I was working from home on Monday morning when a power outage sent me to put on my generator. I thought it was one of the regular outages that burn money (spent on diesel or petrol for generators) for me and millions of Nigerians. Then at noon, I saw the news reports attributing the outage to another national grid collapse, the second such collapse in 2022. What this meant was that while the grid was down, there would be zero wattage of mains electricity in the country. Everything would be powered by independent power sources like generators, inverters or solar panels. Imagine a country of 200 million people spread across 923,768 km² thrown into darkness all at once. Imagine this happening so regularly that such a ridiculous event no longer incites any protest or even concerted complaints by the victims of this grand incompetence.
“The GenCos could generate as much as 9,000mw but blame an N1.64trn debt as the reason they are underperforming”.
The national grid is managed by the Transmission Company of Nigeria, a company whose government ownership and performance since creation has never inspired confidence. Earlier in December 2021 when there was another grid collapse, the TCN had insisted that grid collapses were perfectly normal and happen everywhere in the world. Since 2013, the grid has collapsed more than 100 times, an average of 10 times a year. This is not normal anywhere in the world. Many countries at war still manage to keep their mains electricity on.
The issue with electricity supply is not just with the national grid collapse but also with the generation companies (GenCos) that cannot generate as much electricity as the country could use. According to the Vanguard news, the electricity supply has fallen to a meagre 1,393MW as of Sunday. The GenCos could generate as much as 9,000mw but blame an N1.64trn debt as the reason they are underperforming. The money according to the GenCos is owed to them by the Nigerian Bulk Electricity Trading Plc, another government-owned company still operating in the power sector.
The NBET buys electricity from the GenCos and sells it to the Distribution Companies who sell it to the final consumers. The problem is NBET has an agreement with GenCos to pay electricity generated whether it is delivered to and sole by the DisCos or not. This is called unutilised capacity payment. The point of establishing NBET is that private owners of the GENCOs require assurance that they would be paid for the power they have to pre-invest billions of naira in generating; NBET is backed by an assortment of guarantees to limit the risk that investors in generation take on.
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There is a gap between the electricity GenCos can generate and what Transmission Company of Nigeria has the capacity to “evacuate” i.e., transport from the GENCOs and deliver to the DISCOs. This gap is a result of inadequate investment in thousands of kilometers of transmission wires and other equipment required to link the far-flung GENCOs to the DISCOs. DISCOs too lack adequate equipment to take delivery of transmitted power and distribute to homes and businesses.
NBET has been having issues paying for this unutilised capacity of GenCos and is even disputing the capacity the GenCos are reporting to make claims for payment. In the same vein, the GenCos are in turn owing a lot of money to NBET, a situation that led the Central Bank of Nigeria to take the extraordinary step of limiting the GenCos’s ability to withdraw money from their bank accounts. The DISCOs argue, quite correctly, that the Federal Government’s decision to subsidise electricity is the primary reason why the sector is starved of funds to invest and is burdened by debts.
The energy crisis is, of course, not limited to just electricity supply. The fuel scarcity and price hike have continued. Petrol remains hard to get, and diesel’s price has more than doubled within a month. The bitter icing on the unappetising cake is the scarcity of jet fuel that airplanes require to run. This scarcity has now gotten to a stage where local airlines are threatening to shut down operations within a few days.
On one hand, is the airlines insisting fuel marketers are unable to meet their hand and on the other hand are the fuel marketers who are saying the airlines are partly to blame for delaying payment for fuel supplied. The other part of the blame, the marketers say, belongs to the exchange rate regime that has made it difficult for the marketers to get the dollars they need to buy the fuel. It would be a scandal if local flights are grounded in Africa’s largest economy.
