Wednesday, March 16, 2022

Increased Power Shortages Compounds Nigeria’s Fuel Scarcity Woes

Nigerians are experiencing even less reliable electricity supply than usual amid gasoline scarcity that has caused long queues at gas stations for over a month in the West African nation.

In recent weeks, provision of power to Nigerian homes and businesses has been especially patchy, leaving them ever more reliant on expensive and polluting generators that run on gasoline and diesel.

The deterioration in the electricity supply is due to “very low power generation” by the nation’s power plants, the state-owned Transmission Company of Nigeria, or TCN, said last week. More than a dozen gas-powered facilities were either not operating or producing limited output at various points during the past two months, it said.

Nigerians are already contending with shortages of gasoline that have resulted in long queues outside filling stations for more than a month since the authorities rejected imported cargoes of the fuel for containing too much methanol.

More than 40% of the country’s approximately 200 million people don’t have access to grid electricity, according to the World Bank. Those that are connected to the grid endure frequent outages forcing them to rely on self-generated backup power with an estimated capacity of 40,000 megawatts.

The generation companies acknowledge they are struggling but attribute their current difficulties to the dilapidation of Nigeria’s transmission infrastructure -- the national grid collapsed twice in two days this week -- and years of being underpaid for their power. While the electricity plants could produce an average of about 7,100 megawatts between 2016 and 2021, the grid was able to receive less than 3,800 megawatts over the same period, according to the Association of Power Generation Companies, or APGC.

The power stations have lost out on 1.7 trillion naira ($4.1 billion) since 2015 by being unable to dispatch this “stranded capacity,” APGC Executive Secretary Joy Ogaji told reporters on March 13. The state-owned Nigerian Bulk Electricity Trading Co., or NBET, also owes the generation companies “huge sums” for electricity that was sent out to the grid and supplied to customers.

While data about the outstanding arrears owed to the generation firms wasn’t available, Nigeria’s electricity distribution companies paid NBET, which buys power from generating firms and sells it on, less than 30% of invoices worth 730 billion naira in 2020. This leaves NBET unable to remit full payment to its suppliers.

The government transferred most of Nigeria’s generation and distribution assets to private ownership in 2013, while retaining the transmission network and NBET under state control. The country’s privatization agency said last year it would propose the unbundling and sale of the TCN.

ByWilliam Clowes


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