Sometimes I wish that Nigeria’s
power sector challenges are solved so that I will have less to write on, but
this seems not to be happening as issues keep arising in this large and
troubled electricity market with its various actors and stakeholders.
After my last publication on the
feasibility of the power sector recovery plan, I received several messages from
key sector players including from a diplomatic mission commending the article’s
insightfulness and asking that I share a copy of the recovery plan if I had it.
At the time the last article was published, I did not have the plan and my
preliminary analysis was based on the media briefing by the Minister of Power
after the approval of the plan. However, I have obtained the plan now and I
hope to further analyse the plan based on the specific programmes it hopes to
embark on. The feedback I found most interesting was from a former Chairman on
the Technical Committee of National Integrated Power Project (NIPP) who was not
happy that I did not emphasise how DISCOS, in truth, collect a lot of revenue,
but turn around to claim to other market players that they collect little and
are operating at a loss. He described DISCOS as the problem of Nigeria’s
electricity sector for not remitting revenue and refusing to invest in
upgrading their infrastructure.
I promised to be more critical of
all players in the sector especially DISCOS as I have always been (and as
allowed by word count – it will take not less than a 5,000 word article to
analyze how DISCOS are a big problem for Nigeria’s electricity sector). I still
do not understand how the government strongly believes that DISCOS operate two
accounting books and yet, have not taken appropriate and necessary actions to
ensure that they are more transparent and accountable. This lack of
transparency and accountability helps in the low revenue base of the power
sector which starves it of the finance it critically needs for reforms and
recovery programmes. Interestingly, these and other issues including enforcing
corporate governance from power sector operators, enforcing market discipline,
developing a coherent strategy to resolve militancy and making a definite
policy statement on tariff are among sector issues that the World Bank listed
as conditions for the release of $1 billion needed to help fund power sector
programmes.
Speaking of definite policy
statements, according to a World Bank global scorecard for policy makers which compares
the national policies and regulatory frameworks for sustainable energy amongst
different countries, Regulatory Indicators for Sustainable Energy (RISE),
February 2017, Nigeria ranked amongst the worst countries with regard to
enabling policy environment for energy access, energy efficiency and renewable
energy. Of 111 developing and developed countries studied which represents 96
percent of the world’s population and energy consumption, Nigeria scored very
low for the three categories. For energy access, Nigeria ranked 10th worst
country ahead of Liberia, Yemen, Mauritania, South Sudan, Sierra Leone, Chad,
Haiti, Central African Republic and Somalia in that order. Countries that
performed better than Nigeria include – Afghanistan, Congo Republic, Madagascar,
Ethiopia, Eritrea, Niger, Togo, Sudan, Honduras, Mozambique. For energy
efficiency, Nigeria was ranked 8th worst ahead of Somalia, Mozambique, Chad,
Loa People Democratic Republic, Mali, Mauritania, Congo Republic while Niger,
Central African Republic, Liberia, Vanuatu, Solomon Islands, Yemen, Burundi,
Myanmar, Maldives, Haiti, Zimbabwe, South Sudan were among 12 countries that
performed better than Nigeria. On the renewable energy category, Nigeria was
ranked 21st ahead of Somalia, Haiti, Sierra Leone, Eritrea, South Sudan, Niger,
Mauritania, Bahrain, Liberia, Congo Rep while Uzbekistan, Mozambique, Benin,
Burkina Faso, Saudi Arabia, Kuwait, Cambodia, Congo Democratic Republic, Qatar
were listed countries that performed better than Nigeria.
Although Nigeria’s renewable
energy score improved by over ten places when compared to energy access and
energy efficiency it was still 4 points below the indicator score mark for low
performing countries. Nigeria’s performance on this scorecard will not come as
a surprise to people with a good understanding of the energy sector in Nigeria.
Space will not allow me analyse the report in detail. For instance, on the
energy access category, Nigeria’s overall score for energy access was 22 and 0,
0, 17, 35, 22, 100, 0, and 0 for existence of plan, scope of plan, grid
electrification, minigrids, stand-alone systems, affordability, utility
transparency and monitoring, and utility credit worthiness indicators
respectively. The most interesting aspect of these indicators is that consumer
affordability of electricity scored 100 which is an indication that electricity
consumers can afford to pay the cost of electricity.
This situation seems to be well
understood by government and key electricity market players which may be what
the Nigerian government is exploiting in its continued push for a cost
reflective tariff for the market. However, consumer affordability of
electricity is clearly different from willingness to pay for electricity which
is one of the challenges that the grid sector is facing. The problem of
willingness to pay borders on social issues of distrust with public utilities
and citizens’ perception of government’s role in providing utilities which is
mostly informed by politicians’ election campaign promises. The scores of the
other indicators means that government has a lot to do in making the right
policies and setting the right regulatory frameworks for an enabling
environment that accelerates sustainable energy access.
On energy efficiency, Nigeria’s
overall score was 11 out of 100, and this equally doesn’t come as a surprise
especially when policy makers are not knowledgeable about their
responsibilities to the sector. For instance, the Senate Committee Chairman on
Power, Senator Enyinnaya Abaribe while responding to a question on how energy
efficiency in Nigeria can be increased said that it is the job of energy
efficiency appliance vendors to educate Nigerians on energy efficiency as it is
not the job of government to lead energy efficiency programs, or in extension
make enabling policies.
Unfortunately, the Nigerian
Electricity Regulatory Commission (NERC) which should be helping policy makers
better understand the sector which they are to make policies for and also
supervise are not doing enough. A check on the capacity building programmes
designed for legislators will reveal that most of the capacity building
programmes are not specifically designed for policy makers in Nigeria’s
difficult regulatory environment. Most capability building programmes are via
sponsorship to international conferences that will add little or no knowledge
for making the right country-specific power sector policies. The legislative
committees, relevant government ministries and departments and agencies on
power also lack experts who should help in crafting the right policies asides
other capacity, institutional and bureaucratic challenges that trouble the
sector.
Renewable energy is performing
better than other categories; however, there are a few practices by some
project implementing stakeholders especially government energy agencies and
projects that are not only unhealthy for the immediate growth of the sector,
but which will in the medium term, help destroy the progress being made by
other stakeholders. These practices include poor design of projects, wrong
costing of projects and lack of transparency in procurement and contract
processes which lead the implementation of projects that fail within a short
time. This gives a bad name to renewable energy technologies and products. To
help promote sustainable energy in Nigeria, government must do what is
necessary, not just in formulating enabling policies and regulations for growth
but to ensure that these policies are implemented and enforced appropriately in
line with best practices. While government and other stakeholders are working
towards creating a more enabling sustainable energy policy environment,
consumers must realize that they hold the power to wheel the ship of policy in
the direction they desire, which can only happen when consumers effectively
engage with the policy and regulatory making processes.
By Okafor Akachukwu
Source: Business Day Online
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