Former president Olusegun Obasanjo promised a massive investment programme to end Nigeria’s chronic electricity shortages.
He spent US$10 billion on building new power stations and new lines of pylons to take electricity into the homes of ordinary Nigerians.
This huge investment was roughly equivalent to Nigeria’s income from oil exports in the whole of 2007.
But after eight years of broken government promises that things would get better soon, most Nigerians still resort to generators, kerosene lamps and candles to light their homes at night.
Many of the new power stations ordered by Obasanjo are finally nearing completion, but now electricity industry experts are warning of a new problem.
Most of these power stations are fuelled by natural gas, but the government has not invested enough money in building a gas pipeline network to supply them with fuel.
Neither has it built an adequate transmission network to take the electricity that these new power plants are due to produce to consumers.
Furthermore, Niger Delta militants have cut many of the gas pipelines that presently exist to supply fuel to these new power plants.
Unless President Umaru Yar’Adua can strike a peace deal with the militants, much of Nigeria’s new generating capacity could be forced to remain idle.
Joseph Makoju, a special advisor to President Yar’Adua on power issues, says that Nigeria’s massive investments in power generation should start to yield fruit by the end of 2009.
“A power station takes five years to build, while a transmission station takes four years,” he explained. “By the end of next year, we will begin to see results from the 10 power stations currently under construction.”
However, a senior engineer with the Power Holding Company of Nigeria (PHCN) says the big problem is that most of the new generating plants are powered by natural gas.
Most of them are privately owned generating stations known as Independent Power Producers (IPPs). They are due to sell their electricity output to the national grid, which for the time being remains in government hands.
“All the IPPs are gas-based, and given the activities of militants in the Niger Delta, it’s not possible to have enough gas to fire the power stations,” said the PHCN engineer, who did not want his name mentioned.
Osita Okechukwu, a spokesman for the Coalition of Nigerian Political Parties, an alliance of parties opposed to Yar’Adua’s government, agreed that poor planning and an over-reliance on gas lay at the heart of Nigeria’s electricity problems
“A cursory study showed that the amount invested in the integrated power (sector) was wasted because the emphasis was on gas-powered plants, without gas pipelines, nor transmission and distribution network,” he said.
Oby Ezekwesili, who served as Education Minister under Obasanjo and is now a Vice-President of the World Bank, also admitted that poor planning led Nigeria to build too many gas-fired power stations before the pipelines were in place to supply them.
“We know, for instance, that of 2,000 megawatts of generating capacity that was available over the last seven years, only 500 megawatts of it was activated simply because of lack of gas supply,” she said.
Before the Delta crisis expanded to the point where the militants shut down over 20 percent of Nigeria’s oil production, it seemed very logical to use natural gas to fuel the country’s new power stations.
Here was a potentially valuable by-product of oil production that was simply being flared and wasted.
One of the new power stations which could be starved of gas by Delta militants cutting pipelines is a $480 million IPP being built as a joint venture by the Nigerian National Petroleum Corporation (NNPC) and the Italian oil giant ENI at Kwale in Delta State.
Kwale came on stream in April 2006, when former president Obasanjo commissioned it, boosting Nigeria’s power output by around 15 percent..
This power plant in the heart of the Delta will initially produce up to 480 megawatts of electricity. A second phase expansion could double its potential output to 960 megawatts.
However, in order to function at full capacity, Kwale will need to burn 75 million standard cubic feet of gas per day.
It is far from certain that the power station will be able to draw that much gas from the pipeline network, especially if the Delta militants continue their campaign of sabotage.
Egbin thermal power station near Lagos, which is even bigger than Kwale, is already crippled by chronic gas shortages.
Egbin should be able to generate 1,350 megawatts of electricity from gas, but the PHCN engineer said it never receives enough to function at full capacity.
“So what Egbin does is to reduce power generation each time there is shortage of gas,” the engineer said.
These are the moments that spell darkness for Nigerians.
