WHICH IS THE MAJOR CHALLENGE; FUNDING OR ACCOUNTING FOR ENERGY?

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The privatization of the power sector by the Federal Government came with a very promising roadmap. The Power Sector Recovery Plan (PSRP) was the roadmap geared at achieving uninterruptible supply of electricity in the country. Presently, its five years down the road and it seems we are “light years” away from achieving that feet, or we just might have lost the map in the quest to find the treasure. Following the recent trend, it won’t be surprising if we are told that the roadmap have been devoured by rats.

Also the Nigerian Electricity Regulatory Commission (NERC) was introduced with the aim of regulating the transmission and distribution of power across the country. Other government agencies were also inaugurated and assigned different roles, all geared at consolidating the promises of uninterrupted power supply.

Several issues are presently rocking the boat carrying Nigeria’s uninterrupted power supply. One of which is that the electricity distribution companies (DisCos) cannot sell energy without adequate power generated by the generation companies (GenCos). However, there’s the major issue of unaccounted power. The energy generated and distributed throughout the country cannot be accurately accounted for. More than 60 percent of energy is lost due to theft and vandalism. This porosity and permeability is gradually leading to the imminent collapse of the Nigeria power sector.

 

Read Also; 2017 Power Sector Review – Is PSRP Leading us To Darkness?

In the presence of theses obvious challenges, some experts are still calling for counterpart funding from private investors and government. Recently we received huge funding from the World Bank. Conversely, if these large pore spaces are not adequately sealed, then funding  will be of little importance, more like fetching water with a basket.

Let’s take a typical case study of the current trend – The Federal Government had to disburse N702bn to the Nigerian Bulk Electricity Trading (NBET) because of the financial constraints, poor distribution infrastructure and gas supply constraint to the GenCos. This bail out funding was used to pay the GenCos gas and equipment suppliers, banks and other partners. In all of these the DisCos remittance is on an average of 24.9 percent, a figure NBET and NERC are working with the DisCos to improve upon. Having all these in mind, one can say that the DisCos are behaving like start-up companies. Honestly, it’s not a far cry if they are addressed as thus. In this vein, just like all start-up companies, accounting for your business profits and losses is more important than funding.

In the 2018 budget, NGN 555.88bn (€1.3bn) has been allocated to the Ministry of Power, Works and Housing; however, this budget must cover three different sectors. Fortunately, the international community has been involved in securing a $600m (€515m) loan from the African Development Bank to help the country meet its electricity generation target of 20,000MW by 2020.

Furthermore, in August 2017, the Transmission Company of Nigeria received $1.55bn (€1.3bn) from the World Bank, EU and other partners to finance its expansion projects. These funds are geared at increasing the generation capacity as well as expanding the transmission grid.

 

Read Also; Is 2018 Truly Going To Be Lit As Promised

These are indeed huge sum of monies, but the real question now is if funding is really the major issue rocking the Nigerian Power Sector?

Undoubtedly, funding is a universal limiting factor on huge project or reforms, but in order to tackle the power sector challenges, we have to address the specific problems. Accounting for generated power is a specific challenge, and this leakage should be addressed primarily prior to increasing the volume of the basket.

In summary, it is a known fact that generated power is far below the standard amount needed for about 170 million people, same with the transmission capacity. In this regard everyone is thinking that increasing the generation and transmission capacity is the way out. Let’s pause to have a second thought, if we presently cannot account for about 7,000MW of power we are stuck with, meaning it would be relatively more difficult to account for an increase in generated power. It’s just a “food” for thought, but it might seem those involved are not “hungry”.

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About Omobright 302 Articles
A FUTA Alumnus, a geophysicist, a cartographer, a freelance writer and poet. Loves adventure, music, movies, football and food. Hates monotony. Hobbies are reading, writing and travelling. Interested in human, society, academics and power(energy) sector.

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