Nigeria’s Power Sector at Another Crossroads: Beyond Changing Ministers -By Olaleke Alao

The electricity crisis in Nigeria has now evolved from an infrastructure challenge and turned into a crisis. It is now a national psychological illness. It influences business confidence, how people survive, industrial productivity, education, health care, digital innovation, foreign investment, and even the legitimacy of government itself. Nigerians have been swinging between promises, calls for reform, road maps, emergency declarations, restructuring of sectors, tariff changes, privatization initiatives and reshuffle of ministers for decades, but darkness has been one of the common themes in national life.

In view of this, the recent change in the Minister of Power by President Bola Ahmed Tinubu has become a topic of much discussion. Adebayo Adelabu’s departure and Joseph Olasunkanmi Tegbe’s appointment as the new Minister of Power is not just a mere personnel change. It is a sign of change in the philosophy, style of governance and focus for reform in one of the most troubled sectors in the Nigerian State. The issue Nigerians have is whether this is yet another cosmetic political tweak or if this marks a shift towards a more radical solution to electricity problem in Nigeria. The question is more critical given the political sentiments that had been raised by President Tinubu himself during the 2023 campaign season when he made a public statement that if he did not provide stable electricity within his first term, Nigerians should not vote him the second term. That was a strong statement! It was courageous. It was also a political no-no! The President linked the electricity supply to his presidential re-election power for the first time in recent political history in Nigeria. Governance has come to stay now.

Electricity is not just another election campaign issue in Nigeria. This is the brain of the development. Darkness does not lay the foundations of any great nation. When the cost of diesel is higher than the cost of production, businesses are not competitive in the economic development of any country. A society that has sustainably improve health care delivery cannot have hospitals that are using generators for surgeries. If we educate students with rechargeable lamps, and lecturers carry out research using fuel-powered electricity, then such educational system will not be able to compete in the global arena.

Today, Nigeria is caught in one of the most perplexing paradoxes in the world, a country with abundant gas reserves, blessed with the sun, blessed with fresh water, with a very energised youth and yet cannot consistently power the people with electricity. This paradox has hurt the public trust in the governance system. Thus, each new Minister of Power assumes the job with technical duties and the emotional disenchantment of millions of people.

A lot of the rhetoric that Adebayo Adelabu used was expansionist. Growth of generations, extension of transmission lines, installation of new substations, grid enhancements and future megawatt goals were common topics in his administration. The predictions were not lacking of any sort. News of more generation capacity was made. Pledges were made about improvements to transmission. Coordinating Energy and making significant infrastructure investments were discussed. However, the common Nigerians had other experiences given these forecasts. Grid collapses persisted. Billing and tariff banding continued to be an issue that was a national scandal. Small businesses kept closing their doors as diesel prices proved to be their killer. Energy costs were an issue for manufacturers. There was still a divide between rural and urban areas. Even though its a constitutional right, the celebration of electricity was still treated as a time of the year (Up NEPA like the sound of Happy New Year). The gap between government promises and actual experiences undermined trust in the government. The main problem with the previous strategy was not that it was not intended, it was simply the lack of systemic credibility that was apparent. Nigerians were increasingly unhappy with the lack of results in the power sector, preferring it to be handled with announcements. Sure enough, public fatigue was the outcome.

Mr Joseph Tegbe’s presentation seems to have undergone a dramatic turn. This new minister is not only seeing the problems less through the lens of projections and expansion plans, and heightened capacity, but more through the lens of institutional and financial failures, governance and accountability failures, and failures as a whole. This is a major shift of thinking. The issue of power problems in Nigeria has been discussed largely as technical or engineering issues; increase power generation, increase transmission, and build more power plants. But the crisis goes far beyond insufficient electricity generation. The actual problem is that the Nigerian electricity market is ill-structured and there are a lot of problems along the value chain.

Huge debts are owed to power generating companies. There is not reliable payment from gas suppliers. Distribution companies are still in very poor financial condition. The billing system is not trusted by consumers. The energy grid is fragile and energy theft is rife. Metering gaps still exist, political interference in enforcement is common, tariffs are sensitive to political factors, and the regulatory climate is uncertain.

The reframing of the crisis by Tegbe points to a more technocratic way of tackling the problem. He is stressing on four major elements which could constitute a significant shift in policy for the Nigerian power sector, namely liquidity, accountability, market discipline, metering, debt restructuring, transparency and institutional reforms. The question of whether Nigeria can produce more electricity is not this time the only question. The more pertinent question now seems to be, how to establish a power market that is able to operate sustainably on its own? That is the appropriate question to ask.

The power problem in Nigeria is not to be addressed with populism. The not-so-pleasant fact that few politicians are not willing to admit publicly. Investment is needed in order to have stable electricity. Investment requires confidence. You cannot build confidence without cost recovery. Cost-recovery means that an appropriate commercial price is set. This is where the politics starts to go haywire. For years, governments have been trying to achieve an unattainable balance, politically acceptable tariffs and huge infrastructure investments from private operators. Numbers just do not add up! No serious long-term capital is invested in a sector where revenues are fluctuating; debts are growing and never going to be paid back, and consistency of regulations is not in the picture. But Nigerians have a right to their rage as well. People are being asked to pay more for that service that they do not always get. This establishes a risky sense of trust that is not present. This sets up a risky feeling of lack of trust. The actual problem is not so much about tariffs, though. It is trust. Many Nigerians would grudgingly embrace painful changes if they see any tangible improvement. However, a lack of luck and hope has worn down over the years.

