on September 7, 2007 inaugurated a Power Sector Reform committee to work under the supervision of the National Energy Council that is chaired by the late President himself. The Power Sector Reform Committee was headed by the immediate past Minister of Petroleum Resources Dr. Rilwanu Lukman. The Committee was mandated to find urgent and workable solutions to the nation's power supply problems. Yar'Adua had also directed the committee to determine the best ways of deploying Nigeria's existing capacity for power generation, transmission and distribution.

He said that in drawing up a master plan that will provide for short, medium and long term power requirements of the nation, the committee should also review ongoing power sector projects, including the National Integrated Power Project (NIPP) and Independent Power Production (IPP) projects in the country with a view to streamlining them into the master plan.

The committee's terms of reference also included reviewing the existing power sector structure in the country to make it more accountable, effective and efficient. The Committee was given six months deadline for the completion of its task.

However, after almost one year of deliberation, the committee in June 2008 submitted its final report to the government and recommended that the Federal Government should halt the privatisation of the power sector until necessary repairs are carried out on the existing infrastructure. The committee also recommended that Nigeria needed $85 billion (about N10.2 trillion) to meet her 20,000MW electricity target by 2020. The Committee said the sum should be expended on the ailing sector in the next 12 years in order to achieve government's short, medium and long-term target as contained in the Power Sector Master plan.

Stakeholders in the sector argued that the problem of power sector is one that should be tackled vigorously. According to them, from all indications the performance of power sector in Nigeria over the years, has been dismal and, by extension, "accentuated the economic and industrial underdevelopment situation of the country". They said the situation on ground shows that Nigeria as developing country is not even at the stage of take- off since the stage would imply that basic infrastructural facilities are in place. They opined that considering the strategic importance of the power sector in socio- economic development of the country and with the attendant problems that have characterised it, getting the private investors involved will make a whole lot of difference. All said and done, no meaningful achievement was record during this period.

In what appears to be an unusual new-year message to Nigerians on January 1, the federal government had admitted its failure to match words with action with regard to attaining its set 6,000 megawatts of power by December 2009.

Vice President Goodluck Jonathan (as he then was), was honest and forthright about the government's less than expected performance in the area of improved electricity while delivering the new year message. He however assured that resources would be mobilised this year to address the challenge of power supply through effective transmission and distribution.

"While I am happy today to report that we have achieved some substantial measure of success, I regret to mention that for a number of unforeseen and unavoidable reasons, this target could not be met. Millions of Nigerian are therefore still without power. For this, I render on behalf of government very sincere regrets.

"At the inception of this Administration, we promised to drastically improve access to electric power by the end of 2009. This is because power is a basic necessity in a technologically-driven world. Our target, which was modest, was set at generating 6,000 megawatts of electricity by year end," Jonathan said.

Jonathan's Quest for Stable power

Worried by the frustrating situation, President Goodluck Jonathan, then the Acting President declared that his priority would be to deliver electricity to Nigerians who have been groaning in darkness notwithstanding the country's abundant energy sources.

Jonathan who spoke while declaring open the 10th Nigeria Oil and Gas Conference in Abuja in February assured that government would take all necessary steps this time around to deliver on its promise to provide stable electricity supply to Nigerians.

He said a situation where majority of Nigerians are denied the benefit of power supply, which the petroleum industry can guarantee through gas for example is unacceptable.

"We must have electricity in Nigeria and the oil and gas companies will partner with us in delivering this to the Nigerian people within the shortest possible time."

The non availability of adequate gas to for power generation had been blamed on the NNPC's failure to fulfill its promises to make gas for domestic use its priority by exporting the gas, which would have been used to feed the nation's power plants to sister countries under the West Africa Gas Pipeline project scheme. It was gathered that this year alone about 150million standard Cubic feet of gas (mmscf/d) would go to Ghana and this will double by next year to over 300mmscf/d.

About 50mmscf/d was said to have been exported to Ghana last month by the NGC, to shore up their power generation capability and also boost their industrial sector demand at the detriment of government's goal for Nigerian economy through power generation.

