- Cost of fuel, maintenance in banks rises to N1.3trn
- Go back to NIPP, engineers advise govt
With power generation hovering in the region of 3,000 to 4,500 megawatts for most part of last year and with a conservative power need of the country put at 40,000 megawatts, investigations by The Point have revealed that Nigerians spent about N5.5trillion to fuel generators in 2016.
Power supply remained epileptic across the country, leaving about 56.16 per cent of electricity consumers enjoying less than eight hours of supply daily while an abysmally low 5.88 per cent enjoyed about 20 hours of power supply daily, according to statistics.
The implication was that manufacturers, financial institutions, hospitals, educational institutions, private companies, small and medium enterprises, most government offices, which could all not function effectively without adequate power supply, had to depend on power generating sets to provide alternative supplies. This is in addition to findings, which revealed that about 80 per cent of private homes lacked access to regular power supply in 2016.
This is also besides cases of several houses far-flung in inter-lands and developing neighbourhoods that are yet unconnected to the national grid in Lagos, Ogun, Oyo, Kwara, Kano, Jigawa, Kastina, Yobe, Adamawa, Borno and Taraba states, among others.
Worse still, a nationwide survey by a non-governmental organisation, Independent Energy Watch Initiative, revealed that about 62 per cent of consumers were often burdened and compelled by distribution companies to make financial contributions to replace components of failed power supply infrastructure.
These revelations came just as some non-government organisations and auditing firms told The Point that the country needed just about N4.5 trillion to meet its 40,000 megawatts demand.
The aggregate of $15 billion, which had been spent by successive governments over the last 15 years to revive the power sector, had only managed to give the country an installed generation capacity of 12,000 megawatts, according to the Minister of Power, Works and Housing, Babatunde Fashola.
Going by the old naira to dollar exchange rate of N150, however, the $15 billion expended on power projects in the last 15 years, should have exchanged for about $2.25trillion and, according to experts’ projections, should have given the country an installed generation capacity of about 20,000 megawatts.
Nigeria currently generates about 3,000MW for its over 170 million population, leaving the nation as one of countries with the lowest per capital electricity usage in the world.
According to the PriceWaterHouseCoopers Nigeria’s report on the economy, the country’s electricity consumption per capital is only 151 kilowatts hour per year.
Electricity consumption per capital measures the average kilowatt-hours of electrical power generated per person in a particular country or region.
The auditing firm, which attributed the development to value chain losses, limited transmission coverage and supply disruptions, disclosed that, based on the pace of the ongoing projects in the sector, the per capita power consumption in the country would only reach 433 kWh per year by 2025.
This is only 11 per cent of the per capital power consumption presently in war-ravaged Libya. If that target is met by 2025, it will still be one of the lowest in the world.
Presently, Zambia does 543.77 kWh; Zimbabwe, 912.74 kWh; Tunisia, 1,215.08 kWh; Egypt, 1,408.59 kWh; Iraq, 1,639.06 kWh; Namibia, 1,927.76 kWh; Syria, 1,983.66 kWh; Malaysia, 3,724.23 kWh; South Africa, 4,841.28 kWh; and Iceland, 51,142.11 kWh. Growth Markets Centre leader, PwC, Mr. David Wijeratne, explained that there was a critical need to drive higher power availability and the only way to achieve that was to target a stretch of 982 kWh per year, which is 6.5 times the current level, by 2025.
His projection was based on the benchmark of other growth markets like Vietnam. Reaching this goal, the strategy management consultant said, would require a comprehensive transformation of the power sector in Nigeria with three substantial ‘leaps’ over the next 10 years.
To him, accelerating growth in power generation capacity, expanding the power transmission network, driving better efficiencies and scaling up efficient power distribution capabilities are the major leaps that can ease the country’s journey to the target.
“This includes a mix of favourable policies, implementation of new technology, faster project execution and improvement in operational efficiencies across the value chain. Executing these levers will also require significant involvement and alignment between the Federal Government, the Ministry of Power and the industry participants. The implementation needs to be well planned and sequenced appropriately to derive the desired benefits,” he said.
Nigeria’s electricity consumption per capital at the moment is only 151 kilowatts hour per year. Presently, Zambia does 543.77 kWh; Zimbabwe, 912.74 kWh; Tunisia, 1,215.08 kWh; Egypt, 1,408.59 kWh; Iraq, 1,639.06 kWh; Namibia, 1,927.76 kWh; Syria, 1,983.66 kWh; Malaysia, 3,724.23 kWh; South Africa, 4,841.28 kWh; and Iceland, 51,142.11 kWh
N5.5 TRILLION EXPENDITURE ON GENERATORS
Aside from over 50 million homes that spend a minimum of N1, 000 on fuel for generators daily, the office of the President and that of the Vice President spent a total of N32.9 million to run their generators in 2016.
Findings revealed that 27 federal ministries spent an average of N200.2 million to power their generators in 2016, totalling about N5.4 billion. The states’ ministries are not left out as The Point found that each of the over 700 ministries across 35 states, except Lagos that generates its own power, spent an average of about N70 million within the year, totalling about N50 billion.
The private sector also spent for tunes to generate power in their offices, and other facilities across the country.
For instance, in the banking sector, figures released by the banks’ headquarters in Lagos were alarming.
According to a source in the Central Bank of Nigeria, branches of all the banks across the nation dropped from 6,537 in 2015 to about 6,327 in 2016, but that did not have significant impact on the expenses incurred by the banks to keep the branches running.
Findings revealed that the cost of fuel and maintenance of each of the over 12,000 generators in the branches rose from N4.5 million in 2015 to over N9 million every month in 2016, meaning that about N1.3 trillion was spent within the year.
