Let there be light in Aba
A privatised power sector is meant to reverse Nigeria’s downward spiral to de-industrialisation but rent-seekers dressed as businesspeople can use their political connections to undo the entire process.
In the past week BusinessDay portrayed in a series of exclusive stories how crony capitalism, traced to the very top of Nigeria’s political class, has trapped the residents Aba in darkness, condemning one of Nigeria’s foremost entrepreneurial cities to an avoidable bondage.
When will Nigeria transit from pre-modern times when the common wealth was taken by force, money was amassed, property were seized by brigands? The stories portray how political power is monopolised and exercised by a few to the detriment of many.
In 2005, Geometric Power Aba Limited was awarded the license for a 20-year concession to generate and distribute power (off-grid) to the Aba business district and Ariaria.
So far $530 million has been invested in the first independent power transmission station in the country. Equipped with the most modern distribution system; 100km of brand new industry-centred distribution lines; 3 brand new sub-stations and a 27km pipeline to transport gas to the power plant from Shell’s gas gathering centre in Abia State. Nonetheless the 141MW plant is yet to generate or distribute power. As a result the two ring-fenced areas: the Aba business district and Ariaria remain in darkness.
If Aba gets the power it sorely needs, the “Japan of Africa”, renowned for its shoes and garments, will catalyse a job generating industrial hub worthy of emulation. Aba shoemakers are renowned across West and Central Africa. They dominate the ladies shoe and men’s leather sandals market. According to Nextzon, a consultancy, “The shoemakers control between 60 and 70 per cent of the ladies shoe market in Nigeria”.
If Geometric works, it will save the residents of Aba a lot of money. Two-thirds of households in Aba generated 136MW through diesel generators while commercial and industrial consumers generated 92MW, according to a 2009 survey.
Data from a 2012 national survey of micro, small and medium enterprises by the National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) showed that MSMEs in manufacturing and wholesale and retail spent the most running their generators. For example, 2,166 manufacturing enterprises used generators for between 1 to 5 hours. Running generators for longer hours, say, between 16 and 20 hours, decreased the number of companies by 37 percent to 794.
The Aba shoe and garment cluster, an icon of informal economy-led growth, has survived many ups and downs. In 2000, despite abysmal power supply, the combined turnover of the shoe and garment industry of Nigeria’s third largest commercial city was $200m.
Ethiopia is a concrete example of how electricity can attract investments garment and shoemaking industries. Chinese shoe manufacturers are moving to Ethiopia, the largest producer of power in sub-Saharan Africa, because there’s power, leather and skills. Huajian, a Chinese shoe factory in Ethiopia employs 2,000 people, 1,670 are Ethiopian.
Ethiopia is taking advantage of this increase in demand for leather products – it earned $65.8 million from leather exports between December 2012 and June 2013; totals exports in 2012 was $2.8 billion. A Chinese shoe maker, Huajian, plans to invest $40.3 billion over five years in Ethiopia.
Since 1973 Ethiopia has commissioned 8 hydro-electricity projects with a combined generating capacity of 8,722MW. The Gilgel Gibe III dam, commissioned in 2013 generates 1,870MW while the Millennium Dam, to be commissioned in 2017, will generate 5,250MW.
The sooner the dispute over Geometric’s right to power is resolved the better it will demonstrate Nigeria as a favourable investment destination with the policies and regulation in place to fund power projects. It will also be an example of the commendable effort to exploit stranded gas and reduce gas flaring.