The agreement to supply gas to Ghana was entered into by the NNPC about ten years ago as part of commitment to the West Africa Gas Project scheme, which was brainchild of former President Olusegun Obasanjo.

But Jonathan noted that "For Nigeria to be exporting gas and yet do not have this vital resource for domestic power generation is like a farmer who after a bumper harvest sells off all his or her produce, spends the proceeds on other material things and consigns the family to living in hunger ! it is not and will never be a wise proposition."

"As corporate citizens, oil and gas companies have a responsibility to be good neighbours . We cannot live in darkness when we have a better option of a life under uninterrupted power supply". He said.

As Acting President, Jonathan dissolved the former cabinet constituted by the late Yar'Adua, but did not appoint a substantive Minister of Power, following his decision to take charge of the all-important sector.

To ensure optimal efficiency, Jonathan resolved to take the lead in the power ministry, supported by the Minister of State for Power, Mr. Somo Nuhu Wya.

Breaking the cherry news to Nigerians, President's Senior Special Assistant on Media and Publicity Mr. Ima Niboro said "There is a new concept about power. It is going to run as a body that will be chaired by the Acting President as chairman and he will take responsibility as minister for a certain period of time and the minister of state will be deputy chairman," . "This body will work in close harmony with the power sub-committee of the Presidential Advisory Council and Barth Nnaji heads this committee. He is an experienced power consultant, that is why you see those positions are vacant".

On June 5 however, Jonathan directed his vice, the Minister of State for Power to commence full implementation of the Power Sector Reform Act in order to create room for private sector participation and efficient service delivery to Nigerians. Specifically, the President directed the Power Ministry to fast-track the reform process and break all barriers that would prevent private sector players coming to invest in the sector.

"President has given mandate to commence the reform process and break all barriers that would prevent private sector players coming to invest in the sector. I have clear mandate of Mr. President to break all bottlenecks to private investor's participation in the power sector .We are ready to encourage you and we will create the enabling environment for you to actively invest in the sector. Our doors are open to all genuine investors" said the Minister of State for Power.

He explained that based on the President's directives, the Ministry would commence full reform of the sector in order to encourage the inflow of the much needed investment for the sector. The partial implementation of this Act before now had led to the establishment of Nigerian Electricity Regulatory Commission (NERC) and unbundling of Power Holding Company of Nigeria (PHCN) into 18 successor companies as follows, Generation-6, Transmission-1 and Distribution-11 respectively.

According to Wya, it has become obvious that government alone cannot provide the required investment that would drive the sector for the benefit of all Nigerians, adding that government is open to anybody who has the resources and ready to invest in the sector to come on board.

Wya explained that though most of the power stations in the country are thermal or gas-fired based, Nigeria still needs more thermal or gas powered plants adding that investors could easily diversify into other alternative power generation opportunities that exist in the country.

As part of measures to transform the power sector and breathe life into electric power in the country, President Jonathan also recently approved the composition of a new power reform structure.

Niboro, who announced this on June 15, said the new structure would be driven by the Presidential Action Committee on Power chaired by the President himself and supported by a Presidential Task Force on Power. The Presidential Action Committee, he said would provide leadership and guidance for the development of the power sector, and determine the general policy direction and strategic focus of the ongoing power reform. Vice President Mohammed Namadi Sambo, he said would serve as alternate chairman of the Presidential Action Committee, while its other members include; the Minister of State for Power, the Ministers of Finance, National Planning and Petroleum Resources, the Secretary to the Government of the Federation, the Head of Service, Governor of the Central Bank of Nigeria, a Special Adviser on Power, and Chief of Staff to the President.

The Presidential Task Force, on the other hand, he said is charged with developing and driving the Action Plan for the nation's power sector with achievable targets within the lifespan of the present administration. The Taskforce, which will report to the President and the Presidential Action Committee on a regular basis, was also directed to articulate a proper plan of action for implementation in the areas of power generation, transmission distribution as well as all issues regarding power sector reform.