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Electricity Power Supply Shortage: Kano Must Take Destiny in its Hands By Ahmad U Sanusi
Amongst the plethora of socio-economic problems plaguing the ancient city of Kano, none is as prevalent as the incessant power outage which is getting worse by the day. The bustling industrial estates of Sharada, Bompai, Chalawa and Gunduwawa are fast becoming ghost towns, business activities are getting paralysed, the manufacturing sector is in ‘reverse gear’ the usual outflow of manufactured goods from kano to other states is replaced with the inflow of manufactured goods from the Lagos-Ibadan-Ogun axis. The private sector is forced to rely on generators using power from PHCN as “stand-by” rather than the other way round.
At night, the skyline of Kano is nothing but dark – passengers on a plane flying by may not even recognise there is a city down there. The residents of Kano are suffering in silence, some close from work but never eager to drive back home – because when they finally do, what they meet is absolute darkness and the sound of generators from the neighbourhood. Even the few rich that can afford generators are slowly cutting hours they usage due to cost of fuelling. People are forced to retire to bed early just to wake up the next day tired, because all night they hardly sleep for two straight hours. Kano is fast changing from centre of commerce to a city of darkness.
What really is the problem? The general opinion of the common man in Kano is that the Federal Government via PHCN is deliberately sabotaging the economy of the state by providing inadequate electricity power supply. True Kano may be paying the price of playing opposition to the central government; however, a problem known is a problem half solved. Moreover it is important to understand that, despite this discernment against the central government, PHCN lacks the capacity enough to provide Kano let alone Nigeria with its energy requirement.
Understanding the problem Nigeria is the largest oil producer in Africa and the tenth largest producer of crude oil in the world. It has 35.9 billion barrels of proven oil reserves and 185 trillion cubic feet (Tcf) of proven natural gas reserves, which makes Nigeria the seventh largest natural gas reserve holder. Despite the hydrocarbon abundance Nigeria can only boast of less than 4000MW effective generating capacity for a population in the region of 120 million while South Africa with a population of 44 million people generates electricity in excess of 40,000 MW. The bulk of Nigeria’s generation capacity and transmission network was built in the 1960’s and 1970’s. This, coupled with a record of poor maintenance has left the system grossly inadequate in fulfilling the country’s energy requirement.
The Nigerian power sector operates well below its estimated capacity. According to PHCN, the country’s peak electric demand in February 2006 was 7600 megawatts (MW), but actual generation capability was 3,600 MW. This gives rise to high supply and demand imbalances mostly balanced by self generation in the form of small diesel and petrol generating sets. A World Bank study in 2002 estimated 97% firms in Nigeria own electricity generators. Growth in demand has also added to the problem which has not been matched by additional capacity considering the age of plants. The number of housing units, population, number of factories and electric appliances increase, without additional power plants been built to balance demand with supply.
The sparse geographical distribution of generating plants with location being influenced by energy source means electricity has to be pushed across the grid over a long distance to end users with average of 300-500 km resulting in very high transmission and distribution (T&D) 35% compared with OECD 7% and China 9%. This is further complicated by government policies of connecting more towns and villages to the national grid without expanding infrastructure thus, adding pressure to the already overloaded supply system which is suffering from both lack of maintenance and expansion (last transmission line was built in 1987).
An EIA report shows that less than 40 percent of Nigerians have access to electricity, majority of whom are concentrated in urban areas. Current per capita consumption of electricity in Nigeria is about 106 (KWh) per person compared to Ghana’s 430KWh/person, India’s 470 and Brazil’s 1800KWh/person. The energy requirement of an average Nigerian is meagre as compared to the citizens of other countries. For instance an average housing unit in Nigeria requires just the energy to light a bulb, watch television, listen to radio, enjoy a fan and very rarely store water in the refrigerator. While for their counterparts around the world, energy is a solution for daily living as they use appliances such as washing machines, dish washers, drying machines, electric cookers/stoves, deep freezers and room heaters which rely on electricity. Therefore, even the 10,000MW target for 2007 is inadequate if the standard of living in Nigeria is to be improved.
Reports from BPE show that an investment of about $7.5 billion is needed to improve the power supply system and to reduce the level of power cuts in the country. The breakdown of this investment shows that the generation sector would take $3.2 billion, while transmission and distribution would attract $1.5 billion and 4.5 billion respectively. BPE also confirmed that the nation is losing N135 billion annually to inefficient power system which could be more as billions of Naira is spent on generators and the fuel for powering them.
While the government’s foreign reserve accumulates in excess of $30 billion from windfall of crude oil sells, and over N250 billion is disbursed monthly to the three tiers of government. Private capital is targeted in meeting the investment requirement of the power sector. For instance the Chinese recently agreed to finance the Mambila Hydro project with $1 billion on a concessionary interest rate of three percent.
In March 2005, president Obasanjo signed the Power Sector Reform Bill into law, enabling private companies to participate in electricity generation, transmission and distribution. The government has separated PHCN into eleven distribution firms, six generating companies and a transmission company which are to be privatised. This is to among other things solve the inability of the state to finance needed expenditure on new investment and removal of barrier to entry for new power generating companies.
The model chosen is the multi-buyer multi-seller model whereby transmission and dispatch are separated from generation. Power generating companies (Gencos), through a long term contract known as power purchase agreement (PPA) will sell electricity to distribution companies (Distcos) which is to be transported through the grid controlled by a transmission company (Transco).
