I had posted earlier that half of the problem we have in this country will be solved if we have adequate, affordable and constant power supply. ELECTRICITY. It is the single biggest impediment to the industrial takeoff in Nigeria. Through the years thousands of factories, companies, and industries have died as a result of their inability to absorb the often high cost of providing power through the use of generators. By the time you factor in the cost of diesel you might as well go to China, Taiwan, India, or anywhere else and import whatever products you are making in Nigeria. There is no other way to explain it; our cost of labor remains much lower than most developing economies, but the extra cost of providing electricity often eats up the difference and more. Only those in high-end products and services who can afford to charge higher premium can withstand this cost differential.
There are sectors of an economy that a responsible government cannot spin off until they have invested sufficiently in that sector to the point that all the private buyers can do is maintain and improve the facilities incrementally. Electricity is one such industry. All the developing economies such as China, India, and Brazil, are currently investing massively into the power sector, and these are countries that have already achieved steady electricity supply. China and India are each currently building on average two power stations per week, just to keep up with anticipated electricity demand. Recently, President Jonathan handed over certificates of ownership to all the new owners of various PHCN facilities. In my opinion, this is the biggest abdication of responsibility I have witnessed of any government in Nigeria. For the record, I am not opposed to privatization; I sincerely believe that there is so much deadwood agencies and facilities Nigeria need to privatize. Why not electricity and why not now?
Electricity is not cheap. In 2001 Geometric Power Limited, a company owned by Professor Bart Nnaji, the former minister of power, was involved in a project that provided a mere 22 megawatts of power as a bridge to serve some ministries and other areas in Abuja. It cost the Nigerian government several billions of naira to do so. Since 2005 the same Geometric has been attempting to build a power station in Aba. After eight years, more than twenty billion naira in debt to several Nigerian banks, and a recent pact with GE, Geometric is now expecting President Jonathan to inaugurate this facility sometime in November after several postponements. What has Geometric achieved in all these years and all this money? According to the company's own recent announcement, they expect to provide up to 141 megawatts of electricity. Surely they expect a whole lot more down the road, but the reality is that this is what they are now able to generate so far. This is by no means an indictment on Nnaji, the man should be commended, even celebrated for going all the way and finally achieving this.
I had used Geometric Power Limited to demonstrate how expensive it is to generate power, and to show all the more reasons Nigeria government must not abdicate their responsibility in this much needed sector. I have argued repeatedly that Nigeria needs to invest between ten to fifteen billion dollars per year for the next ten years if we must address this electricity menace. In pursuing privatization our government have divided the power sector into three divisions; power generation, transmission, and distribution. Our government wishes to retain exclusively the transmission part. President Obasanjo once sent several ministers to London to woo potential European and American buyers of these facilities, but all these big conglomerates stayed away. I had warned beforehand that the the GE's, the Enron's, and the Siemens of this world will not touch these facilities with a ten feet pole.
These are the caliber of companies that can afford to invest the tens of billions of dollars required to build new power stations. But how can they invest such money only to be held hostage to a government controlled antiquated transmission bureaucracy. I also warned that they will not show up when President Jonathan announced his privatization exercise, and they didn't show up. Finally these facilities have now been handed over to several front men and front firms acting on behalf of men like Babangida, Abdulsalami, Atiku, Tinumbu, Sambo, and so forth. I really don't care who buys these facilities, except that I am absolutely certain that these men, no matter how much you think they have stolen from Nigeria, do not have the hundred to hundred and fifty billion dollars needed to invest into this sector in the next ten years. So far we may see some South Korean companies, even some Chinese companies sign MOU's but I'm sure that they will not invest a hundred billion dollars into Nigeria power sector.
After these guys have wasted our time, perhaps five years later, our government may be forced to reacquire these facilities or begin to build new power stations if we must meet our electricity challenges. Under Bart Nnaji, we experience power generation that came close to 5,000 megawatts. Since then it has dropped to somewhere around 3,000. Another huge mistake our government continues to make is in estimating that if only we can get to 10,000 or even 20,000 megawatts our entire electricity problem will be solved. I beg to disagree. 90% of all the top 5% of our industries remain off the grid, providing electricity exclusively for themselves at a huge cost. Once the national grid is stable, many will have no choice than to join the grid, and only then can we begin to measure our true demand. Perhaps some of you are by now asking, if privatization worked in the telecommunication sector, why can't it work in power? It took peanuts comparatively to activate the dead communication sector. I have just given you the sort of figures it took Geometric to get to the point of hopefully generating 141 megawatts. I bet you that Globacom (Glo) did not spend half that much to get their network up and running.
10,000 Megawatts may sound like a lot of power, but I've heard that the company providing power to Heathrow airport generates about that much, just to put things in proper perspective. And there are thousands of Nigerians who have given up on manufacturing, who would likely be encouraged to try again. To power a thriving economy capable of sustaining meaningful growth Nigeria must be looking at generating well over 50,000 megawatts and more. South Africa, a country of less than fifty million currently generates 34,000 per year and adding to that annually, and when they experienced some minor glitches five years ago, they budgeted fifty billion dollars just to address those glitches. We can either continue to fool ourselves, or our leaders should wake up and start doing the right thing, the really difficult work they are elected to do. Why are our leaders afraid of tackling this problem you may ask? As I explained earlier, electricity is not cheap, to do so would mean that these governors may have to give up a lot of their security votes, the legislators may have to give up their constituency allowance, and the presidency would give up a lot.
But leadership matters in making difficult decisions for the sake of the people. Every year I watch how our federal and state governments can't wait for our excess crude account to accumulate before they quickly divide what is there. If the executive had shown leadership in convincing the governors and the house and senate leaders of the need to spend every penny that accrued in our excess crude account on electricity in the past five years, Nigeria would be at a different level now. If we don't fix this problem, all our collective dreams about Nigeria would remain just that; a dream. I am not concerned about the suffering of the masses though I should be; I am not concerned about the effects of carbon monoxide that is emitted across Nigeria through these millions of generators though I should be. I am, however, mostly concerned at the inability of Nigeria to spur hundreds of thousands of small and medium scale factories and services into action. The very engine Nigeria desperately needs to make this overdue leap into the next level of development. The world has been watching and waiting for us, and frankly I have no confidence in the ability of our government to create the necessary environment if they cannot assure us a steady power supply.
Ref: Michael Nnebe
Ref: Michael Nnebe
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