ABSTRACT

This study is mainly to examine the
power sector reform, the effect on electric power supply reliability and
stability in Nigeria. The study is mainly to review the power sector before and
after the reform, effect of the reform on electricity supply, reliability and
the impact. Also the major problem affecting the model was examined. There has
been a slow and steady down turn in the power sector of Nigeria over the past 25
years leading to a failure in the system in 1999. The study shows that if all
identified problems militating against NEPA meeting the energy demands of the
country is met by the reformed energy sector in no time the electric power of
the country would improve.

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INTRODUCTION

The reform that is taking place in
the electric sector of the world is rapidly increasing and the nature of the
reform is becoming more sophisticated. Countries like China, India and United
states have adopted their own reform models according to their own
circumstances and needs. Since 1972 till early part of 2006, electricity
production and supply in Nigeria has been a monopoly of the federal-owned
electric utility body known as National Electric Power Authority (NEPA). NEPA
was in charge of the transmission, generation, distribution and sale of
electricity to customers. But today the citizens of Nigeria lack access to
uninterrupted supplies of electricity as the country power sector has a low
generating capacity. the decline in the performance of the utility is a result
of adequate funding and managerial strategies. According to Nigerian Tribune,
the problem of the sector was due to fact that in the 1990s, there was no
expansion in power generation facilities, notwithstanding the increase in
population. In 1993, the energy generated was 1,669 MW and the leaders then did
not see any need to invest in the power sector. Between 1981 and 1985, during
the fourth National Development Plan, there was oil boom and power demand growth
rate was over 10 percent.

 

 

 

 

 

 

 

Former president Obasanjo upon being
sworn-in as Nigeria president and commander-in-chief of the armed forces of
Nigeria on May 29, 1999, made a promise to fix the terrible electricity supply
problem the country was facing. In other to achieve the set goal he started by
appointing Late Chief Bola Ige as minister of mines, power and steel
development. He also made Bello Suleiman, as the managing director of NEPA.
Engineer Bello was a one-time Executive director at NEPA headquarters before
being made minister in charge of mines, power and steel development by general
Abdul Salami A. Abubakar(1998-1999).

The inability of the appointed men to
turn around the power sector led to a change in Baton from Bola Ige to Lyel
Imoke and from Bello Sulieman to Joseph Makoju in a move by the president to
refocus his direction in keeping to his promise made to Nigerians to improve
the power sector of the country. The change in the managers of the sector also
brought a change in the name of the sector from NEPA to PHCN(POWER HOLDING
COMPANY OF NIGERIA).The change in the name brought about the privatization
process in the power sector under the auspices of the Bureau of Public
Enterprise(BPE).

    
The power sector in Nigeria from 1999-2007 had the main objectives of:

1.   
Promoting competition to help more rapid and fast provision
of services throughout the country.

2.   
Create a new legal and regulatory environment for the sector
that establishes a level of playing field and encourages private investment and
expertise and meet social goals.

3.   
Unbundled the National Electric Power Authority(NEPA)

4.   
Privatise the successors to NEPA.

In
2001, the National Electricity Policy Draft was approved. This draft outlined a
three-stage legal and regulatory reform of the power sector as follows:

The translational stage:  Private power
generation through independent power producers(IPPs) and emergency power
producers (EPPs); corporate restructuring and unbundling of NEPA through sale
or license of all thermal plant to private operators and the subsequent
privatization through the transfer of management and control as well as
ownership of distributed companies.

The medium term(3 to 5 years after the unbundling and privatization
completed):  This involves the competition
among generating companies; sale of energy by companies generating power in
excess of their needs to distribution companies.

The long-run competition structure(beyond 5 years): This structure involves
the power generation companies, transmission and distribution companies will be
operated optimally, economic pricing of electricity to cover the full cost of
supply opportunity for large industrial consumer to chose their suppliers.

        The Electricity power sector
reforms(EPSR) bill that will provide a legal backing to the power sector
reforms  in 2005 adopted by the Senate
and The House of Representative and was signed into law by President Olusegun
Obasanjo in 2005. The signing of this bill into law made way for the legal
unbundling of NEPA into new businesses, the establishment of the independent
regulatory agency, also a consumer assistance fund to ensure the efficient and
targeted application of subsidies to less privileged members of the society was
established. A rural electrification agency to manage the rural electrification
Fund to ensure a separate but equally focused application of subsidies for
rural electrification projects was established.

      The federal government has invested 2.47
trillion in Nigerias power sector over the last 16 years(199 till date)this
investment were made during the regime of Olusegun Obasanjo, his successor late
Umaru Yar’Adua and Goodluck Jonathan. The permanent secretary, ministry of
power, Ambassador Godknows Igali and the managing director, Niger Delta holding
company NDPHC Mr. James Olotu, disclosed this before a senate Ad-hoc committee
probing the power sector from 1999 till date.

