Lagos electricity situation mirrors Nigeria’s power dilemma

BusinessDay Research and Intelligence Unit (BRIU) concluded a survey to evaluate the state of the Power sector in Nigeria and its impact on Nigerians. The sample size was taken from Lagos State, the commercial nerve centre of Nigeria, home to several manufacturing firms, multinational companies, financial institutions, SMEs and other businesses.

However, the focus of this survey was on the residential consumers of electricity in Lagos. The sample size cut across all areas and sections of the state comprising Lekki, Magodo, Ilupeju, Badagry, Apapa, Surulere, Ogba and Agbara. Subsequently, BRIU covered various locations and local government areas in Lagos.

Unsurprisingly, when asked their views on the current state of power supply based on personal experience, the respondents are very dissatisfied. Analysis among the respondents revealed that only 1.3 percent are very satisfied with the level of electricity provided; 7.5 percent are somewhat satisfied; 3.8 percent are neither satisfied nor dissatisfied; 8.8 percent are somewhat dissatisfied while the balance of 78.8 percent are very dissatisfied.

Furthermore, the respondents also had similar views and experience not just with the power generation segment but also with the distribution sub-sector, as 70% of residential customers are very dissatisfied with the services of their distribution companies, otherwise referred to as DISCOs. In addition, 12.5 percent are somewhat dissatisfied while 8.8 percent are neither satisfied nor dissatisfied and the balance of 8.8 percent is somewhat satisfied.

The Eko and Ikeja Distribution Companies are responsible for the receipt of electricity from the generating companies also known as GENCOs and subsequent distribution to the electricity consumers in Lagos state. Overall, the DISCO segment of the electricity industry have decried the dilapidated distribution infrastructure across the country as a limiting factor in meeting expected capacity to supply power to consumers. However, we expect that there should have been some noticeable investment in the distribution infrastructure in the sector now that it has been transferred to private owners.

Consequently, in spite of some level of progress in infrastructure rehabilitation and overhaul in the distribution sector, less than 50 percent (43.8 percent) have received and make use of the pre-paid metering system, which is the new and transparent method for billing electricity usage ensuring that customers pay for only what they consume. As a result, 56.3 percent still make use of the old (post-paid) metering system despite the privatisation reforms in the sector. The estimated billing system lacks transparency as consumers are often charged for consumption that often does not reflect requisite usage.

When asked to opine on the rate of power supply in the last four years, 33.3 percent believed that it had not improved while 27.2 percent stated that it had deteriorated. 16 percent responded that power supply remained unchanged while 14.8 percent declared that it had slightly improved and the balance of 8.6 percent believed that electricity services had significantly improved.

Overall, 85.9 percent believed that the government had not done enough to effectively regulate the power sector post-privatisation. Furthermore, 84 percent also declare that not much is being done to enlighten or educate the populace on post-privatisation developments in the Power sector. Since the privatisation took place, not much is known or understood about the progress or the existence of status reports on investment and time-lines toward significant development in the industry in the medium to long term.

As the All Progressive Congress (APC) wins the Presidential elections for the first time in Nigeria’s 16 years of uninterrupted democratic process, it is imperative that the new government works toward enlightening and keeping the public informed on deficit challenges and what the sector requires to improve. In addition, the public needs to be updated on how the private owners are working towards reforming the sector to meet the desired end and expectations of the country for 24/7 electricity supply.

South Africa is the second largest economy in Africa with GDP of US$341.2 billion (2013: US$350.8 billion). The country with a population of an estimated 52 million people generates electricity generates well over 40,000 megawatts (MW) annually. The country’s state-owned electricity provider, ESKOM supplies about 95 percent of SA’s total power needs, while the balance is met by Independent Power Producers (IPPs).

With an estimated population of 170 million people, Nigeria is the largest economy in Africa with GDP of US$594.3 billion (2013: US$521.8 billion). Less than 50 percent of the population are connected to the grid. The country’s power generation capacity is 6,090MW (Estimated demand is 10,000MW); yet actual supply fluctuates well below that figure and averages less than 50 percent of its capacity annually.

According to EIA, Nigeria has one of the lowest rates of net electricity generation per capita in the world. The Country’s generation is often hampered by gas supply challenges caused by pipeline vandalism along its Escravos-Lagos pipeline network, among other issues. Policy framework exists to increase generation to over 20,000MW by 2020. Obviously, there is much work to be done.

OMOSOMI OMOMIA