The huge cost was not only as a result of the increased cost of diesel, but also the cost of spare parts for the generators, which rose by over 100 per cent, due to the near crash of the value of the naira in the foreign exchange market.
The cost of fuelling and servicing generators used to power about 20,000 Automated Teller Machines (Nigeria Inter-Bank Settlement Scheme) across the country is not, however, included in the figure above.
In the telecommunications sector, the five operators in the sector spent an average of N20 billion each (N100 billion) on power generation in their offices, outlets and mast sites across the country in 2016, an indication that the poor state of the power sector took a great toll on operations in the telecoms industry and created holes in the pockets of subscribers.
“It is unbearable doing business in Nigeria due to the ailing state of the power sector. We are a profit making organisation, but we cannot afford to over-burden our subscribers with tariff.
To survive the hard times, we had to outsource some key departments in 2016 and that really helped us cut cost by about 20 per cent,” a top source in MTN Nigeria told our correspondent.
SALES ROSE BY 70 PER CENT – MANUFACTURERS
Some manufacturers of industrial generating sets in the country confirmed findings of the nation’s overdependence on generators, as they told our correspondent that their sales and maintenance orders increased by 70 per cent in 2016 alone.
Assistant Manager, Sales and Marketing, JMG Limited, manufacturers of JMG and FG Wilson diesel and gas generators, Mr. Uche Obi, told The Point that irregular power supply affected the sales of his company’s products in 2016 positively.
He said that clients exhausted their maintenance kits ahead of the scheduled period because they used the generators more often than they did in previous years.
“Despite the fact that we had to increase the cost of our spare parts by 20 per cent three times in 2016, due to the forex crisis, a lot of our customers did not mind, as they serviced and changed parts of their generators more than they did in 2015,” he disclosed.
A top source in Mikano International Limited, also confirmed that the company witnessed tremendous sales improvement during the year, a development he also attributed to poor power supply in the country.
According to him, the year was one of the best for the company as the development boosted its profit by a remarkable margin.
100 MILLION GENERATORS IN USE – MAN
The President, Manufacturers Association of Nigeria, Dr. Frank Jacobs, disclosed that about 100 million Nigerians owned generators in 2016.
According to him, while an average residential expenditure on powering generators climbed to an all-time high of over N2 trillion, both operators in the Small and Medium Enterprise and real sector spent about N3 trillion in 2016.
“Electricity crisis is the most important infrastructure bottleneck in Nigeria and all types of firms experience power outages and 85 per cent of them own two or more generators as alternative source of power generation. This leaves much to be cheerful about. The efforts of government have continued to totter. We are speedily losing hope,” Jacobs lamented.
FOCUS ON NIPP – EXPERTS
Experts in the power sector have, however, frowned at some critics who believe the government has no business in the power sector. They expressed the view that Nigeria should plan to meet the demand of electricity in the country.
According to them, government should intervene and ensure that the National Integrated Power Plants are completed, as they appear to be the cheapest source of power for the country.
A renowned petroleum engineer, Mr. Martins Onovo, told The Point that the biggest investment the government had made in the sector was the NIPP.
He, however, noted that the effort was not productive. He said, “The energy and the time we spent to realise 5,000 megawatts could have done 50,000 megawatts, because we had the money and the capacity to do it. But they got distracted by those saying government had no business in business, and that mantra destroyed the focus government ought to have had in fostering business.
“There is nowhere you say government has no hand in business; government is the owner of business. If we are determined to fix power, we must fix the NIPP and follow the roadmap of former President Olusegun Obasanjo.”
Meanwhile, the President, Nigerian Society of Engineers, Mr. Otis Anyaeji, said that Nigerians shouldn’t expect much improved power supply and availability for now.
He said adequate and reliable power supply on a sustainable basis meant that electricity generation, transmission and distribution must double the demand.
He said, “If your demand is 1,000 megawatts and your installed capacity is also 1,000 megawatts, then you don’t expect that you will always have 1,000 megawatts because if one of the plants has a problem and it supplies, say 50 megawatts, then you will have 950 megawatts. You will suffer from the absence of those 50 megawatts.
“Nigeria, as an industrial country, needs more than 180,000 megawatts, but we have installed about 12,000 megawatts. We cannot wheel around more than 5,000 megawatts. On an industrialisation basis, if all factories in the country were working, even if all the 12,000 megawatts were available, it would still not be enough.”
FOCUS ON RENEWABLE ENERGY – I-WIN
Proffering solutions to the menace, Partner, IWIN, Mr. Uche Onwumereo, advised that the government should not rely on gas.
With the recurrent vandalisation of gas pipelines, he said it was important that governments at various levels considered alternative forms of power generation, with particular preference to renewable sources.
“Other alternatives to the grid power will reduce the pressure on the available grid generation and may result in capacity release, as a result of the forgone grid consumption.
This capacity release will cause more energy to be released to the DisCos for re-distribution,” he said.
A Pretoria, South Africa-based Nigerian engineer, Mr. Chuks Onyenakeya, urged the government to look inward and emulate South Africa. He suggested that Nigeria should explore coal, biofuels and waste alternatives. He said, “About 70 per cent of energy supplied in South Africa is from coal, while crude oil, biofuels and waste (burning of traditional biofuels for heating), gas, nuclear, hydro and solar generate 14.8, 10.7, 2.9 and 0.1 per cent respectively.
“South Africa is the fourth largest investor in renewable power in the world, after Uruguay, Mauritius and Costa Rica. Same rate of investment is expected to happen in Nigeria, because we have more resources. Renewable energy will play a bigger role in the sector in the future.”
