Making the power sector work
Steady power supply is, no doubt, a very critical factor in moving the Nigerian economy forward. Among other positive impact, stable electricity is expected to give verve to SMEs thereby considerably reducing unemployment as more and more young people engage in productive ventures. As such, the minister of power, Babatunde Fashola, really has to gird his loins to make this sector work.
The task before the new minister is an enormous one as the sector is faced with a barrage of problems. These include lack of investment, technical issues such as weak transmission lines, inadequate gas supply, vandalism and supply-related bottlenecks for gas-power infrastructure, grid limitations and issues around reflective tariff that could help investors recoup their investments. It is our considered view that these problems must be adequately addressed if the country’s energy needs are to be met.
To begin with, the new minister must find a creative way of resolving the issue of cost-reflective tariff. Operators in the power sector believe that having a cost-reflective tariff is the only way the electricity sector can thrive. Electricity in the country needs to be properly priced. It is believed that power supply would be more stable if the price of the product is right. The price also has to be right for any investor to make it in the sector; it can also only be profitable if the customers are satisfied with the supply.
Transmission is also a very big issue in Nigeria’s power sector. The Transmission Company of Nigeria (TCN), which is currently being run by Manitoba Hydro International through a management contract, is critical to revamping the fortunes of the power sector. Unfortunately, the TCN that is expected to provide stability in electricity transmission across the country is plagued with system failure, and reinforcing this would require huge capital outlays which the government does not have. The current assets of TCN include about 5,523.8 kilometres of 330 kV lines and 6,801.49 kilometres of 132 kV lines which are very obsolete and weak. The minister must therefore find a creative way to resolve this issue without further straining government finances.
Furthermore, gas pipelines vandalism has been a major challenge facing the power sector. So also is the problem of how to protect Nigeria’s power infrastructure. Oftentimes vandalism of gas pipelines is the cause of drops in power output. This calls for a creative but urgent solution as well.
Nigeria requires substantial electricity for sustenance but currently relies entirely on thermal and hydro power plants for its power supply. We do not think that this is sustainable whether in the short or long term. The country must therefore explore other sources to complement the existing traditional sources. On this note, there is need for the new minister to look into how energies from wind, solar and other sources could be harnessed and brought into the mix. The impact may be marginal in the near term, but it will definitely be huge in the longer term if sustained.
Indeed, as already stated, steady electricity supply is crucial to Nigeria’s industrial development. It will reduce the cost of manufacturing and other domestic services, guarantee investments, provide employment, reduce poverty level and therefore antisocial behaviours in the country. This is why we believe the minister must move quickly.
In carrying out the arduous task of revamping the nation’s ailing power sector, however, we note that, very importantly, the minister needs the cooperation of all Nigerians to succeed. He should therefore seek the input of all critical stakeholders in the sector as he begins to confront the “demons” that have held Nigeria’s power sector for so long.