- Nigeria loses estimated $26bn annually to power failure – Experts
The recent blackout experience in the northern part of Nigeria further exposed how far the country is from economic development as electricity remains the bedrock of any economic growth. In this report, FESTUS OKOROMADU, x-rays the cost implication of neglecting the power sector.
The Nigerian electricity supply industry crisis took a new turn in the last two weeks with the report of blackout in almost all the northern part of Nigeria alongside the South East region.
Crisis started on October 22, when the Transmission Company of Nigeria reported a power outage in the North East, North West, and part of the North Central after the 330-kilovolt Ugwuaji-Apir double circuit transmission lines 1 and 2 tripped.
In addition, TCN reported that the Shiroro-Kaduna line had been vandalised, leading to reduced bulk electricity supply to Kaduna, Kano and other major cities in the region.
Barely two days after, TCN announced a snapped 330kv transmission line in the swampy forest of Igumale, Benue State, further complicating the already bad situation.
Earlier on Monday, TCN had attributed some of damages reported to activities of insurgents operating in the region, stressing that insecurity is hampering the repair works but assured it was working round the clock to restore electricity to the region.
“Economic losses arising from Nigeria’s electricity shortages are estimated to be $26 billion annually, without accounting for spending on fuel for off-grid generators, which is estimated to be a further $22 billion”
Consequently, President Bola Tinubu mandated the National Security Adviser, Nuhu Ribadu, to provide security support to enable quick restoration of power.
But speaking to journalists in Abuja last Tuesday, on efforts to restore electricity to the region, the Managing Director of the Transmission, Sule Abdulaziz, said the company had deployed its engineers to commence work and is set to distribute approximately 500 to 600 megawatts by Sunday, November 3, 2024.
Explaining the process deployed, he said, “Restoring one of these lines will allow TCN to wheel about 400MW of power through that corridor, TCN is also intensifying efforts to repair and restore the Ugwuaji-Apir by Sunday 3, November 2024.
“This will enable TCN to wheel a substantial quantum of power from Apir to Jos, Kaduna, and Kano.
“Whenever the Shiroro-Kaduna line is out, the only other gateway used to supply the northern region is through the Ugwuaji-Apir transmission lines.
“Unfortunately, that line was also vandalised, leaving us with only lines one and two to supply power to that region.
“For line two, nearly five spans of the line were vandalised. Our engineers are working to restore that line, but due to security concerns they require a military escort.
“By 6 pm, our engineers have to leave the area for safety, return to a secure location for the night, and resume work in the morning.
“As of now, line one, which can carry 400 megawatts, should be ready between today and tomorrow.
“The second line, with five spans vandalised, is expected to be ready by Sunday.
“So once we complete these two lines, we will be able to transmit at least 500 to 600 megawatts to the northern region.”
Nigeria loses estimated $26bn annually to power failure – Experts
While the TCN gave an insight into the crisis bedeviling power transmission in the country and the inherent danger of the lingering insecurity in the region, Country Director of the International Human Rights Commission (IHRC-RFT) for Nigeria, Ambassador Abdullahi Bakoji Adamu, focuses on the economic impact.
According to IHRC-RFT, the region incurred an estimated N1.5 trillion in economic losses due to widespread blackouts that lasted for about 10 days.
Adamu in a statement from Kano, noted that the power outages are exacerbating the region’s existing economic and security challenges, disrupting essential services and daily life for the region’s over 100 million residents.
While expressing concern over the government’s response to the crisis, he highlighted the severe human rights implications of prolonged power instability. “Reliable electricity is a basic right, essential for security, health, education, and economic stability,” Adamu stated, urging the government to take prompt action as the situation worsens, increasing social vulnerabilities and security risks.
On the security front, Adamu noted that inadequate lighting and disrupted communication channels leave communities more susceptible to crime, and the instability of power creates conditions ripe for conflict and unrest.
He stressed that access to electricity is vital for maintaining human dignity and socio-economic rights, aligning with the UN’s recognition of energy access as fundamental to modern human rights.
The Ambassador pointed out that the outages affect essential services, including safe water, refrigeration, and sanitation, adversely impacting families, students, and businesses.
To address these pressing issues, Adamu called for sustainable solutions, advocating for investment in decentralised and renewable energy sources and the development of regional power infrastructure per the Nigeria Electricity Act to lessen dependency on the national grid.
“These blackouts highlight the urgent need for energy reforms in Northern Nigeria,” he concluded, underscoring the necessity for immediate action to stabilise the region and improve the quality of life for its residents.
