World Bank worries about power deficit

Businesses, households groan
The slide in electricity supply to homes and factories have become worrisome to Nigerians and business owners.

In the last few months, power supply has dipped, a survey conducted by The Nation showed.

At the best of times, during the last three months, electricity supply is less than 10 hours daily. In worse situations, many homes and factories were without power supply for days.

The cost of doing business has risen steeply with the exorbitant expenses being incurred by businesses on energy supply.

Should this situation persist, there will be more capacity reduction and job cut, according to experts.

Nigeria’s largest private sector group, the Lagos Chamber of Commerce and Industry (LCCI), warned that the high energy cost would have a back-breaking and negative impact on businesses that are already grappling with intense inflationary pressures, exchange rate depreciation, high cost of funds and weak purchasing power.

Its Director-General, Dr Muda Yusuf, said high energy cost means a worsening challenging situation.

According to him, it has implications for business sustainability, sales, turnover, profitability and the capacity of businesses to retain existing employees and the creation of new jobs. He called on policy makers and the government to do a thorough study on the challenge and come up with workable solutions.

“It’s worthy of note that the issue of electricity is germane to any business especially when the government source is epileptic, making it very expensive for Small and Medium Enterprises (SMEs) to sustain themselves. For the multinationals and other businesses, the bottom line is affected,” Yusuf said.

Manufacturers are worst-hit by the failure of Electricity Distribution Companies (DisCos) to rise to the occasion.

President of Manufacturers Association of Nigeria (MAN) Mansur Ahmed, said electricity supply constitutes up to 38 per cent of the cost of production.

He said modern industry competitiveness depends to a great extent on provision of adequate and efficient infrastructure especially electricity supply. He said inadequate power supply had become a huge challenge for manufacturers and by extension, the economy.

Private operators under their umbrella association, the Organised Private Sector in Nigeria (OPSN) said electricity outages now average about 10 hours per day; electricity expenses constitute about 40 per cent of total cost of production, with the cost of self-generated electricity averaging N119 billion in 2019 alone.

The OPSN comprises MAN, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Nigeria Employers Consultative Association (NECA), Nigerian Association of Small and Medium Enterprises (NASME), and Nigerian Association of Small Scale Industrialists (NASSI).

According to the group, inadequate electricity supply, high electricity tariffs and exorbitant cost of self-generated electricity are responsible for the spike in the cost of doing business with consequential upward spiral effects on unemployment.

The DisCos give reasons for poor electricity supply, despite the increase in tariffs, as ranging from national grid collapse to distribution problems and poor transmission/infrastructure.

The dip in power supply is also attributed to gas constraint, which is usually attributed to most power failures. The National electricity regulatory commission (NERC) in its quarterly reports, attributed the dip in electricity generation to shortage of gas supply.

A World Bank report said businesses in Nigeria lose about $29 billion annually because of unreliable electricity. It added that 20 countries with the largest population lacking access to electricity, constitute 76 per cent or 580 million people of the global access deficit.

Twice, last month, the country’s electricity transmission system also known as the National grid, collapsed more than once, plunging economically vibrant states like Lagos, Kano and other major cities, into total blackout.

Besides, there has been a dwindling capacity in electricity production. For instance, Dataphyte, a media research and data analytics organisation, in its review of the regular operational report of the Nigerian Electricity System Operators for March, revealed that electric energy produced in that period did not exceed 120,000,000 kilowatts hour (KWh) for any day in the period. It further said that the electricity produced was less than 100,000,000 KWh for nine days in the same period.

“To put this in context, the average electrical energy produced in March 2021 was just enough to deliver 189W (three 60 watts bulbs) of electrical power to each of Nigeria’s 24 million households with access to electricity. With the World Bank’s estimation that only 56.5 percent of Nigeria’s population have access to electricity, it then means only 24 million households in Nigeria have access to electricity,” Dataphyte noted in its report.

According to a USAID report, on most days, Nigeria’s power sector “is only able to dispatch around 4,000 MW, which is insufficient for a country of over 195 million people.”

In April, the country recorded a daily electricity dispatch of less than 4,000MW. The Nation in that period, reported that “the Nigeria Electricity Supply Industry (NESI), recorded a dip in its power supply from 3,387Mw to 2,805Mw.”

ayolayo0405:
Nothing is working in this country... I mean nothing