To Buhari on the power sector

DEAR Mr. President, the electric power sector is very critical to the turnaround of the Nigerian economy. The most important first step will be to appoint the right person as the Minister of Power. Second will be a dispassionate assessment of progress made thus far in the power sector reform programme. Third is the completion of the last lap of the privatization of the generation companies, specifically, the Niger Delta Power Holding Company’s new gas-fired thermal plants in the Niger Delta; and fourth, the unbundling and possible privatization of Transmission Company of Nigeria (TCN)

The Goodluck Jonathan regime, with a strong commitment to privatization, embarked on the Power Sector Road Map in August 2010, using the Electric Sector Power Reform Act (2005) as his guide, climaxed by the handing over of the assets to the new investors on November 1, 2013 at a price of $3 billion. That development has set the stage for the much-anticipated private-sector led the transformation of the Nigerian power sector. The benefits have been slow in coming, due largely to the various technical and operational issues that are still being resolved, especially with gas supply to the thermal power stations and the problems with metering by the distribution companies, the weak power distribution infrastructure, and the wheeling capacity of the national power transmission grid.

But central to resolving all these issues is your administration’s unflinching commitment to pursuing the privatization programme to its logical conclusion in all ramifications.

The completion of the sale of the 10 new power plants of the Niger Delta Holding Company will be a logical step forward to instil confidence in both investors and the local and international business community and in demonstration of the commitment of your administration to completely turning around the power sector and moving the Nigerian economy forward.

Some of the power plants have been commissioned. It is necessary that work is expedited on the completion of the remaining power plants so that they can be commissioned and sold as quickly as possible with the prospect of earning as much as $5.7 billion from their sales, which could be used to finance a sizeable portion of ongoing infrastructural projects.

One of the major structural challenges facing the Nigerian power sector is the over-reliance on gas as a feedstock. This is unlike the situation in most other countries of the world. Globally, coal is the most widely used primary fuel. It accounts for about 36 per cent of the world’s total electricity production. The United States produced about 40 per cent of its total electricity supply from coal in 2013; China, 62 per cent in 2012; and South Africa, over 80 per cent in 2014. Currently, coal does not feature at all in Nigeria’s electricity supply energy mix. This ought not to be. An innovative strategy should, therefore, be put in place through a combination of efforts by the Ministry of Mines, the Ministry of Power and the Nigerian Electricity Regulatory Commission to provide the required fiscal incentives and enabling environment to both investors in coal mining and coal-fired power plants to fast-track the building of coal-fired power plants in Nigeria. The recent licence granted to Zuma Energy Nigeria Ltd to build a 1,200 megawatts coal-fired power plant in Kogi State in four phases is a step in the right direction.

Nigeria is grossly under-dammed. The number of dams and reservoirs in Nigeria is put at approximately 200, compared to 23,842 in China; 9,265 in the United States; and 1,114 in South Africa. The plan by the Niger Delta Power Holding Company to generate 4000 megawatts from presumably a number of large to medium sized dams under its NIPP Phase 2 is not enough. What we need is a much larger number of dams of various sizes, including mini and micro dams that can produce one to five megawatts off-grid for captive communities.

It has been globally recognised that solar, small, mini and micro hydropower are key to energy security in the future. The trend in both Canada and the United States has been to micro hydro because it has negligible environmental impacts and opens up many more locations for power generation. Small hydropower is defined by the Renewable Energy Master Plan of Nigeria as all hydroelectricity schemes below 30 MW and mini below 1 MW. The National Energy Policy (2003) states thus, “The nation shall pay particular attention to the development of the mini and micro hydropower schemes.” The Electric Power Sector Reform (EPSR) Act, 2005, emphasises the role of renewable electricity in the overall energy mix, especially for expanding access to rural and remote areas.

I wish to recommend that the National Energy Policy (2003), the Electric Power Sector Reform (EPSR) Act, 2005; the National Energy Master Plan (2006) and the Renewable Electricity Policy Guidelines (2006) be thoroughly reviewed with the view to harnessing Nigeria’s renewable energy potential to the fullest.

The recent visit by the International Atomic Energy Commission is an encouraging step in the direction of building nuclear power plants. But beyond this must be a determination by Nigeria to invest the required financial resources but more particularly invest in the required human resources to acquire and domesticate nuclear technology for peaceful use. The key point to note here is that no country develops nuclear power technology without a strong political will and heavy investment in the development of the required critical mass of nuclear scientists and engineers.

In conclusion, Mr. President, I wish to state that the greatest challenge your government faces with respect to turning around the power sector is not primarily resources, as important as that is, but a sound and comprehensive policy framework. That policy framework must be based, first and foremost, on a recognition of the role of the private sector as the key driver of transformation, growth and development in the power sector, the provision of the right package of incentives to the private sector, the diversification of the power sector energy mix away from over-reliance on gas feedstock and a strong focus on hydro-power, including micro and mini dams as well as renewable energy.

• Igbinoba is a Lagos-based economist and business consultant.