Blackouts over gas shortage spark fresh concerns in Nigeria’s failing power sector

Electricity shortages in various parts of Nigeria, stemming from a deficiency in gas supply to power generation plants, have reignited concerns about persistent challenges in the country’s power sector. Recent reports from DAILY POST revealed that both the Nigerian Federal Government and the Transmission Company of Nigeria attributed the decline in electricity supply to gas limitations.

The government had previously pointed to gas shortages as the cause of reduced electricity supply by the Niger Delta Power Holding Company (NDPHC) to distribution companies. Nigeria relies on 26 hydro and gas-fired power plants for its electricity, with a generation capacity fluctuating between 3,000MW and 5,000MW since the sector’s privatization in 2013, despite a population exceeding 200 million.A decade after privatization, the power sector’s performance remains stagnant, despite a substantial investment of N3.348 trillion in electricity subsidies, as reported by the Nigerian Electricity Regulatory Commission. Despite planning to allocate an additional N1.6 trillion to electricity subsidies in 2024, the sector faces persistent issues such as inadequate investment, regulatory uncertainties, transmission constraints, and planning shortfalls.The National Electricity Regulatory Commission’s (NERC) third-quarter report for 2023 emphasized the ongoing challenge of gas constraints in the national grid, despite Nigeria having 208.83 trillion cubic feet of gas reserves, a third of Africa’s total. The Chief Executive Officer of NUPRC, Gbenga Komolafe, highlighted this discrepancy.The power industry in Nigeria encounters various obstacles hindering its growth, including a lack of investment, policy enforcement, regulatory uncertainties, gas supply issues, and planning deficiencies. Bolaji Tunji, the special adviser for strategic communication and media relations to the Minister of Power, Adebayo Adelabu, assured that the government is actively addressing the gas constraint challenge for Generation Companies (GenCos). This includes engaging stakeholders and settling outstanding debts owed to GenCos.However, Joy Ogaji, Managing Director and Executive Secretary of the Association of Power Generation Companies (APGC), was unaware of the government’s engagement with GenCos but suggested that steps may have been taken to address the gas shortage affecting the Nigerian Electricity Supply Industry (NESI). She emphasized the importance of a solid contractual regime with bankable guarantees and full payment from off-takers to resolve challenges in the power sector.On the other hand, Kunle Olubiyo, President of the Nigerian Consumer Protection Network, disputed the government’s explanation for the recent electricity supply drop, attributing it to a liquidity crisis rather than a gas shortage. He advocated for stopping electricity subsidies to achieve efficiency, asserting that subsidies are paid for services not provided to Nigerians by GenCos and Electricity Distribution Companies.