Challenges of electric power generation and distribution in Nigeria

Challenges of electric power generation and distribution in Nigeria

Every Nigerian understands that the energy sector in our country has many weaknesses. There is a constant instability, electricity is often cut off, and as a result, the standard of living is deteriorating and conclusions are emerging about the government's low efficiency. What are the reasons for this situation? Let's try to figure this out together by considering the basic challenges of power generation and distribution in Nigeria.

Challenges of electric power generation and distribution in Nigeria

It can't be said that the state of the energy sector is getting worse. Privatization of the sphere of power generation in Nigeria has brought some positive results. At the same time, the state subsidies were maintained for some users.

Nevertheless, tariffs continue to increase. This can be explained mostly by the fall in prices of the oil market. The administration has to convince frustrated citizens that they have to pay more if they want stable and constant electricity.

The problem of shortage of electricity generation in Nigeria is painful, as different governments have tried to solve it for decades. For a long time, a monopoly was maintained.

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After returning to civilian rule in 1999, the government had to spend 2 million dollars annually to improve weak power sector in Nigeria and improve service. In 2010, the electric power industry was transferred to the private regime on the initiative of the President Goodluck Jonathan. Then the holding company PHCN was privatized. In 2013, 6 plants and 11 electricity distribution companies in Nigeria were sold. The population expected things to get better.

Some improvements have been noticed, but this is still far from what should have been obtained. This progress can be compared to a drop of water in a huge sea. Although the production of electricity reached the level of 6.4 thousand mW, this is still a very weak result. The supply is much less than demand. Let's look at Slovakia, for instance. This country produces more electricity even though its population is only 3% of that of Nigerian.

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Challenges of electric power generation and distribution

The owners are new, but the problems are still the same

In spite of the fact that the electric power enterprises are relieved of the bureaucratic pressure, which previously hampered their activity, there is still a lot of structural problems. They impede the orderly provision of Nigerians with utilities and hinder the growth of the energy sector.

  • A serious problem is the shortage of the gas used by thermal power plants.
  • The number of unpaid bills continues to grow.
  • The transmission network has long been obsolete and poorly maintained. Even if more electricity was produced now, there would be no way to process it. This explains the efforts of many energy operators to stimulate progress. To expand and modernize the means of energy distribution, considerable investments are needed.

Measures for the development of the energy sector

To improve the situation of the companies, the Central Bank worked on their stabilization in 2015. A $1.1 billion strategy was launched. Operators were able to use preferential loans. In addition, tariffs were raised in accordance with the long-term plan approved in 2012. The cost of electricity had to be gradually increased in order to encourage private investment. Reports say there has been an increase of 45%.

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Challenges of power generation and distribution

The organizations struggling to overcome poverty in Nigeria and trade unions condemned this decision and argued that it was unreasonable since the services did not improve significantly. Therefore, they don't know what the money gotten from the people was spent on. If progress has occurred, the overwhelming majority of the population has not felt it. The only real effect is the deterioration of the quality of life against the background of low income.

Large-scale protests aimed at abolishing the increase of tariffs were organized in major cities of Nigeria. The Senate also argued for this, calling such actions extortion and exploitation of citizens.

Criticism reflected the needs and opinions of consumers. Households and enterprises had to face difficulties that they were not prepared to accept. Failures in the supply of electricity disrupt their work, reduce production and worsen situations.

The statement that the price increase should follow the improvement of services sounds logical enough and has a moral basis. However, such an approach is incompatible with the complex conditions of a market economy. Operators need investments to repair and purchase equipment, and to hire skilled workers who can improve the level of services. Progress requires material and time costs.

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Power sector

Long-term maintenance of production is possible only if the manufacturer's expenses do not exceed revenues. When it comes to electricity, and infrastructure facilities, the costs are borne by the end consumer or the government that uses these various subsidies. Also, these two sources can be combined.

Financing must precede investment

Lack of money is one of the serious problems that Nigeria is constantly facing. The government is not in a position to provide the subsidies required to maintain a reliable modern infrastructure, expand it, and organize access to services for the entire population in a timely manner.

electric power generation and distribution in Nigeria

The budget is critically small and barely covers current expenses, not to mention large-scale plans for the future. If funds appear in the treasury, they are quickly redirected to pay debts. As a result, the only source of money is the pockets of citizens.

The federal government seeks to raise more money to cover costs, create an infrastructure fund for the transport and energy sectors financed from international and local sources.

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However the debt is so much that the efforts of the government bring about little results. The burden is constantly increasing, which makes Nigeria all more dependent and weak.

Private investors are unlikely to spend money on the development of infrastructure projects, if they do not have a guarantee of profit. In this case, it is practically absent.

Challenges of electric power generation in Nigeria

The high prices set by the government prevent investors from obtaining the required level of returns. This is one of the most important obstacles that prevent the private sector from participating in the development of Nigeria's electric power industry.

In spite of the fact that there are significant reserves of natural gas in our country, the wrong state price policy has led to its shortage and limitation of the operation of thermal power plants. Oil companies did not have the opportunity to finance the development of enterprises engaged in processing and collecting gas intended for internal use.

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Since 2010, prices gradually increased to expand the capacity of gas firms, but the process was rather dysfunctional. Similarly, oil refineries for which state licenses were issued were not built.

Investors distrust is due to the fact that the government did not settle domestic fuel tariffs and did not subsidize this area properly.

Power distribution in Nigeria

Authorities continue to try to explain why they failed to achieve set goals on the background of a market economy and talk about numerous challenges of electric power generation and distribution in Nigeria.

The people are tired of blinding believing these promises. They want to see results. A country with abundant energy reserves should not suffer from shortage and poor quality of service provision. We can only hope that in the coming years, we will see the long-awaited progress and live in comfort for which we have the right.

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