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 INTRODUCTION

Power Generation in Nigeria cannot be over emphasized: - electric energy plays the most
vital role in the economic growth, progress and development as well as poverty
eradication and security of any nation. Uninterrupted power supply is a vital issue for
Nigeria and other nations of the world. The economic growth and prosperity of any
nation will crucially depend on the long-term availability of energy from affordable and
accessible sources and environmentally friendly, security climate change and public
health are closely interrelated with energy.

(1) Energy is key factor in all sectors of any country’s economy. The standard of
living of any nation will be directly related to the per capital measure energy
consumption, the per capital energy consumption is a measure of the per capital
income as well as a measure of the prosperity of a nation.
(2) Energy strongly supports the provision of basic needs such as cooking of food,
provide comfortable living temperature e.g., AC and Fans in offices and homes,
lightening, the use of appliances, piped water or sewage, essential health care,
(storage of vaccines, emergency and intensive care), Educational aids,
communication (ICT, Radio, Televisions, Emails, World Wide Web), sports and
transports. Energy also fuels productive activities including Agriculture,
Commerce, Manufactory industry and all these are tied to energy. In view of these
insufficient energy supply contributes to poverty and deprivation which can lead
largely to economic decline.
(3) The energy crisis, which has engulfed Nigeria for more than two decades; has
largely contributed to the incidence of poverty by paralyzing commercial and
industrial activities across the country over these years.
The council for renewable energy of Nigeria estimates that power out ages brought
about a loss of 126 billion naira annually Oyedepo, Energy sustainability and
society 2021.

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Power Generation Nigeria dates to 1886 when two (2) generation sets were installed to
serve the Colony of Lagos. By an act of parliament in 1951 the Electricity Corporation of
Nigeria (ECNS)was established in 1962, the Niger Drams Authority (NDA) was also
established for the development of hydroelectric power.

The two organization were merged in 1972 resulted in the formation of National Electric
power Authority (NEPA) in which was saddled with the responsibility of Generation,
Transmission and Distributing electricity Nigeria. It operated as a vertical integrated
utility company and had a total generation capacity of about 6,200 mw. From 2
Hydropower and 4 thermal power plant. This resulted in an unstable and unreliable
electric power supply. Situation in the country with customers exposed to frequent power
cuts and long period of power outages and the industry characterized by lack of
maintenance of power infrastructure, outdated power plants, low revenues, high loses,
power theft and non-cost reflective tariffs.

In the year 2001, the reform of the electricity sector begins with the promulgation of the
National Electric power policy which had as its goals the establishment of an electricity
market in Nigeria. It had the overall objective of transferring the ownership and
management of the infrastructure and assets of the electricity industry to the private
sector with the consequent creation of all necessary structure required to forming and
sustain an Electricity market in Nigeria. In 2005 as a result of the power sector reform
process, NEPA was unbundled and renamed power holding company of Nigeria (PHCN).

The Electric power sector reforms (EPSR) act was signed into law in March 2005,
enabling private companies to participate in electric generation, transmission, and
distribution. The government unbounded PHCN into eleven electricity distribution
companies (Dis Cos), Six generation companies (Gen Cos) and a Transmission Company
of Nigeria (TCN). The act also created the Nigerian Electricity Regulatory Commission
(NERC) as an independent regulator for the sector.

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At present, the federal Government had fully divested it interest in the six Gen. Cos while
60% of its shares in the eleven (11) Dis Cos has been sold to the private operators. The
transmission company remains under government ownership.

The generation sub-sector presently includes 23 grid-connected generally plants in

operation with a total installed capacity of 10;396 mw (available capacity of 6;056 mw),
with thermal based generation having an installed capacity of 8,457 mw (available
capacity of 4,996 mw) and hydropower having 1,93804 mw of total installed capacity of
1060 mw from power, Sapele, Egbin, ugheli Kainji, Jebba and Shiroro respectively.

This comprises of the privatized Gen Cos, Independent Power Producer (IPPS) and the
generating stations under the National Integrated Power Projects (NIPP). IPPs are power
plants managed by the private sectors prior to the privation process. In its effort to
increase the level of power generation, the federal government in 2004. Incorporated the
Niger Delta Power Holding Company (NDPHC) as a public sector founded by emerged
intervention scheme.

The company has a mandate to manage the Natural Integrated Power Project (NIPP)
which essentially involves the construction of identified Critical Infrastructure in the
Generation, Transmission, Distribution and Natural gas supply sub-sector of the electric
power value chain. In the generation sub-sector, NDPHC is expected to add ten (10) New
gas fired power station to the grid in which the NIPP power stations will add about 4,774
mw to National grid.

As of mid-2005, there were a total of 58 licenses for on-grid generation with the
expectation of a total on-grid generation capacity of 26,42312 mw mostly from thermal
generation in the southern part of the country where the oil and gas fields are located.
However, out of this figure only 11,774mw have been completed which the transmission
company has no capacity to transmit the installed capacity of 11,774mw if readily
available.

Government in its effort to improve the power sector for enough power supply in
Nigeria had suffer the following challenges.