To achieve the 6,500 MW goal for 2006 and 10,000 MW, the federal government has approved the construction of four thermal power plants (Geregu, Alaoji, Papalanto, and Omotosho), with a combined capacity of 1,234 MW. However, the bulk of increase in generating capacity is expected to come from private independent power plants (IPPs) that will generate electricity and sell to PHCN.
In April 2005, Agip’s 450 MW plant came online in Kwale Delta State as part of the government’s encouragement of oil companies to generate electricity with the hitherto flared associated gas. IPPs currently under construction include 276 MW station in Afam, ExxonMobil’s 388 plant in Bonny, ABB’s 450 MW in Abuja, Eskom’s 388 MW plant in Enugu, expansion of 700 MW Afam station contracted to Shell by Rivers State Government, NNPC/Chevron JV 780 MW gas-fired thermal plant in Ijede, Lagos State.
Implication for Kano and Northern States Kano and its Northern counterparts need to understand the electricity power sector reform program and follow current developments in the sector. For instance, the location of power plants currently under construction shows that there is none sited in the northern region.
The implication is that, unless IPPs are compelled to sell their power directly to PHCN, they have a choice of not transmitting power across 300-500 km grid in the process attracting transmission losses when they can concentrate supply in their locality. If the power generating, transmission and distribution companies are ffinally privatised, States like Kano will be wasting their time complaining that the central government is denying them electricity power for political reasons. The reality is that private investment knows no federal character.
Issues That Should Concern Kano and Other Northern States It is impossible for investors to locate gas fired power plants in the northern region for the simple reason that there is complete absence of gas pipeline infrastructure in the region. Having realised this fact, the question that the people of Kano should be asking the federal government is: ‘whether it is an oversight or a deliberate ploy to undermine the development of the north?’
It is even more worrisome if one realises that as far back as February 2004, the Energy Sector Management Sector Assistance Programme (ESMAP) a global technical assistant bi-literally sponsored by UNDP and the World Bank published a document named “Nigeria Strategic Gas Plan” (ESM279). The document among other things proposed a countrywide pipeline network which equally reaches the northern states.
For the north, the link is suppose to start from East to Ajaokuta via Enugu (340 km), Enugu to Makurdi (305 km) Ajaokuta to Kaduna (325 km), Kaduna to Kano (205 km), Kaduna to Yola (630 km), Kano to Maiduguri (510 km), Kano to Katsina (150 km), Katsina to Birnin kebbi (415 km). Assuming this projected has been completed; a state government - private sector partnership will see the north generating its electricity requirement. However, aside the East to Ajaokuta pipeline that will supply gas to Geregu power plant in Kogi state none has been built in the north.
As the ESMAP document focusing on domestic utilization of gas rot in the federal government’s annals, shiploads of pipelines are arriving at port Tema for the constructing of a 430 mile West African Gas pipeline (WAGP) which will carry natural gas from Nigeria to Ghana, Togo and Benin. WAGP is estimated to gulp a princely $590 million. Similarly, the government is in discussion with Algeria for the construction of a 2,500 mile, $7 billion Trans-Saharan Gas Pipeline. The pipeline would carry natural gas from oil fields in the Nigeria’s Delta region to Algeria’s Beni Saf export terminal on the Mediterranean.
As the power sector takes shape not in the favour of Nigerians who happen to be northerners. The northern governors are busy amassing wealth, the honourable legislators are busy collecting pay checks, the manufacturers are busy closing shop and joining their counterparts in the trading business, the elders are busy drinking tea and thinking of contracts at Arewa House, the few rich that can afford generators struggle with the cost of fuel, the poor continue to sit in the dark. Meanwhile, the special assistant to the president on petroleum matters is a northerner.
Security of supply The upsurge in militancy in the delta and persisting insecurity in the region pose a major threat to the proposed pipeline network that will give the northern states access to natural gas for the generation of electricity. The grudge held by the Niger Delta against the Northern states is a major security of supply issue that should concern the North when thinking of its energy strategy. Probably the North should start thinking of an Algeria-Northern Nigeria Gas Pipeline.
The Way Forward The northern states must take electricity power supply destiny in their hands. Kano in particular should benchmark with states like Lagos which is using a public-private sector approach of solving its energy needs. As Kano looks up to PHCN for it share of electricity dispatch, Lagos has completed its independent power plant which was initiated as far back as the Enron era; the Nigerian Gas Company and some private companies are planning the expansion of gas pipeline in the state; furthermore it has started looking towards an alternative renewable energy source with the completion of a solar energy project in Amuwo-Odofin LGA (awaiting commissioning) and recently the state commissioner of Science and Technology disclosed that eight more solar projects are to be sited in parts of the Lagos metropolis.
The people of Kano, manufactures, investors, politicians, lawmakers and even the royal fathers must clamour for gas pipelines to be extended to the state to enable the setting up of independent power plants. Policy makers should also start thinking of alternatives to gas in order to mitigate the risk of over reliance on a resource that can be withheld for political reasons. Possible alternatives exist in hydro, solar, biomass (wood and wood waste, solid waste) bio fuels (ethanol) which are within the reach of the state. Alternative sources of financing energy infrastructure must be pursued e.g. Islamic Development Bank (IDB), OPEC Fund, African Development Bank (ADB) etc. Finally, Kano and the north in general must realise that the world is moving too fast and the southern part of this country is not going to wait for us. The earlier we realise the better, ignorance can not be an excuse!
A U SANUSI ausanusi@yahoo.com
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