Africa Trade Barometer report
Further confirming the negative impact of persistent power outage on the economy, the Standard Bank in its latest edition of Africa Trade Barometer report said Nigeria loses an estimated $26 billion annually to power failure. The said cost excludes spending on off-grid generators.
“Economic losses arising from Nigeria’s electricity shortages are estimated to be $26 billion annually, without accounting for spending on fuel for off-grid generators, which is estimated to be a further $22 billion,” the report stated.
“While the decentralization of the power sector is a welcome development, the government must be prepared to provide a conducive environment that will encourage investors into the sector”
According to the report, businesses spend about $22 billion annually on off-grid fuel to offset the impact of power shortages. This further pushes operational costs.
“In Nigeria, surveyed businesses must contend with a national grid that frequently collapses as it fails to meet a daily peak demand which is nearly four times its generation capacity,” the report reads.
The report identified electricity supply as a major challenge to business operations in Nigeria and across the African continent.
“Across the 10 African markets, power supply infrastructure remains the most severe obstacle to surveyed businesses’ operations,” the report read in part.
It also highlighted the negligence of infrastructure development in the sector and the consequential impact on businesses, saying “It is reported as one of the most poorly perceived infrastructural attributes as well as the one presenting the most severe obstacle to business operations.
“Blackouts cause a downtime of production, risk the quality of goods that require controlled environments, impact water supply, and affect telecommunications infrastructure which businesses may rely on for payments. The result is reduced sales and income,” the report added.
Infrastructure vandalism and cost implication
Unfortunately, while bemoaning the absence of adequate infrastructure in the Nigeria power sector to service economic growth, vandalism has become a necessary lexicon in our daily reality.
Interestingly, every sector is getting a fair share of it as the government appears unable to tackle the challenge.
Reporting its fair share of the consequences of vandalism cum cost implication of the item on its infrastructures, TCN in its latest monthly bulletin said, the Federal Government has reportedly spent a total sum of N29.3 billion as cost to repair 266 electricity towers damaged by vandals nationwide within a period of 34 months between January 2022 and October 2024.
The publication explained that the vandalization of over 266 power transmission towers during the period occurred across the country, including the Abuja, Lagos, Kano, Enugu, Bauchi, Port Harcourt, and Benin regions, adding that TCN contracted out the repairs of some of the vandalised towers.
While in some cases, it deployed in-house engineers of the transmission company to work on other vandalised towers.
A breakdown of the report showed that 90 towers were destroyed in 2022. This figure increased by 23.3 per cent to 111 towers in 2023.
In the current year, electricity tower vandalism occurred 65 times between January and October 27, 2024.
Further analysis showed that in 2022, 21 towers on the 132kv Kano-Kankia transmission line two were destroyed, and 16 towers were damaged under the Kano-Kankia line one.
Similarly, 19 towers on the Makurdi-Jos double circuit transmission line were vandalised, among others.
In 2023, 15 towers on the 132kv Owerri-Ahaoda transmission line in Port-Harcourt were damaged and 13 towers on the 132kv Ahoada-Yenagoa transmission line were vandalised.
Also, 122 earthen conductors, 244 galvanised bolts, nuts, and copper cable lugs from the remaining towers were stolen.
Among the notable incidents in the first ten months of 2024 was the collapse of Tower 388 on the 132kV Jos-Bauchi line in the Bauchi/Yelwa single circuit transmission line, as were Towers 377 and 378 on the 330kV Gombe-Damaturu line along Bauchi/Gombe and Damaturu. Additional collapses were reported on the 330kV Damaturu-Maiduguri line, including Towers 125, 126, 193, 194, and 195.
In the Bauchi-Gombe area, 450, 452, 453, and 455 on the 132kV line were vandalised, and Tower 70 on the 330kV Gwagwalada-Katampe line in Abuja saw four of its footings destroyed.
Vandals also carted tower members of the 330kv Jos-Gombe from towers 288 to 291.
Professionals proffer political solution
As usual, Nigeria governments and its officers are good at proffering political solutions especially in cases of emergencies.
Thus, when the National Economic Council under the chairmanship of Vice President Kashim Shettima met on Thursday, they quickly announced decentralization of the national grid as the measure to end the frequent grid collapses.
Shettima and his NEC team outlined key steps in the decentralization process, including establishing mini-grids and increasing the use of renewable energy sources such as solar photovoltaic and wind turbines.
Speaking at the 145th NEC meeting held at the Presidential Villa in Abuja, Shettima, who serves as NEC Chairman, emphasized the government’s commitment to accountability in addressing the nation’s energy challenges.