Several other recently built gas-fueled power stations face similar fuel shortages. They include Gerekun in Lokoja, and Omotosho in western Nigeria.
A second serious problem is that Nigeria’s electricity transmission system has not been upgraded sufficiently to carry the extra power generated by the new power plants to consumers.
Even if the new power stations can get enough gas to generate electricity at full throttle, many of the high voltage power lines needed to carry their output to Nigeria’s big cities have not yet been built.
Until this mis-match is rectified, some of the new IPPs may be forced to run at low capacity.
Makoju, the Special Advisor to Yar’Adua, blames the current electricity crisis on over 30 years of neglect and under-investment by previous governments.
“For a long time – from 1976 to 1999- we did not invest in the power sector, no new power plants were built,” Makoju said in a telephone interview.
Consequently, he said, “the system collapsed.”
Makoju who previously served as an advisor on power issues to Obasanjo and was briefly chief executive of the National Electric Power Authority (NEPA), says that in recent years Nigeria has been trying hard to make up for lost time.
But Yar’Adua has acknowledged that the heavy investments made under Obasanjo have yet to bring any significant benefit to ordinary Nigerians.
“While we are targeting 6,000mw by 2009, the US$10 billion invested in the sector between 2000 and 2007 has not translated into power generation, transmission and distribution,” he said recently.
Obasanjo had promised to raise Nigeria’s electricity output five-fold from 2,000 megawatts when he was elected president in 1999 to 10,000 megawatts by 2007.
But this proved to be a hollow pledge. In January 2008, PHCN, the successor organization to NEPA, was still supplying less than 3,000 megawatts of power to the nation.
“The citizens cannot understand why the economic activities of the nation are being atrophied by epileptic power supply after such a huge amount was spent on the power sector,” said Okechukwu, of the Coalition of Nigerian Political Parties.
Fixing Nigerian’s battered energy sector came top of the seven-point agenda that Yar’Adua sold to Nigerians in his campaign for the general elections last April.
Shortly after assuming office as president, he even threatened to declare a “state of emergency” in the electricity sector, given the enormity of the problem.
However, eight months into the life of his administration, Yar’Adua has yet to reveal how he intends to tackle the crisis.
Indeed, the president is in no hurry to rush into quick fixes which may turn out to be mistaken in the long run.
He pointedly refused to include any fresh capital expenditure for the power sector in the 2008 Federal budget.
Yar’Adua said he was “exercising caution to ensure that any further funds to the sector would translate into production and delivery of energy to the ordinary Nigerian.”
However, the president promised to pump billions more into the power sector as soon as his government comes up with a new strategy.
This money will come mainly from Nigeria’s Excess Crude Account - the windfall earnings from oil exports which the government receives over and above the income required to fund its regular budget.
“I have told the leadership of the National Assembly that the Federal government will inject its share of the Excess Crude Account into power, and the states have also assured me that they will put in,” Yar’Adua said.
But the president is in no hurry to loosen the purse strings.
“Even if these funds come in today, I will warehouse them until we get a clear direction, hopefully within the next one month, after which I will send a supplementary Appropriation Bill specifically on power to the National Assembly,” he explained.
While assuring the World Bank of the government’s preparedness to address the problems of the power sector, Yar’Adua noted that “more dollars will not provide light, unless we find a project management solution.”
The PHCN was created by Obasanjo as a first step towards breaking up and privatizing the constituent parts of NEPA. His government hoped that private sector investment and better management would be levered in to help switch the lights on in Nigeria.
But although several IPPs have been built to sell power to PHCN, the new holding company has yet to make progress in reorganizing and selling off the constituent parts of Nigeria’s crumbling electricity network
Speaking for the World Bank, Ezekwesili stressed the need to reform the way that Nigeria’s power sector is organized so that it delivers a reliable supply of electricity.
“The most important task ahead is the reform of the power sector to ensure that different investments that have been made in the past in the power sector actually translate into availability of power,” she said.