Remedying the power sector for service delivery

power distribution eko

Consistent and stable electricity is one of the most crucial determinants of any country’s Gross Domestic Products (GDP) alongside socioeconomic growth and development. Over the years, Nigeria; the giant of Africa has performed rather shoddily in this sector. According to The Spectator Index in 2017, Nigeria was positioned second with the worst record in the world’s global ranking for electricity.

Historically, electricity was first generated in Ijora, Lagos, Nigeria in 1896 by the then British Colonial Government and later established the Nigerian Electricity Supply Company which became operative pursuant to the Electricity Ordinance Act, 1929. To ensure impressive spreads across the country, the Public Works Department was established. In 1950, these institutions were consolidated forming the Electricity Corporation of Nigeria (ECN) by virtue of the Electricity Corporation Ordinance 1950. Also established was the Niger Dams Authority (NDA) responsible for construction and maintenance of dams. There were diverse evolutions as years went by. Other supplemental laws regulating the sector at this time are the Energy Commission Act 1990 and Utilities Charges Commission Act 1992.

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Despite these mentioned reforms the sector had undergone, it mockingly earned some colloquial names from the society including ‘Never Expect Power Always’ (NEPA) and ‘Please Hold Candle Now’ (PHCN). Thus, there were calls for more meaningful reforms. The development principally led to the unbundling of PHCN into eleven distribution companies

.The sector’s critical issues include liquidity – electricity tariff, gas supply, pricing, electricity theft, vandalism, etc. Lack of liquidity majorly on account of a non-cost reflective tariff is a barrier. Simply put, electricity is being sold below the realistic cost of producing and supplying it.

Unfortunately, the current electricity tariff was reviewed in 2015 and took effect in 2016 with volatile inflation and exchange rate benchmarked at N178 per $1. It is therefore without a doubt that the tariff is due for a review in line with the MYTO. Unfortunately, it has inconsiderately remained a no-go area especially by the government. Whilst Discos are expected to distribute generated electricity, the current tariffs pose as a hindrance; knowing that the more electricity taken up from the grid for distribution, the more losses they are likely to incur as they resell below profitable rates. Alternatively, Government as a stakeholder can come in with a bailout towards loss reduction. Otherwise, it is more like using a sledgehammer on DisCos.

Ani Nkemjika,


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