http://www.bloomberg.com/news/articles/2015-09-11/bribes-debt-100-billion-lost-nigeria-can-t-keep-the-power-on

Five minutes into Frank Edozie’s presentation on the challenges facing Nigeria’s power industry, the electricity cut out in the Jasmine Hall at the upmarket Eko Hotel in Lagos.
“Very timely,” Edozie, a former power ministry adviser and a senior consultant to the U.K.-funded Nigerian Infrastructure Advisory Facility, said over the low muttering and laughter of an audience of more than 100 people. “We probably ran out of gas.”
There’s no end in sight to the daily blackouts that the government says are costing Africa’s largest economy about $100 billion a year in missed potential and that President Muhammadu Buhari calls a “national shame.” Gas shortages, pipeline vandalism, inadequate funding, unprofitable prices and corruption mean fixing the electricity cuts two years after a partial sale of state power companies to private investors won’t be easy.
Generated output has never risen above 5,000 megawatts, which is about a third of peak demand, and if it did the state-owned transmission system can’t deliver any more than that before it starts breaking down. South Africa, with a less than a third of Nigeria’s population of about 180 million, has nine times more installed capacity and it too is grappling with blackouts.
Nigeria, Africa’s biggest oil producer, ranked the worst of 189 countries after Bangladesh and Madagascar on the ease of getting electricity connected to businesses, costing almost 7 percent of lost sales each month, according to a 2015 World Bank Doing Business report.
The power bottleneck comes on top of slump in oil prices and currency that are threatening Nigeria’s role as a destination for investors. Economic growth slowed to 2.4 percent on an annual basis in the second quarter from 6.5 percent a year earlier.
MAP: Nigeria Power Plants
MAP: Nigeria Power Plants
About two-thirds of Nigeria’s people have no access to electricity, and at the current plant commissioning rate, supply will barely meet 9,500 megawatts by 2020, according to a 2014 World Bank project document. Demand is expected to increase 10 percent each year. Buhari’s party promised before he won power in March’s election to generate 40,000 megawatts within four to eight years.
For years the industry’s poor performance has spawned jokes about the former state electricity company’s name. Nigerians called the National Electric Power Authority "Never Expect Power Always," and when its name was changed to the Power Holding Company of Nigeria a decade ago, they mocked it as the “Problem Has Changed Name.”
Hopes Dashed
Hopes that the power situation would improve after former President Goodluck Jonathan partially sold off 15 state generation and distribution companies for more than $3 billion to private investors two years ago have been dashed.
The buyers included locally owned companies such as Forte Oil Plc, Sahara Group and Transnational Corp. of Nigeria Plc, along with foreign technical partners such as Korea Electric Power Corp.
They found the companies they bought weren’t financially viable, and the distribution firms mounted with debt started hemorrhaging cash. Last year, “the financial flows in the sector came close to collapse,’’ the U.K.’s Department for International Development said in a December 2014 report.
"There wasn’t much due diligence done" because strikes during the sale period blocked access to the utilities, said Dolapo Kukoyi, a partner at Lagos-based Detail Commercial Solicitors, which advised investors looking to buy the distribution companies. “People basically bought blind -- this was across the board.”
Bailout Package
Nigeria’s central bank designed a 213 billion-naira ($1.1 billion) bailout package to cover revenue shortfalls and help the companies meet debt-service obligations on bank loans of almost 500 billion naira.
Even after the sales, bribery of power officials by some diesel generator and fuel suppliers to organize household and business blackouts in order to boost sales is continuing. Diesel generation costs 30 cents to 50 cents per kilowatt-hour, compared with the average grid tariff of 13 cents, according to the World Bank.
“Criminality is still there," said Bokar Toure, a senior energy economist in Abuja, the capital, for the African Development Bank, which has lent and provided guarantees to Nigeria’s power industry. "Just because it has been handed to a private company doesn’t mean it’s going to end.”
The generation companies have battled with chronic gas shortages used by 70 percent of the plants, despite Nigeria holding Africa’s biggest reserves of more than 180 trillion cubic feet. From December to June, rampant pipeline attacks reached levels last recorded at the peak of a 2006 to 2009 militant insurgency in the oil producing Niger River. They’ve slowed since then.
Tariff Cuts
Government-set tariffs have also hampered the distribution companies. Just before the elections, the regulator banned them from charging consumers for losses caused by billing mistakes, effectively cutting the tariff by more than half in some areas. This caused most of the distribution utilities to declare force majeure, claiming they couldn’t pay for their power supply.
Up the chain, generating companies say they haven’t received payments from the state-owned Nigerian Bulk Electricity Trading Plc, which acts as a middle man between them and the distribution companies.
And because the distribution utilities haven’t paid about 20 billion naira owed since February, payments to the power plants have slowed, said Rumundaka Wonodi, chief executive officer of NBET in Abuja.
No Minister
While NBET has enough cash to make the market payments for five months, the money is there to cover breakdowns and the company doesn’t want to deplete the funds without the agreement of the power minister, Wonodi said. Problem is, Buhari hasn’t filled that position more than three months after taking office.
“We cannot prop up everyone,” Wonodi said in an interview.
The generation companies are also feeling the pinch. The 30-year-old Egbin plant in Lagos, which is owned by Sahara and Korea Electricity, is owed almost 44 billion naira for December to June, along with 22 billion naira of past debt costs.
“We’ve never broken even in 2 1/2 years,” Egbin Chief Executive Office Dallas Peavey Jr. said in an interview at the plant. “If it wasn’t for Sahara to be quite honest we would have shut down about three months ago.’’
The national grid is another bottleneck. It needs about $40 million a year just for maintenance, compared with the $1 million now allocated by the government, Peavey said. Nigeria’s aggregate technical, commercial and collection losses are 35 percent of total generation, according to the World Bank.
Buhari said last month that he recognized that transmission was a greater problem than generation and his administration was taking action to boost supply.
“We’re at the end of our rope,” Peavey said. “We keep urging them to make concrete permanent steps because without that, quite honestly, we’re going to shut down.”

