Problems of Electricity Distribution in Nigeria
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Nigeria has had an energy supply crisis for as long as many can
remember. This is the poor performance of the power sector provide
adequate power supply in spite of the country being Africa’s largest
oil producer and having some of the world’s largest deposits of
coal, oil, and gas. This is the reason for constant blackouts in
Nigeria and the source of the most popular slang, “NEPA has taken
light†. NEPA and later, PHCN which stands for National Electric
Power Authority and Power Holding Company of Nigeria, respectively
were the names of the public enterprise responsible for the control of
power before the privatization of the power sector.
(adsbygoogle = window.adsbygoogle || []).push({});
The average Nigerian has always thought the failure of the power
sector is a result of the ineffectiveness of the government. However,
even after the privatization of the power sector, not much has
improved. This article is on the problems of electricity distribution
in Nigeria.
Problems of Electricity Distribution in Nigeria
(adsbygoogle = window.adsbygoogle || []).push({});
Read on below:
Infrastructure Constraints
The first problem of the Nigerian power sector is the lack of
infrastructure needed to meet the electricity demands of the nation.
Some of these infrastructural problems include:
Undiversified energy sources for electricity: Nigeria still largely
makes use of fossil fuels to generate electricity and
hydroelectricity.
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Insufficient gas pipelines
Obsolete generation plants and equipment
Inadequate and poorly maintained transmission and distribution
networks such as transformers
Vandalism: Theft and vandalism of transformers and power cables is
prevalent in Nigeria
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Government rules and Policies
The problem of electricity distribution in Nigeria can also be traced
to the enforcement of rules and policies by the government that do not
encourage investment in the power sector. For example, the operations
of thermal power in generating electricity have been hindered by the
shortage of gas, partly due to the policy of the government on
pricing. Power companies do not pay so much for gas which then
discourages international oil companies from investing more in the
construction of the facilities that will help to gather and process
the country’s gas for domestic use. Also, the deregulation of
domestic fuel prices by the Nigerian government is what has caused the
reluctance of private investors in building oil refineries in spite of
the fact that the government has issued several licenses to private
companies to build oil refineries in Nigeria. Although the government
has tried to gradually raise gas prices so as to encourage gas firms
to expand their capacity, it has been a slow process.
Low tariffs
The power sector records increased financial losses due to deficits
caused by low tariffs compared to the cost of production and service
delivery.
Problems of the Power sector in spite of Privatization
Many Nigerians thought the privatization of the power sector was the
miracle needed in the power sector. Although this move has taken away
the bureaucracy that plagued the sector during government control, it,
however, did not take away the structural problems that plagued the
sector before privatization. These structural problems include:
Shortage of gas supply for thermal plants
The culture of unpaid electricity bills by the masses
Obsolete and poorly maintained transmission equipment
(adsbygoogle = window.adsbygoogle || []).push({});
Obsolete generation facilities: The new operators of the power sector
have had to deal with the use of the same old and poorly maintained
facilities to generate power.
Low prices
The payment of low prices by electricity consumers discourages private
investments which are needed for the sector to develop. Under the
Multi-Year Tariff Order (MYTO), introduced in June 2012, the
government has had to raise prices paid by electricity consumers to
gradually make tariffs more reflective of cost. The most recent
adjustment to prices (in 2015) raised prices by an average of 45%
wherein Lagos, small residential power users now pay N24 (US$0.12) per
kWh while heavy domestic users pay N29 per kWh. The rise in prices was
met by huge criticism from trade unions and groups who complained that
the rise in price was unjustified because there has not been any
significant improvement in services delivered by power companies. Many
also complained that the majority of the Nigerian population cannot
afford the new charges because they live on a low income. Asides major
protests in cities all around Nigeria that demanded a reversal of the
tariff increase, the national assembly also called for a reversal of
the tariff naming it a means of extortion of the Nigerian masses.
While the points of high prices not being affordable by the Nigerian
masses may seem morally sound, it is not practicable. Operators of the
power sector need investments in equipment, facilities, and employment
of adequate manpower in order for an improvement in services to be
seen, this will in turn result in an increase in production costs. In
order for the sector to regularly produce the services the Nigerian
masses require, there needs to be at least enough revenue to cover the
cost of production. This has to be paid for, either through government
subsidies or the masses.
Lack of Funding
One of the main issues with the power sector in Nigeria today is the
inability of the government to finance the provisions of equipment
that can sustain even the current level of power supply, talk less of
expanding services to include the millions who do not yet have access
to power.
The federal government can borrow more to fund but the existing debts
and low revenue generation mean that the government is limited in this
option and could slide back into debt troubles.
The next option would be an investment from private individuals and
companies. However, these ones are unlikely to invest in
infrastructure projects because of the little or no profitable returns
caused by the government-imposed utility and low fuel prices.
The power sector is caught up in a web. How do you explain to a people
who are now frustrated with the power cuts in Nigeria (in spite of the
abundance of resources), that there is need for higher pricing policy
and possible removal of subsidies so that there can be more
investments and funding which is what will boost the performance of
the sector to their expectations.
