It was painful to read last week that Nigeria is planning to sell power to Burkina Faso despite the low level of generation. It is painful because, economists have long shown that there is a strong correlation between the level of power generated by an economy and the level of growth of that economy. Nigeria’s failure to generate appreciable power has perpetually stood in the way of growth and development and may continue so ad infinitum should the status quo remain.
A cursory look into the economies of developed and developing countries show that the level of power generation is a significant intervening factor. We can establish that here by taking a look at the world’s most developed economies and compare their level of economic growth; we can carry out the same exercise for counties that are the least developed in the world.
The United States, the world’s largest economic powerhouse generates 4.01 trillion kWh while Canada generated 635 terawatt-hours (TWh) of electricity in 2015 and the United Kingdom did 335 TWh last year. The US hit $18.57 trillion US in GDO last year, Canada made $1, 65 trillion and Britain got $2.936 trillion. The huge numbers are testament to the power in significant electric power generation.
How does this play out for emerging economies? Same trajectory; for instance South Korea generates approximately 528,656 GWh of electricity with a GDP of over $1.5 trillion. Coming closer home, South Africa produces 45,000 megawatts with GDP of $349.42 billion (just below Nigeria’s $405 billion).
It was shameful to read in the news that Nigeria, Africa’s leading economy can presently boast of a measly 2,684 megawatts for a population of nearly 200 million, and this after a drop due to slow down in output from the hydropower plants and some gas-fired stations, including Egbin in Lagos. This is a drop from 3,462MW barely a week ago out of installed capacity of 4,463.3MW.
The drop in generation is against the background of an estimated $16 billion splashed on the sector by government between 1999 and 2007. Private sector investment is said to be in the tune of $1.4bn and that translates to N427bn, most of which is threatened due to contractual glitches. Annual economic loss due to the broken power infrastructure is estimated at US$ 984.38 million. The underperformance of the sector was despite a much touted reform or unbundling.
The unbundling of the Power Holding Company (PHCN) resulted in one Transmission Company, the Transmission Company of Nigeria (Transisco); eleven distribution companies and six generation companies. But the novel arrangement is saddled with myriad challenges from appropriate pricing, to gas supply among others. These challenges hit households in what has come to be known as ‘crazy bills’, a situation where consumers are given a raw deal-billed far more than what they consume.
But the hardest hit in the mess of a privatisation is the manufacturing sector, which remains largely undeveloped. The manufacturing sector, which is supposed to power the export sector remains challenged due to expensive alternative to national grid electricity supply. In 2016 alone, they spent a whopping N130 billion to generate power to produce their wares.
Apart from shaking the belief of local enterprises in the system, such an environment of value attrition would cast doubts in international investors and scare away old ones. The story of the tyre industry aptly illustrates the situation as companies have fled to more clement economic environments like neighbouring Accra even if Nigeria seethes of the major input of the industry-rubber.
It is the same way Nigeria overflows with inputs for power supply, water for hydroelectricity, Sun for solar energy and wind for wind energy among many others. Yet the country is unable to generate enough electricity to power economic development required to deliver development to the people.
But government had offered the refrain that the country can generate as much as 8,000 megawatts given the proven gas reserves and the problem is that “the transmission grid could not support such quantum of power without complications”. What a shame for a government that has constantly harped on building infrastructure with a preachy slant.
Government should be told that power generation and exploitation is sine quo non to economic development. The most developed countries, which now take power generation for granted are producing such dizzying power levels that expose how much of pretenders we are in this clime. The United States, which is arguably the most developed nation on earth and consumes 4,144.3 Terawatt hours of electricity annually. Is it any surprise then that humongous companies like GE, Ford and Caterpillar originate from there?
More than anything else, government should deepen power infrastructure as rapidly as possible in order for the country not to be left behind in the development game. It should align the roles of the Gencos, Discos and Transiscos to the overriding objective of jerking up power to the eternal good of individuals, industry and the economy.
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