By Engr. Adéṣẹ́gun Ọṣìbánjọ
The Administration of President Tinubu started remarkably very well on two strong footing: First, it actually kickstarted the revolutionizing of the electric power sector with the signing into law of the Electricity Act (EA) 2023 by President Bola Tinubu on the 8th of June 2023, heralding the break of Federal Government’s monopoly and decentralization of electricity supply meant to transform Nigeria’s power sector into an efficient and competitive industry and repealing the 2005 Electric Power Sector Reform (EPSR) Act signed into law by former President Olusegun Obasanjo. The Constitutional Amendment Act 2023 previously signed into Law on March 17, 2023, by former President Muhammadu Buhari paved the way for the implementation of EA 2023 with constitutional backing.
Secondly, after the implementation of the epoch-making inauguration declaration, “Fuel Subsidy is gone,” the fight back from the hawks/cabals and the harsh reality that followed, President Bola Ahmed Tinubu GCFR in empathy with Nigerian masses insisted that subsidy must be paid on Power consumed nationwide, as revealed by the Minister of Power, Dr. Adebayo Adelabu, at a press briefing in Abuja. The Minister explained further that the President issued a directive that the country must achieve regular and incremental Power supply before considering any increase in Electricity tariffs.
The Presidential reprieve was however short-lived with the classification of electricity tariffs into Bands A, B, C, D & E with their corresponding rate increases as announced by NERC. This however, took the entire country still struggling to come to grasp the harsh reality of the fuel subsidy removal by shock and surprise. Two questions came to mind immediately:
1. What changed within the short while to cause a reversal of the presidential directive?
2. What were the facts presented to the President to convince and secure his approval?
It became mind-boggling when the Minister of Power posted on his X – Social media timeline to tell the world that positive feedback was received on the tariff increase but did not give details at a time when the entire country is groaning under severe pain and hardship.
Organized labour also failed the nation woefully by committing the treasonable felony offense of shutting down the national grid. They should just have demanded for a flat Salary/Wage and allowances bottom-line for political officeholders, civil & public servants, the organized private sector and pensioners inclusive. This would have given a good spread to the sharing of the burden of the demand for sacrifices to all cadres on the national payroll.
Challenges facing electricity supply in Nigeria
The challenges of the electric power sector dates back from time immemorial leading to several reform programmes and acts by various government administrations that failed woefully. Yes, electric power supply is about science and technology, it is highly technical but these are not the bane of the challenges of the sector. It is about the logic to it, the method applied, the choices made and playing politics with this very critical and highly sensitive sector.
The first major challenge is the Aggregated Technical, Commercial, and Collection (A.T.C & C) losses which stood at about 48% in Q1, 2022, and is composed of technical and commercial losses and payment collection loss which alone stands at about 30%. These can be analyzed further as follows:
1. Payment collection loss and Electricity theft: The first root cause which accounts for about 30% of A.T.C & C losses is mostly from the significant portion of the consumer base that remains un-metered, accounting for approximately 60% of the total. This emanated from not applying Methodology and deploying Technology to this challenge.
2. Electricity value chain imbalance: The Capacity imbalance in the Electricity Value chain starting from Generation to Transmission and to Distribution is the second root cause of A.T.C.&C losses. This is a major undesirability for the complex and technical centralized grid operations that we chose. The Transmission and Distribution Value chain Infrastructure are obsolete and grossly insufficient. There is the urgency to upgrade and expand the system to match the capacity of each value chain which are currently at different and varying capacities. The transmission and distribution infrastructure must be able to wheel, distribute and supply the installed power generation capacity of 16.4 GW respectively. We need to answer some salient questions like, With the incessant grid collapse experienced nationwide, do we really have enough of the required technical expertise and human capacity to deal with the complexities and technicalities of a centralized grid system? This challenge emanated from the Choice of Centralized Grid made for the sector.
3. Increasing Revenue: Operators have also fact shown that the revenue generated from electricity supply does not reflect the true cost of supplying electricity, hence the need to shore up revenue to make up for the shortfall. This however, must not negate the first global sustainability consideration for electricity supply, which is the ability of the Consumers to pay for the Service. The Logic to this challenge was simply not applied.
The second notable challenge was the Privatization of the Distribution companies (DisCos) done in 2013. Hon Minister, Adebayo Adelabu succinctly underscored the critical position of DisCos in the electricity value chain by saying that if they fail, the entire Power sector has failed. Unfortunately, this understanding was not put into consideration or was nonexistent during the privatization process. The sale of the DisCos was done primarily to solve and balance some political equations across the country.
