The Power Sector- Highlights and Lowlights of the Current Administration
In this edition, the writer reviews the performance of the President Goodluck Ebele Jonathan administration in connection with the Nigerian Electricity Supply Industry (“NESI”) and speaks specifically to some of the highlights and lowlights of the said administration, as far as the power sector is concerned. He looks at what this administration had done well and matters which could have been better handled.
First Things First
The writer is one of those who believe that the administration of President Goodluck Jonathan has done moderately well in setting the platform for an improved electric power sector through the administration’s power sector reforms.
Highlights
Prior to taking over the leadership of the country, the power sector reforms had been suspended for approximately two (2) years by the President Yar’Adua administration and it took President Goodluck to re-start the reforms through the formulation and issuance of the roadmap for the reform of the NESI (the “Roadmap”) in August 2010.
Apart from issuing the Roadmap, the outgoing administration also sought to implement the Roadmap substantially and it indeed achieve moderate success in this regard. The privatization process was nearly flawless in terms of transparency and integrity. Further, there were periods when power supply actually improved. Added to this was the fact that the government was bent on ensuring that the sector received as much support as it desired through concessions and incentives. There was also the intervention by the Federal Government of Nigeria, through a N213 billon power intervention fund to cater to the legacy gas debts and address the revenue shortfall in the NESI.
There had also been some activity in connection with gas supply and the improvement of the national transmission grid. Although, the writer is of the view that not enough had been done particularly in connection with the transmission grid and serious action began rather late. Furthermore, the Federal Government had almost throughout its tenure, protected and upheld the independence of the regulator of the NESI- the Nigerian Electricity Regulatory Commission. There were also a number of good technocrats at various times in the NESI and the gas subsector.
Apart from the foregoing, the president had at some point established a committee to align both the gas subsector and the power sector. This was done because a major reason for having stranded power in Nigeria had been the misalignment of both the gas subsector and the power sector. Several people, including the writer had argued that it was worth trying out the UK model where the Office and Gas and Electricity Markets (Ofgem), has been the regulator of both electricity and gas.
The right noise has also been made by this administration in relation to renewable energy and there are indeed a number of projects about to commence in earnest by private sector participants in Nigeria. Nigeria’s renewable energy feed-in tariffs which are amongst the most attractive in the world were also introduced and included in the Multi-Year Tariff Order under the watch of the current administration. Indeed, there has been much more interest in the NESI than there had ever been prior to this time and more upgrades to power infrastructure have arguably been made in this administration, than any other.
In sum, one can conclude that moderate success has been achieved by the current administration, in terms of the electric power sector in Nigeria.
Lowlights
There indeed have been challenges and a few mistakes, though with far-reaching consequences, have been made by the outgoing administration. One of such mistakes was insufficient communication with the populace of the fact that what the administration was doing in the first 4 (four) years could at best, be tagged ‘building a strong foundation for an efficient power sector’. The citizenry should have been informed that the effects of what was being done would only be fully enjoyed a number of years after the completion of the privatization of the sector.
This poor communication ensured that people did not realize that much of what was done could not be expected to generate immediate results such that there would be constant or near constant power supply until after a few years. Several people mistook the reforms in the power sector for magic which should produce immediate results.
To the extent that for nearly thirty (30) years, successive administrations had destroyed the electric power sector, it would take quite some time to rebuild same especially where one considers that, apart from the challenges with the sector directly; there have been substantial problems with the gas subsector which ought to provide fuel for the power sector. Without the improvement of gas issues not very much success can be achieved in the electric power sector. There is, therefore, the need to continue to structure the gas subsector to better cater to domestic gas supply. This is in addition to the need for the improvement of the grid.
The mistakes the current administration made also included not properly educating people that the results of the actions of the federal government would not yield immediate dividends. Communication of this truism was not properly propagated and it is possible that some of the President’s assistants did not tell him the whole truth or did so rather very late.
The mistake highlighted above led to another mistake- the federal government not doing enough to provide short term solutions whilst dealing with the gas and grid challenges. Specifically, the mistakes the current administration made in relation to the NESI have included insufficient education of the citizenry, failure to deal very quickly and decisively with the gas subsector and the grid and importantly, failure to work assiduously on short term (though more expensive) options such as emergency power projects that could take 6 months to 1 year to come to fruition. The federal government could have given support to short-term solutions, whilst completing the long term resolutions.
Conclusion
The current administration has tried its best to improve the sector and it now behooves on the incoming administration to reinforce the foundation already laid by the current administration and to further develop the NESI as the real sector of the Nigerian economy which should the fulcrum upon which the economy should be built would not develop.
For more information on the power sector, read the text on the power sector authored by the writer.
Ayodele Oni
Ayodele Oni {ayodeleoni@outlook.com}, a solicitor, specializes in international energy (oil, gas and electricity) investment law and policy. He holds an LLM in Energy Law and a mini-MBA in power & electricity. Follow him on twitter @ayodelegoni.