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Nigeria has had an energy supply crisis for as long as many can
remember. This is the poor performance of the power sector provide
adequate power supply in spite of the country being Africa’s largest
oil producer and having some of the world’s largest deposits of
coal, oil, and gas. This is the reason for constant blackouts in
Nigeria and the source of the most popular slang, “NEPA has taken
light†. NEPA and later, PHCN which stands for National Electric
Power Authority and Power Holding Company of Nigeria, respectively
were the names of the public enterprise responsible for the control of
power before the privatization of the power sector.
(adsbygoogle = window.adsbygoogle || []).push({});
The average Nigerian has always thought the failure of the power
sector is a result of the ineffectiveness of the government. However,
even after the privatization of the power sector, not much has
improved. This article is on the problems of electricity distribution
in Nigeria.
Problems of Electricity Distribution in Nigeria
(adsbygoogle = window.adsbygoogle || []).push({});
Read on below:
Infrastructure Constraints
The first problem of the Nigerian power sector is the lack of
infrastructure needed to meet the electricity demands of the nation.
Some of these infrastructural problems include:
Undiversified energy sources for electricity: Nigeria still largely
makes use of fossil fuels to generate electricity and
hydroelectricity.
(adsbygoogle = window.adsbygoogle || []).push({});
Insufficient gas pipelines
Obsolete generation plants and equipment
Inadequate and poorly maintained transmission and distribution
networks such as transformers
Vandalism: Theft and vandalism of transformers and power cables is
prevalent in Nigeria
(adsbygoogle = window.adsbygoogle || []).push({});
Government rules and Policies
The problem of electricity distribution in Nigeria can also be traced
to the enforcement of rules and policies by the government that do not
encourage investment in the power sector. For example, the operations
of thermal power in generating electricity have been hindered by the
shortage of gas, partly due to the policy of the government on
pricing. Power companies do not pay so much for gas which then
discourages international oil companies from investing more in the
construction of the facilities that will help to gather and process
the country’s gas for domestic use. Also, the deregulation of
domestic fuel prices by the Nigerian government is what has caused the
reluctance of private investors in building oil refineries in spite of
the fact that the government has issued several licenses to private
companies to build oil refineries in Nigeria. Although the government
has tried to gradually raise gas prices so as to encourage gas firms
to expand their capacity, it has been a slow process.
Low tariffs
The power sector records increased financial losses due to deficits
caused by low tariffs compared to the cost of production and service
delivery.
Problems of the Power sector in spite of Privatization
Many Nigerians thought the privatization of the power sector was the
miracle needed in the power sector. Although this move has taken away
the bureaucracy that plagued the sector during government control, it,
however, did not take away the structural problems that plagued the
sector before privatization. These structural problems include:
Shortage of gas supply for thermal plants
The culture of unpaid electricity bills by the masses
Obsolete and poorly maintained transmission equipment
(adsbygoogle = window.adsbygoogle || []).push({});
Obsolete generation facilities: The new operators of the power sector
have had to deal with the use of the same old and poorly maintained
facilities to generate power.
Low prices
The payment of low prices by electricity consumers discourages private
investments which are needed for the sector to develop. Under the
Multi-Year Tariff Order (MYTO), introduced in June 2012, the
government has had to raise prices paid by electricity consumers to
gradually make tariffs more reflective of cost. The most recent
adjustment to prices (in 2015) raised prices by an average of 45%
wherein Lagos, small residential power users now pay N24 (US$0.12) per
kWh while heavy domestic users pay N29 per kWh. The rise in prices was
met by huge criticism from trade unions and groups who complained that
the rise in price was unjustified because there has not been any
significant improvement in services delivered by power companies. Many
also complained that the majority of the Nigerian population cannot
afford the new charges because they live on a low income. Asides major
protests in cities all around Nigeria that demanded a reversal of the
tariff increase, the national assembly also called for a reversal of
the tariff naming it a means of extortion of the Nigerian masses.
While the points of high prices not being affordable by the Nigerian
masses may seem morally sound, it is not practicable. Operators of the
power sector need investments in equipment, facilities, and employment
of adequate manpower in order for an improvement in services to be
seen, this will in turn result in an increase in production costs. In
order for the sector to regularly produce the services the Nigerian
masses require, there needs to be at least enough revenue to cover the
cost of production. This has to be paid for, either through government
subsidies or the masses.
Lack of Funding
One of the main issues with the power sector in Nigeria today is the
inability of the government to finance the provisions of equipment
that can sustain even the current level of power supply, talk less of
expanding services to include the millions who do not yet have access
to power.
The federal government can borrow more to fund but the existing debts
and low revenue generation mean that the government is limited in this
option and could slide back into debt troubles.
The next option would be an investment from private individuals and
companies. However, these ones are unlikely to invest in
infrastructure projects because of the little or no profitable returns
caused by the government-imposed utility and low fuel prices.
The power sector is caught up in a web. How do you explain to a people
who are now frustrated with the power cuts in Nigeria (in spite of the
abundance of resources), that there is need for higher pricing policy
and possible removal of subsidies so that there can be more
investments and funding which is what will boost the performance of
the sector to their expectations.
(adsbygoogle = window.adsbygoogle || []).push({});
(adsbygoogle = window.adsbygoogle || []).push({});
jQuery(document).ready(function( $) { $.post(
'https://nigerianfinder.com/wp-admin/admin-ajax.php', {action:
'mts_view_count', id: '291115'}); });
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