Obsolete and grossly insufficient distribution infrastructure was sold to new Owners who do not have the technical knowledge and understanding to apply the business sense of urgency required to upgrade and expand the distribution network to match transmission network and installed generation capacity. This challenge emanated from playing politics with this critical sector.
President Tinubu’s administration is not responsible for this please. In fact, it is one of the herculean challenges that the administration has to deal with to achieve stable power supply.
Action being taken by the administration
The Administration is tackling the challenges listed below headlong:
1. Electricity value-chain imbalance: Transmission losses and inefficiencies are currently being addressed in phases by the Siemens agreement under the Presidential Power Initiative (PPI) conceived during a meeting between the former President Muhammadu Buhari and former German Chancellor, Angela Merkel on August 31, 2018 which is now being vigorously implemented by President Tinubu’s administration. The Transmission value chain is currently undergoing upgrading and expansion across the Country. It is very critical that these efforts are handled with high level specialty and expertise, to avoid being subsumed by the same very complex and technical Transmission network. Please note that the Federal Government owns both the Transmission Company of Nigeria (TCN) responsible for the maintenance and expansion of the physical transmission infrastructure and the newly established Nigeria Electricity Independent System Operator which is responsible for operating the Transmission system in a safe and reliable manner, 100%. It is however clear now that the Siemens deal will not extend to the Distribution networks owned by the DisCos.
2. In order to address this gap, the Nigerian government under the supervision of the Federal Ministry of Power, the Elsewedy and Power China have signed a contract of 118,148,469.72 US dollars for the construction and rehabilitation of 2670 kilometres of 33KV, 11KV and 400V Distribution lines. The Project, also under the Presidential Power Initiative (PPI) is designed to complement the ongoing mid-stream Transmission projects to secure power delivery and upgrade of distribution network aimed at increasing electricity reliability and accessibility for millions of Nigerians in the country.
3. These are very huge gains for this administration when the whole project is delivered successfully to achieve stable electric power supply for the installed generation capacity only and would still be grossly inadequate to take the under-served and un-served population out of Energy poverty. This explains why MaakBeat’s intervention becomes imperative.
4. Revenue Increase: The classification of Electricity tariffs into Bands A, B, C, D & E with their corresponding rate increases was the preferred strategy deployed by the Administration to shore up revenue. This is a marked deviation from the cost reflective tariff regime suggested in Part 1 of the Article: Roadmap to Achieving Self-Sufficiency in Nigeria’s Energy Sector, Published by Church Times Nigeria: https://churchtimesnigeria.net/roadmap-to-achieving-self-sufficiency-in-nigerias-energy-sector/. It should be reinforced that leaving payment collection loss and Electricity theft unaddressed and unresolved will still make a mess of the Electricity tariff increase adopted to shore up revenue.
Urgent challenges the administration must deal with
Payment collection loss and energy theft: The Administration needs to accord Number 1 priority attention to this for stable electric power supply and sustainability of the Sector in Nigeria. This is the real game changer that would change the narrative of electric power supply and shore up the much-needed revenue to reflect the true cost of supplying electricity in Nigeria.
We cannot leapfrog over the heavy payment collection loss of about 30% that is inflicting liquidity hardships on operators, creating fiscal burden (subsidy) on the Federal Government and allowing the continuation of energy theft which is mostly from the significant portion of the consumer base that remains unmetered and accounting for approximately 60% of the total to address revenue shortfall with Electricity tariff rate increase is like placing the Cart before the Horse.
Let’s run a quick analysis on the positive impact of the tariff increase as follows:
1. How well has this Strategy reflected in resolving the Revenue shortfall?
2. Has it removed the Fiscal burden (Subsidy) placed on the Government to bear?
3. Has it stopped Government payment to Gas suppliers and others?
4. Is the Strategy strong enough to attract Private and Foreign Investors to reconsider investing in Nigeria’s Electric power sector in preference for their massive investments in the importation of Diesel / PMS Generators?
How best to address payment collection loss and energy theft
Yes, Hon Minister Adelabu made mention of plans to roll out Electricity meters across the country in phases to address Payment collection loss without dates and timelines. Research has however shown that several Mass Meter Deployment Initiatives in time past failed woefully because the right Methodology was not applied to the deployment.
