Power generation and distribution have continued to be problematic in Nigeria in spite of efforts by successive governments to improve supply and boost access to energy in Africa’s most populous country and ensure the viability of investment in the sector. Since 1886, when two generators were installed to serve the then Colony of Lagos to date, Nigerians have never enjoyed the optimum benefits of electricity supply either for domestic usage or industrial production. The country’s power supply has become more epileptic due to inadequate generation, lack of capacity to distribute what has been generated as a result of weak infrastructure and mounting corruption that has cascaded down the value chain of the power industry.
Expectations were high when the government of Goodluck Jonathan took the bold step to privatise the sector in 2014, by selling 60 per cent stakes in the power distributions firm to some privacy concerns. However, from all indications, most of the Distribution Companies that acquired the power infrastructure assets have proved incapable of managing effectively the expectations of Nigerians. It was also discovered that many of the distribution firms over-leveraged their exposure to financial institutions to the extent that rather than invest their own capital to purchase the assets, over 70 per cent of money used to buy the power assets were borrowed from local commercial banks.
Gas shortages continue to pressure power sector
Despite its 202 trillion standard cubic feet, SCF, gas reserves, Nigeria has not been able to harness enough of its gas for power generation, as a result of many challenges, including low investment, inadequate funding of projects and huge indebtedness to gas suppliers.
A compilation of industry figures obtained by Vanguard from the office of Vice President Yemi Osinbajo indicated that the power sector has, in the past 12 months (January – December 2018), suffered several setbacks, resulting to N519 billion losses due to an insufficient gas supply, amidst dilapidated distribution and transmission infrastructure.
A breakdown showed that a total of N40 billion, N36 billion, N36 billion, N33 billion, N48 billion and N43 billion was lost in January, February, March, April, May and June 2018, respectively.