“The story of Nigeria’s power and oil sector, those weird Siamese twins has proved to be an intractable puzzle. Any hope of ever straightening them out keeps dimming by the day.”
As countries around the world, particularly in Africa, jostle to attract Foreign Direct Investment (FDI) from the global marketplace, providing a conducive investments climate, and attractive business opportunities, Nigeria the African giant totters.
Recently, the Deputy High Commissioner of Canada and Senior Trade Commissioner to Nigeria, Mr. Teshome Nkruma, called on the Federal Government to re-assess its regulatory regime as many start-ups are relocating to friendlier countries. Nkruma, who was a guest at a webinar titled Bridge Builder #8: Conversation with Global Affair Canada hosted by the Nigerian & Canadian Business Network (NCBN), said some of these companies are moving to Rwanda. Neighbouring Ghana has also become another destination.
“We see so much development in the start-ups. Many of these companies use their platform to expand to other countries. Nigeria has a supply chain of tech start-ups. There was one that received funding and coaching but when we speak to these start-ups they complained about the regulatory environment. Some prefer to relocate to other countries such as Rwanda. The government should look at the system of regulations, let them favour start-up companies,” he said.
A World Bank report on the ease of doing business for instance ranked Ghana 118th while Nigeria ranked 131st out of 190 countries under consideration. But why is Nigeria losing its place as Africa’s FDI hub? Could the core be at the country’s perennial energy challenge? Yet, in the face of the country’s unhealthy business climate including a huge debt profile, poor power generation, rotting infrastructure, rising inflation, and near-collapse of the economy, the Minister of Humanitarian Affairs, Disaster Management and Social Development, Sadiya Umar-Farouq, recently announced Federal Government’s approval of over N14 billion to train 50,000 non-graduates of N-power for a period of nine months. The trainees she said will be groomed on different skills. But should skills acquisition training precede the creation of a healthy business environment? How will the new businesses thrive? Are existing businesses in Nigeria thriving?
A Senior Advocate of Nigeria, Funke Adekoya, said. “While the decision is commendable, I think government priorities will be misplaced unless the training is linked to opportunities where the skills taught will result in employment for those trained. By way of example, training in digital technologies should be linked with employment vacancies in the production of smart cards for buses and trains. Training as welders should result in employment by companies laying girders for the 2nd Niger Bridge and the 4th Mainland Bridge. If the government trains in areas where there is no prospect of employment, it will be breeding bandits.
“The proposed training and starter packs to set up their own businesses will be difficult at a time when all input costs into any business venture are on the increase. Electricity, diesel, transport costs, etc. are part of such start-up costs. And 50,000 is a drop in the bucket when millions require such training. Although the concept is commendable, I am not encouraged by thoughts of its success.”
On Friday, April 8, 2022, the national electricity grid suffered another system collapse. It was the third in less than a month and the fifth in 2022. In the last nine years, the national electricity grid has collapsed over 200 times. Each occurrence leads to prolonged hours of power outage across the country and although the Minister of Power, Mr. Abubakar Aliyu, blamed the constant collapse on poor maintenance and shortage of gas. Nigerians over the years have witnessed inadequate electricity supply.
While this is ongoing, fuel crises persist with people paying prohibitively to procure petrol or diesel to power automobiles and generators. It is worth noting that a large number of Nigerians are unable to afford the high cost of fuel. A larger number do not even own power-generating plants. Notable among the wide spectrum of power generating plant owners are small business operators who desperately depend on power to eke a living.
The Guardian Editorial of March 27, 2022, threw a challenge to the Federal Government, but whether it will be heeded is a different matter. “Clearly, the power sector is a cesspit of corruption and administrative inefficiency. It is incumbent on a proactive administration to demand a thorough investigation of the sector and begin to explore alternatives to energy sources. The world is scandalised that Nigeria, one of the leading producers and exporters of crude oil and gas dwells in darkness. Government should put its house in order and provide a security and business-friendly environment to attract the private sector, without which the sector stagnates. The power industry is too technical and financially inclusive to be undertaken solely by the government. But the present private-sector arrangement is grossly defective and has only presented Nigerians with suffering and exploitation.”
To the CEO of New Hampshire Capital Ltd, Odion Omonfoman, an enormous financing challenge weighs down the power sector and impedes its viability. According to Omonfoman, the problem is partly due to the non-implementation of cost-reflective tariffs by the Nigerian Electricity Regulatory Commission (NERC), high technical and commercial losses exacerbated by energy theft, and consumers’ apathy to payments because of unfair estimated billing practices by DisCos, and poor metering implementation by DisCos.
“There is also the issue of sub-optimal management arising from a lack of proper corporate governance structures in some DisCos. As long as the existing DisCos have an unwritten monopoly to supply electricity to Nigerians without any competition from other market providers, it is doubtful if the power sector will ever be efficient, no matter how much the CBN injects into the sector. In the alternative, state governments should make laws that will allow for state governments to license and regulate private investors to generate and distribute electricity to their citizens as well.”