MaakBeat Transnational Ltd is however offering to assist the Tinubu Administration to implement the strategies of methodological mass deployment of Smart Prepaid meters with the full activation of its Technological functions to eliminate Power theft. The strategies under our Special Purpose Vehicle (SPV): SecureEnergyNigeria Infrastructures Initiatives are up for unveiling only at the Implementation negotiation conversation table. Kindly allow us to revolutionize Payment collection loss and Electricity theft to bring back Investor confidence to the Electric Power sector, please.
Actions/solutions to electricity supply instability
Decentralized Grid: Achieving stability in Electric Power should be driven as Project Light-Up Nigeria with the full implementation of the Electricity Act 2023 by the decentralization of subsequent Electricity supply from the National Grid. Several strategies are already conceptualized and developed by MaakBeat Transnational Ltd to achieve Electric power stability in a Decentralized Grid system. Again, the Strategies under our SPV are only up for unveiling at the Implementation negotiation conversation table.
Nigeria’s Energy Transition Plan: This brings us to one of “2AO’s Words on Marble”: Any developing country that champions or participates in the advancement of the highly ambitious campaign of “Transition out of Fossil fuels” will either stagnate or kill her industrialization & economic development and forever remain in abject energy poverty. Nigeria is divinely endowed with enough fossil fuel to Light-up Africa and still export to the rest of the World.
In reality, there’s no such thing as Transition out of Fossil fuels during our lifetime and possibly the next four generations to come after, the only achievable thing is Energy mix and diversification because renewables don’t work economically. Nigeria must be totally excused from this Campaign if we do not want to get shot in the foot. Please follow the link below to access the conversation on Energy Transition on Fox news: https://lnkd.in/gHKBjiUA
International Conspiracy against Energy Security in Africa: To checkmate Europe and America’s call out on Africa to leapfrog over fossil fuels, and to counter the campaign of calumny and pressure launched by Friends of the Earth and other groups putting pressure to bear on International Financial organizations not to support Fossil fuel Investments in Africa by deploying the already conceptualized strategies developed by MaakBeat Transnational Ltd under our Special Purpose Vehicle (SPV): SecureEnergyAfrica Infrastructures Initiatives which are only up for unveiling at the Implementation negotiation conversation table. This conspiracy is applying overbearing pressure on Africa not to do what Europe and America did to avoid Energy poverty and attain Energy security that secured their Industrialization and Economic growth and forcing the Continent to adopt and implement Renewable energy options that are not affordable.
Please note that the best known and only economically viable renewable energy option, hydropower, is under serious threat from countries that River Niger flows through right from Southeastern Guinea, Mali, Republics of Niger and Benin before flowing into Nigeria and the Gulf of Guinea. Mali and Niger belong to the newly formed Sahel Confederation that is in conflict with ECOWAS for returning back to military rule. Nigeria being the current ECOWAS Chair is a perceived enemy of the bloc and may launch retaliatory options like Damming River Niger to fight back at Nigeria and ECOWAS. If that happens, all our Hydropower Plants will automatically shut-down.
The cost of acquisition and installation of solar power is very expensive and not affordable to the vast un-serviced citizens. It is not economically viable for commercial distribution so far and may not be in the next coming four generations. It is a very good as alternative electricity source for homes, offices and light load installations for those that can afford it. This is not meant to de-market solar power supply, please!!!
We should explore alternate Renewable energy options like Waste-Electric Power Plants deploying the Pyrolysis technology for integration into commercial distribution.
MaakBeat Transnational Ltd, Nigeria comes highly recommended to drive Nigeria’s Energy Action Plans as the Energy Security Consultants being the custodian of these Initiatives for effective and successful implementation, while Adéṣẹ́gun Olútáyò Adéolú Ọṣìbánjọ (2AO) is recommended to serve as the Lead Consultant.
The activation of these action plans will definitely create the Platform for a great unprecedented massive inflow of private and foreign Investments into Nigeria to become the flagship of industrialization and economic development and sustain our Big Brother Africa status on the continent!!!
Evangelist, Engr. Adéṣẹ́gun Olútáyò Adéolú Ọṣìbánjọ MNSE, MNIEE, MCIPSMN
2AO-Nigeria’s/Africa’s Energy and Political Evangelist
Email: adeolu.osibanjo@outlook.com | LinkedIn: https://lnkd.in/eRaBxXkp
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