So the problem started during pres Obasanjo's tenure and pres Jonathan inherited it and did his best on it. Meaning the little power we are getting now is from Jonathan's labour, well what's taking pres Buhari so long .

Nicklaus:
So the problem started during pres Obasanjo's tenure and pres Jonathan inherited it and did his best on it. Meaning the little power we are getting now is from Jonathan's labour, well what's taking pres Buhari so long .

Let's have a sensible, scientific discussion on how we can solve the power crisis in Nigeria, not resort to mindless Political points scoring. Do you know how long it takes to build a power plant? It's like 3 years or more, so even if Buhari commissioned 50,000MW of new Power plants in his first 100 days, we would not begin to feel their impact for at least 3 years.

Infrastructure development takes a long time and is extremely expensive. The only way you can scale up to meet the power problem quickly is by distributed Solar Power installations across millions of roofs across the country. Anything else, and we are just deceiving ourselves.

Regards

Uvie

Barcholder:


Let's have a sensible, scientific discussion on how we can solve the power crisis in Nigeria, not resort to mindless Political points scoring. Do you know how long it takes to build a power plant? It's like 3 years or more, so even if Buhari commissioned 50,000MW of new Power plants in his first 100 days, we would not begin to feel their impact for at least 3 years.

Infrastructure development takes a long time and is extremely expensive. The only way you can scale up to meet the power problem quickly is by distributed Solar Power installations across millions of roofs across the country. Anything else, and we are just deceiving ourselves.

Regards

Uvie

You mean this sensible analysis applies to Buhari and not Jonathan, seeing as the APC party used it as one of their campaign score point.
I know you are clamouring for solar power installations but is it the one who is finding it difficult to make power a priority that ll take solar power installation into consideration

And hey,,,,,,

I know plenty...

Nicklaus:
You mean this sensible analysis applies to Buhari and not Jonathan, seeing as the APC party used it as one of their campaign score point.
I know you are clamouring for solar power installations but is it the one who is finding it difficult to make power a priority that ll take solar power installation into consideration

And hey,,,,,,

I know plenty...

This analysis is a summary of the current Nigerian power situation, which is the result of the last 65 years of power policy. Whatever your Political persuasions are, you cannot seriously attach any credit or blame for the current power situation to Buhari because hes only been in power a few months. Power projects are very long term in nature, so he cannot possibly have had any influence in the construction of power plants in his short tenure so far.

The fact is that in 65 years of Independence, successive governments of Nigeria have only been able to increase the national grid by 3,000MW (2,000MW was done by the British), which is beyond pathetic. Let me put it into context for you. Heathrow airport in London has more power supply than the WHOLE of Nigeria. That is the extent of the uselessness of our power situation, so to speak in glowing terms about Jonathan or indeed any other past Nigerian leader is beyond a joke. The levels and standards in Nigeria are pathetically low.