More
so, Olotu disclosed that contrary to the popular belief, the national
integrated power project NIPPswich ook about $8.23 billion or 1.64 trillion
were actually being funded from the excess crude account, rather from
ministerial provision. Igali also disclosed that despite the sectors need,
budgetary votes were seldom released fully, stating that the country cannot
realise the full benefit of any investment in power unless the value chain
elements – generation,transmission and distribution were also revamped. He gave
a breakdown of the appropriate and money released from 1999 to 2015:

1999
– N11.206 billion appropriated, N6.698 billion released

2000
– N59.064 billion appropriated

2001
–N103.397billion appropriated

2002
–N54.647billion appropriated, N41.196billion released

2003-N55.583billion
appropriated, N5.207billion released

2004-N54.647billion
appropriated, N54.674billion released

2005-N90.283billion appropriated, N71.889billin
released

2006-N74.308billion appropriated, N74.3billion
released

2007-N100bllion appropriated, N99.8billion released

2008-N156billion appropriated, N112billion released

2009-N89.5billion appropriated, N87billion released

2010-N172billion appropriated, N70billion released

2011-N125billion appropriated, N61 billion released

2012-N197.9billion appropriated, N53.5billion released

2013-N146billion appropriated, N49billion released

2014-N69.8billion appropriated, N48billion released

2015-N5.240billion released, no money released yet.

The power sector reform in Nigeria is yet to yield
results due to the corruption and impurities of perpetrators. Nigerians
continue to pay for the price of corruption in the power sector, staying in
darkness but still made to pay monthly electricity bills.

 The federal
government had budgeted  16 billion for
the various reform under Liyel Imok (2003 to 2007) which went down the drain as
it failed to generate electricity for Nigerians. He was allegedly to have
collected the sum of $7.8 million for the execution of the contract for the
construction of Jos-Yola transmission line which was never executed. There were
corruption allegations that fizzled out shortly after.

One of the successes of the power reform is the
establishment of an agency called the Rural Electrification Agency(REA). It is
a cooperate body capable of suing and being sued in its cooperate name. This
agency helped to promote, support and provide rural electrification programs
through private and public sector participation in order to achieve more
equitable regional access to electricity, to maximize the economic, social and
environmental benefits of the rural electrification subsidies, to promote
expansion of the grid and development of off the grid electrification and to
also stimulate innovation approaches to rural electrification as long as no
part of the rural electrification fund shall be used as subsidies for
consumption.

The Jonathan administration had released the power
sector  road map in 2011 which provides
the arometer for the much expected improvement in the sector. The aim of the
road map as its short term objectives up to April 2011 was to ensure
substantial increase in the quantum of power delivered to the people and ensure
that while the supply of power will not only be significantly greater than that
of before but that it will also be much less erratic and unpredictable power
cuts. The power roadmap seeks to ensure increase in the generation,
transmission and distribution capacities in order to enforce a substantial
degree of spinning reserve that will allow the system operator to maintain
generation levels at relatively steady level instead of being tempted to
running all the machines flat out. During the medium term period, the
government expects to reduce the medium term originally expects a substantial
reduction in the governments funding and managerial direction of key element of
the power chain, in expectation that the system operators would have become
privately owned. By December, 2013, when the medium term of the roadmap would
have come on stream completely, the government expects to have twice the total
quantum of power delivered to electricity consumers across the country.

   Nevertheless,
the power sector reform committee need to recognise that the nature of
electricity power from both conventional and non-conventional sources is that
generation of power, its transmission and distribution projects have high cost
whether done by the government or it is privately financed. Therefore the
committee needs to bring the government, the public and private investors
together under mutually beneficial arrangement in the power sector. This will
require addressing a major flaw in the public policy making facing the country
in general and the energy and power sectors specifically. Also, the committee
can take a look at what other countries are doing and steps they are taking to
solve similar situations facing their countries. Take Russia for example, they
are prepared to allow foreign countries to control up a quarter of its
electricity generation industry, according to Anatoly Chubais , chief executive
officer of state owned electricity Monopoly United Energy
System(UES),coincidently, Just as the Nigerian government officials claim that
it has been estimated that Nigeria requires an annual infrastructure investment
ranging between $6 and $9 billion S dollars every year, Mr. Chubais claims that
Russia power industry needs $120 billion dollars to finance its investment
plan. More than $15 billion dollars of the estimated $120 billion will be
utilized to build new power stations and upgrade Russia new aging electricity
network. This amount of money is to be raised from international investors and
$8 billion has already been secured. In addition, another factor causing a
problem in the power sector of Nigeria is the fact that coal, solar and wind
power have not been accorded their rightful roles over the years in the
country. The instability in the power sector, negatively affects the domestic
and economic lives of the people, forcing individuals and organisation to
invest in expensive backup systems.

In 2015, Mr. Babtunde Raji Fashola stated at a summit
that the federal government’s effort at providing electricity was yielding
positive result. And according to him, at September 4 2017, the available power
that could be put on the grid was 6,619 mw while the transmission capacity was
stimulated at 6,700 mw, up from 5,000 mw in 2015. Production reached all time
high of 7,001 mw.

CONCLUSION

With the establishment of the Nigerian Electricity
Regulatory Commission (NERC), the power sector reform of Nigeria has become a
reality. With the large energy potential of Nigeria, high power demand and
rapid economic growth remains a green field full of potential for would-be
investors in the power sector. Power sector reform will improve the stability
of electricity supply, improve cost recovery and increase the availability of
investment capital.

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