He stressed the immediate need to implement the Nigeria Energy Sector Implementation Plan, noting that the country must maximize renewable energy sources and adopt solar and mini-grid solutions tailored to meet regional electricity demands.
“A robust economy is the backbone of every nation. The recent blackouts caused by vandals remind us of the urgent need to expand our energy infrastructure. I believe the governors here would agree that decentralizing electricity is our way forward,” Shettima stated.
He added, “We will continue to uphold the constitutional framework that enables states within the federation to generate, transmit, and distribute electricity in areas served by the national grid. Together, we can make grid instability a thing of the past.”
Shettima also urged the council to support NESIP’s implementation, highlighting the opportunity to leverage diverse regional energy resources.
“If we capitalize on our regional assets—from northern Nigeria’s solar potential to the south’s gas reserves—we can create a resilient, decentralized energy system that fosters growth and empowers our communities.”
But reacting to the decision by the NEC executives, an energy expert, Adewale Ojo, asked how many of the state governors who were part of the meeting had made attempts to implement the NESIP in their states.
He stated, “Despite the NESIP’s adequate provision and emphasise on active participation of the private’s participation in the power sector, how many states of the federation has attempted to officially assume oversight of their electricity market as approved by the new approved Electricity Act which ceded control of local market energy governance to them by Nigerian Electricity Regulatory Commission?
“Our political leaders have failed to exercise the will to build a solid foundation for economic growth, they will rather wait for cheap revenue from Abuja and talk tough when they have crisis at hand. The pronouncement from NEC is only an outcome of the recent power outage that prevailed in parts of the northern state in the recent time.
The question is after the pronouncement what will happen? As usual, once TCN restores electricity to the region, silence will prevail.”
According to Ojo while the decentralisation approach is key to the growth of the country’s energy challenges, the states must create a conducive environment that will attract investors to build mini-grids.
“The governors must be prepared to work, not just come to Abuja to hold meetings. As at today, only Ondo and Enugu States have perfected the regulatory prerequisites to independently manage their energy market, while Lagos is focused on building mini-grids to boost power supply in the states.”
He noted that the twin issue of security and vandalism must be tackled from the locality if Nigeria will ever overcome its developmental crisis.
“Did you hear what the TCN managing director said is responsible for the outage in the northern region? He stated clearly that even his engineers cannot go to the site to carry out repair works because of insecurity, what is the NEC solution to that critical factor, he asked.
On his part, the CEO, Fenog Engineering Company Limited, Eze Chukwuemeka, noted that while the decentralization of the power sector is a welcome development, the government must be prepared to provide a conducive environment that will encourage investors into the sector.
Citing the recent moves by the billionaire businessman, Adedeji Adeleke to build a $2 billion power plant in the country, Chukwuemeka stated that only such private sector driven initiative can salvage the sector. According to him, the hindrances to such investment include bureaucratic bottlenecks and pricing.
But he noted that with the segregation of consumers into different Bands coupled with states regulating their market, investors can focus on industrial customers who can afford to pay the price and provide them with energy.
He emphasized that the era of the national grid serving the whole country is over as government cannot afford to provide the infrastructures needed to do so.
“The latest power outage in the northern region explains the failure of the system. Government should focus on dealing with insecurity, and then allow the private sector to invest in the sector, but in the absence of security investors will not come,” he stated.
On bureaucratic bottleneck, he cited the revelation by Adeleke that a government official resisted and almost frustrated his investment attempt as a concern stressing that such issues should be investigated and culprits brought to book.
According to him, the failure of the government to tackle such issues transparently to conclusion poses a challenge to investors’ confidence.
Prior to the power blackout in northern Nigeria, the national grid has recorded embarrassing system collapse.
Available records show that this year alone, eight grid failures were recorded, with three being recorded within a week.
While expressing worries over the frequency of collapse, the Lagos Chamber of Commercial and Industries stated that the worsening performance of the national grid is an issue of concern to the business community.
Emphasizing the need to improve the sector performance, the Chamber stated, “Currently, the national grid only generates about 4,500MW of electricity for over 200 million people. Meanwhile, South Africa generates about 50,000MW of electricity to service about 59 million people.”
On the way forward, “What lessons have we learned from past grid collapses and restoration efforts? By now, after numerous failures, the National Grid Managers should have identified the root causes and found lasting solutions.
“It is concerning that there appears to be no clear understanding of these causes or lessons learned from the restoration processes. After about 105 collapses in ten years, power sector stakeholders should know what drives these recurring failures and how to prevent them.
We are troubled by the apparent lack of such understanding among regulators in the power sector,” the LCCI said.