Let's be clear, our current power supply of 5,000MW for a population approaching 180 million is nothing short of an national disgrace, and needs immediate action. We need to figure out a way to rapidly scale up to 100,000MW, or we are staring at a social disaster in terms of feeding our rapidly growing population, which is estimated to be 500 million by 2050

Please, lets join hands and figure out a way for us each to contribute our quota to solving what is the greatest existential threat to our people that we've ever faced. The reason I push Solar Energy is because I KNOW that we can very easily add 50,000 MW of supply within 7 years, because it's so scaleable. My company focuses only on homes, and SME businesses, but we still have need for powering large industry and manufacturing by grid supply.

This problem affects us all, please take Politics out of it, its far bigger than that.

Regards

Uvie

Barcholder:


This analysis is a summary of the current Nigerian power situation, which is the result of the last 65 years of power policy. Whatever your Political persuasions are, you cannot seriously attach any credit or blame for the current power situation to Buhari because hes only been in power a few months. Power projects are very long term in nature, so he cannot possibly have had any influence in the construction of power plants in his short tenure so far.

The fact is that in 65 years of Independence, successive governments of Nigeria have only been able to increase the national grid by 3,000MW (2,000MW was done by the British), which is beyond pathetic. Let me put it into context for you. Heathrow airport in London has more power supply than the WHOLE of Nigeria. That is the extent of the uselessness of our power situation, so to speak in glowing terms about Jonathan or indeed any other past Nigerian leader is beyond a joke. The levels and standards in Nigeria are pathetically low.

Let's be clear, our current power supply of 5,000MW for a population approaching 180 million is nothing short of an national disgrace, and needs immediate action. We need to figure out a way to rapidly scale up to 100,000MW, or we are staring at a social disaster in terms of feeding our rapidly growing population, which is estimated to be 500 million by 2050

Please, lets join hands and figure out a way for us each to contribute our quota to solving what is the greatest existential threat to our people that we've ever faced. The reason I push Solar Energy is because I KNOW that we can very easily add 50,000 MW of supply within 7 years, because it's so scaleable. My company focuses only on homes, and SME businesses, but we still have need for powering large industry and manufacturing by grid supply.

This problem affects us all, please take Politics out of it, its far bigger than that.

Regards

Uvie

Although I wasn't referring to the principal post, but, You are 100% right. I like your optimism. I hope your entreaties fall on the right senses.

Nic.

Nicklaus:
So the problem started during pres Obasanjo's tenure and pres Jonathan inherited it and did his best on it. Meaning the little power we are getting now is from Jonathan's labour, well what's taking pres Buhari so long .

Stop this "did his best" comment with Jonathan. You guys are beginning to insult him. He was the one who had the opportunity to solve the problem completely with oil at $100 a barrel.

Adminisher:


Stop this "did his best" comment with Jonathan. You guys are beginning to insult him. He was the one who had the opportunity to solve the problem completely with oil at $100 a barrel.

had the opportunity to solve the problem completely How so I wud like you to name one EX who did, then I wud know you are reasonable. You want Jonathan to be perfect and making excuses for other incompetent ones.

Barcholder,

How many people can afford solar power? And if solar was the way forward, why are more developed countries struggling to adopt it on a wide scale?

Can solar power run a fast-growing industrial economy, cheaply?

I'm asking as someone who once supported alternative forms of energy (clean and cheap was my motto) but is looking at the realities on ground.

Onegai:
Barcholder,

How many people can afford solar power? And if solar was the way forward, why are more developed countries struggling to adopt it on a wide scale?

Can solar power run a fast-growing industrial economy, cheaply?

I'm asking as someone who once supported alternative forms of energy (clean and cheap was my motto) but is looking at the realities on ground.

These are very good questions. I am also doubtful that solar power can compete with gas on a cost basis, whatever its advantages in terms of being able to scale up quickly. In any case, I don't think the main issue with Nigeria's electricity supply have much to do with what kinds of power plants are used, but rather with

1. The government-imposed price caps that prevent the generating companies from covering their costs.
2. A transmission grid that can barely handle the amount of power already being generated, let alone any increases that may come down the line.

Fashola is already dealing with problem 1 to some extent, even if a lot of people are howling about the tariff increases. The big difficulty will be fixing the transmission infrastructure, which will require levels of investment that the Nigerian government is apparently unable to provide. The alternative is private investment, but for that to happen, investors must know that they will be able to recover their costs, and that might mean further politically unpalatable price increases.

To summarize, Nigerians can pretend to pay for electricity, and the generating companies can pretend to provide it, or else get ready to pay more realistic prices that can attract real investment in the sector.