Proffering further solutions, energy experts, Nnaemeka Vincent Emodi and Ogheneruona E. Diemuodeke in their article: The grid collapse conundrum in Nigeria – ensuring consistent energy, published in ESI Africa posited that: “To achieve this, the Transmission Company of Nigeria can upgrade and increase transformer capacity… Second, a better revenue collection method is needed and there needs to be a wider distribution of prepaid meters.
“Third, the Nigerian lawmakers recently supported the constitutional amendment bill to allow state governments to generate and transmit their own electricity. This presents an opportunity for investors and industries to participate in the Nigerian energy market. Also, the states or businesses can transmit excess supply to the national grid. Micro-grid projects could also expand to send excess power to the national grid.
“Fourth, a modern smart grid would enable data to flow between consumers and electricity retailers. This will enable grid operators to match electricity supply with demand, understand consumer behaviour, and plan grid expansion. Finally, the Nigerian government should speed up efforts to decentralise the national grid. This can be through mini-grids driven by renewable energy sources like solar photovoltaic and wind turbines. The effect would be increased local reliability of electric power supply, especially in the rural and peri-urban communities.”
In his article titled: When will our National Greed Collapse? veteran journalist and Managing Director/Editor-in-Chief of The Guardian Newspaper, Martins Oloja said: “Ordinarily, this should engage the attention of all our local, sub-national and national leaders, especially in the executive and legislative arms. But this is not the case because of this malaise called ‘national greed’ that we are not linking to the national grid collapse.”
The story of Nigeria’s power and oil sector, those weird Siamese twins has proved to be an intractable puzzle. Any hope of ever straightening them out keeps dimming by the day. To put a stop to the unending fuel challenge in the country, Vice President, Yemi Osinbajo, announced last year that the integration of artisanal and modular refinery operators into the mainstream oil and gas sector would boost local content in the industry. The Vice President who spoke virtually at the National Summit on the Integration of Artisanal and Modular Refinery Operations in Nigeria said the integration would advance the use of home-grown technology in the refining of petroleum products.
“We are confident that the integration of artisanal and modular refinery operations into the oil and gas sector will not only promote the inclusion of more local content in the industry; it will advance the use of home-grown technology in the refining of petroleum products. It will also curtail illegal oil activities in the Niger Delta regions,’’ Osinbajo said.
He had in 2016, under President Muhammadu Buhari’s directive, embarked on a tour of oil-producing communities in the Niger Delta, in a bid to address lingering issues in the region. This was preceded by the President’s meeting with Niger Delta leaders under the aegis of the Pan-Niger Delta Forum, (PANDEF). The meeting led to PANDEF’s 16-point demand to the Federal Government and was subsequently captured in the Federal Government’s 20-point agenda to develop the region.
“One of the nagging issues we were confronted with during my tour”, the Vice President recounted, “was how to deal with the proliferation of artisanal refinery and its attendant negative environmental impact. Our solution was to promote the establishment of modular refineries. These artisanal refiners will be seen as investors and considered for strategic equity partnerships with technical and financial partners. This vision is hinged on the commitment of this present administration to develop the region and ensure that the people of the region benefit maximally from the wealth of their land. Indeed, the New Vision speaks to a progressive partnership between the Federal Government, state government, private sector, and the local communities.”
Osinbajo said the framework envisaged a private sector-led partnership with equity participation from the state government or its agencies, registered local cooperative societies, and the integration of regional refinery stakeholders, with the private investor having majority equity.
It’s been a year since that summit. Artisanal and modular refinery operations are still being awaited. Within that period remarkably, the Federal Executive Council (FEC) approved $1.5 billion (about N600 billion) for the rehabilitation of the Port Harcourt refinery. Approval had earlier been given for the rehabilitation of both Warri and Kaduna refineries to the tune of $1.484 billion. The only snag is that about N3.8 trillion had been poured into Nigeria’s four derelict petrochemical refineries without any result being recorded. This is in spite of the Federal Government has spent about N1.47 trillion between 2015 and 2020, on maintaining, revamping, and running the four broken-down refineries to no avail.
Meanwhile, a 20 per cent minority stake in Dangote Petroleum and Petrochemical Refinery was acquired at the sum of $2.76 billion by the Federal Government. Many Nigerians view this move as an indication that the government is neither interested in making national assets functional nor liberalising the oil sector.
With the combined fiasco of a power outage, fuel scarcity, and fuel importation by an oil-producing country not to mention the curious intoxication of the Federal Government with borrowing, Nigeria is bursting at the seams. A group, Warri Advocacy Network (WAN), recently drew the public’s attention to how Hon. Justice Abang Effreti, the presiding Judge of the Federal High Court, Warri works with candlelight on account of the poor electricity supply to the court.
The group, in a statement, said: “Justice Effreti most times worked beyond 4:00 pm and sometimes till 8:00 pm with candlelight due to the epileptic power situation in the area… No doubt, Warri is the only city in Nigeria with a Federal High Court outside any state capital and yet the only one with a single judge assigned to tackle the very litigations-thick city.”