The early thrust of the new minister’s reform is more substantive than past ones, but there are areas that needs to be better expressed:

1. Distribution Companies (DisCos)

This is likely to be the most significant structural issue in the sector. Efficient electricity distribution is missing if the electricity is not used. If the electricity is not used efficiently, economic opportunity is lost. The financial, operational, technological and administrative condition of many DisCos are still in critical states. There are some analysts that feel that some operators were never well funded to begin with. The big question is yet to be answered, What will government do with DisCos that are failing on a regular basis? Are there going to be recapitalization? Are we seeing some consolidations? Are licenses to be revoked? Will there be some state intervention? Enforcement on performance, will it ever come to pass? A lack of clarity here can make for a failure of reform to take off.

2. Decentralized Electricity

Nigeria will never be able to have reliable national supply if it relies upon too much of a single weak electrical grid. The future may hold for strong decentralisation, mini-grids, embedded generation, solar clusters, industrial captive power, state electricity markets, regional energy corridors, and community-based renewable systems. The Electricity Act paved the way for more active role in the electricity generation and distribution to the States through the Constitution and law. This could be a game-changer. What if states like Lagos, Rivers, Kano, Kaduna, Enugu, Akwa Ibom, Ogun and Oyo ramp up and build up their own independent electricity ecosystems according to their industrial, demographic and other realities? Sub-national innovation may just be the key to Nigeria’s future electricity.

3. Energy Transition

The world is undergoing a fast transformation in terms of energy conversation. The future of electricity is defined by renewables, battery storage, smart grids, energy efficiency systems, climate financing, green hydrogen and distributed generation. Nigeria must not continue to be stuck in an energy system of the past. There is huge solar potential in the country. Northern Nigeria can be one of the biggest Solar Energy Zone in Africa. But nationwide energy planning nevertheless seems to be overly reliant on gas. But gas is still a significant factor, particularly. However, a visionary power strategy needs to actively embrace renewables, particularly in underserved access to power in rural communities.

4. Demand-Side Efficiency

This is barely considered in the national agenda. Many of the appliances and industrial energy systems being used in Nigeria are inefficient, a large percentage of the electricity used is lost during transmission and Nigeria consumes electricity in an inefficient way. Energy efficiency does not have a great political profile, but it is very important. Better electricity results can be achieved in a country in two ways: firstly, by producing more electricity and secondly, by consuming less electricity.

In essence, power challenge in Nigeria is a governance problem. There are no periods in the country’s history when the absence of policies has been felt. Nigeria has roadmaps. Nigeria has change papers. Nigeria has the framework of privatization. There are investment conferences in Nigeria. There are technical committees in Nigeria. Nigeria has donors’ support. There are experts in each sector in Nigeria. Nigeria has long been lacking of political discipline. Policies change abruptly. Contracts become politicized. Regulatory certainty weakens. Institutional continuity disappears. Corruption distorts priorities. Enforcement becomes selective. Long-term planning is short-circuited and left to short-term politics. Hence the doubts of many Nigerians. They have had numerous promises made to them. This is not another slogan for reform that citizens call for now. They want evidence. Not speeches. Not projections. Not PowerPoint presentations. Evidence! Does electricity have the potential to make a positive difference? Are there ways to minimize the risk of grid collapsing? Is it possible to survive without dependance on diesel? Can bills be made “open books”? Is it possible for meters to be universal? Is it possible to improve the productivity of industry? Is there reliable supply of electricity? It is these that are the true metrics.

The electricity crisis in Nigeria should also be seen as a national security issue. Unemployment is aggravated by the lack of power supply. Unemployment fuels crime. Instability is caused by economic stagnation. An industrialized country that goes bankrupt and have small businesses fail is fertile ground for frustration and social unrest. Energy poverty is also an exacerbator of inequality. The rich just simply purchase bigger generators and solar systems. The wealthy get “Band A (20 -24 hours/day)”. The poor are still in darkness. The poor get “Band E (4 – 8 hours/day)”. So, gradually electricity inequality turns into social inequality. That is why, stable power supply is not only an economic matter. It plays a key role in the nation’s unity.

President Tinubu is now holding himself up to the standard of his earlier promise. There is nothing the administration can do about it. Every blackout. Every grid collapse. Every tariff controversy. Every increase in fuell prices. Every failed promise. All point to the campaign declaration: “If I don’t give you electricity, don’t vote for me again.” That could be one of the political yardsticks of this administration. Maybe this is a good thing for democracy. Nigerian politics has been in existence for too long without any measurable accountability. Electricity is measurable. When there is power, Citizens know it. They know when it is not available. Darkness can never be hid with any propaganda.

It is not too late for the new minister. Actually, this could be the most transformative area for the administration if they get the nerve to take control of it. However, this will not be enough for success. It will take courageous actions from a political standpoint. The courage to take on established interests. Bravery to establish discipline. Bravery to give the hard truths to Nigerians. Bravery to distribute the power system. The courage to see the big picture and focus on the best interests of the nation, rather than on political expediency. Nigeria is in no need for another round of ceremonial reform. It needs electricity. Real electricity. Predictable electricity. Affordable electricity. Industrial electricity. Power generated for factories. Electricity used to operate schools. Electricity used in hospitals. Innovation that is powered by electricity. Power of electricity that provides dignity. So long as this does not occur, development will continue to be unstable. But the Nigerian state will keep losing trust of the citizens until it is able to resolve one of the most basic of issues, electricity. If a minister has to be replaced it can alter the tone. However, Nigerians are no longer using their ears to listen, mainly to tone. They are waiting for the sound of the transformers to be humming evenly during the night. That is Credibility. This is government at its best. This is Nigeria’s call for decades.

Olaleke Alao, Secretary Centre for Convention on Democratic Integrity, CCDI, Maryland, USA