Solving Nigeria’s power crisis

The Nigerian Electricity Regulatory Commission (NERC) last week reportedly licensed eight companies with a combined capacity to generate 1,648.25 megawatts of electricity comprising embedded, off-grid and on-grid generation. It also issued a licence to one distribution company. A breakdown shows that six of the licensed plants are gas-fired with a combined capacity of 1,348 MW while three are solar-powered with a combined capacity of 300 MW.

The licensed companies are Ossiomo Offistes and Utilities/Ossiomo Power and Infrastructure, Edo State; Anambra State Independent Power Generation Company, Onitsha; Cummins Power Generation Nigeria Ltd, Ikeja; Sinosun Investment Ltd, Jibiya, Katsina State; LR-Aaron Power Ltd, Gwagwalada; Lafarge Africa, Ewekoro, Ogun State; Azikel Power Ltd, Obunagba, Bayelsa State; and Middle Band Solar One Ltd, Kogi State.

This move by the electricity regulator is commendable as it represents addition of substantial capacity to the national electricity grid. We commend especially the inclusion of off-grid and embedded generation capacity in the mix. This is in line with the view held by some analysts that if Nigeria is to go close to overcoming its enormous power deficit, the country cannot afford to wait perpetually for its electricity grid but must look elsewhere.

But beyond the recent move by NERC, we believe that more can be done. As some industry experts have contended, there are many people and institutions in the country that generate extra power in large enough increments. These represent low-hanging fruits, and the solution to Nigeria’s power crisis may be found in harnessing this excess power and other small-scale projects that already exist.

As Timi Soleye, president of CRYO Gas & Power, contends in a recent article, “Rather than pin our hopes on a few white elephant projects for the national power grid, we must enable small increments to come online through quickly-deployable, private off-grid efforts.”

According to Soleye, large power plants simply take too long to come on board. To buttress this point, he cites the 450 MW Azura power plant that was recently given approval with much fanfare. The plant “has already spent six years on the drawing board even before construction will begin next year” and “will not be completed and commissioned until 2018 at the earliest”.

So, rather than routinely denying competing private plants permission to distribute, NERC “must look at the excess power that lies idle and give licences to its entrepreneurs willing to take up the slack”. Indeed, “the regulator needs to make a fast track that takes fewer than six months to allow those who want to generate and distribute power to willing buyers to do so”.

We agree with the above contentions, especially in the face of daunting power deficit that has recently gone from bad to worse. As it stands, Nigeria’s grid generation fluctuates between 4,800 MW on the best day and below 2,000 MW on occasional really bad days, whereas Lagos alone needs an estimated 10,000 MW.

If Nigeria must make headway in resolving its power crisis, therefore, we must acknowledge, as Soleye suggests, that the country’s “solutions lie not in the privatisation of power assets of uncertain quality and provenance” but “in the deregulation of the industry so a multitude of existing small projects can put excess resources to work – and then build more”. This, we believe, is the way to go.