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  There is a significant gap between demand and supply of electricity causing
recurrent power shortcuts.
 Lack of significant maintenance for upkeep of the existing powers industry
equipment; and the construction of new infrastructures even when government
spends huge amount of money on power sector continuously.
 Shortage of gas supply to run gas and steam power plants.
 Due to poor maintenance and vandalization transmission network is currently
overloaded and experiences losses of 25% which are particularly high in the
naira.
 Since the grid network is not reliable their high rate of system collapse.
 The distribution grid also suffers from high technical and non-technical losses,
lack of skilled distribution sub-station operators (manpower), electricity theft,
vandalization and poor maintenance of distribution equipment.
 Distribution / transmission / Generation interface problems etc.

Nigeria’s average consumption per inhabitant is only 150k w/h; per capital, one of the
lowest on the world, it is estimated in 201, grid-connected customers suffered an average
of 28 black outs per day.

This situation does only affect the population’s living standard, but it is also one of the
biggest challenges to economic development. All these factors had led to the privation of
power sector in Nigeria.

Transmission and distribution network

The National transmission grid had an installed capacity of 5,758 mw, but effective
wheeling capacity lies about 4500 mw the transmission network has a total length of
(12,300km, 5650 km, 132kv, 6.687km) and connects 32,33okv and 105,132kv.
Substations this is managed by the Government Owned Transmission Company of
Nigeria.

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The distribution network has a length of 224,838km taking into consideration 33kv; 11kv
and 415kv and cables. As part of the power sector reform the network was split into 11
distribution zones each of them now owned and managed by a different Electricity
Distribution companies DO COS.

Privatization of power sector in Nigeria.

Since 1972 until the early part of 1998; electricity generation transmission and
distribution in Nigeria had been a monopoly of the federal government-owned electric
utility body known as National Electric Authority (NEPA). However, a combination of
factor as earlier stated such as inadequate funding, institutional corruption and excessive
political interference along with poor managerial and operational strategies implied that
electricity supply during the era of NEPA was abysmal (Adoche et ali, 2009.
Consequently, the Electric power sector return (EPSR) act was essential to by the Nigeria
federal Government in 2005. The essence of the reform was the

 Liberalization: deregulation and privatization of the nation’s power sector in order

to engender stable uninterrupted power sector supply in the country.
 The problem facing power sector can be traced to the facts that it is government
owned and this is why there is political interference; the management are not given
a free hand to manage privatization will remove political interface and a
administrative red tape from public inter price.
 Privatization will abolish unproductive use of the sector; eliminate fraud and
embezzlement and infuse financial discipline into the organization. Government
all over the world are not suited to run certain enterprises efficiently. As stated in
the business concord editorial of June 17,1985, “the history of public utilities in
Nigeria has been such that continue maintenance of their corporations will only
amount to general economic myopia” (Ojobo 2005).
 Government can still control the power sector without necessary owned them.
 Privatization will improve the efficiency of the sector.
 Provision of opportunity to introduce competitions.

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  Attraction of foreign investment into the sector.
 Reduction of government interference in the economy and promoting market force
in the economic equity.

The further provides for establishment of the Nigeria Electricity Regulatory Commission
(N. E. R. C) which is charged with the following

 Regulate tariffs and quality service

 Institutional and enforcement of the regulation regime.
 Oversee the activities of the industry efficiency.
 Licensing of Generation, Transmission, Distribution and Trading Companies that
result from unbundling of N. E. P. A.
 Provision relating to public policy interest in relation to fuel supply, environmental
laws, energy conservation, management of scale resources, promotion of efficient
energy, promotion of renewable energy and publications of reports and statistics.
 Providing a legal basis with necessary enabling provisions for establishing,
changing, enforcing and regulating technical rules, market rules and standards.

Nigeria Electricity Regulation Commission was inaugurated to take full responsibility in

November 2005. Other aspect of reforms provided for the management of the Rural
Electrification Agency (REA), The National Electric Liability Management Company
(NEJMCO) when is a special purpose entity created to manage the residential assets and
liability of the defund NEPA after privatization of the unbounded companies the acts also
provided for the establishment of the power consumers Assistance found (POLAF) to
subsidize under privileged electricity consumers (Balogun 2010).

However, despite these efforts, the problem of the power sector continues until
November 2013 when PHCN was formerly handed over to the new investors. Most Gas
and steam plants were 100% sold while Kanji hydro power plant, Jebba Hydro power
plant and Shiroro Hydro power plant were given out on long term concession.

THE IMPACT OF PRIVATIZATION OF POWER SECTOR IN NIGERIA

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Since privatization policy is based on capitalist ideology and orientation an in its drive for
profit, it has led to the following:

a) Continuous increase in tariff without Commensurate electricity supply the

ordinary consuming masses are at the receiving end as their electricity bills go up
multiple folds. Today scores are incurring huge electricity bills as the new
Distribution Companies (DIS COS) tariffs have continue to go up and leaving
huge dent in the pocket of toiling masses.Increment in tariffs and outright
deregulation are part of the consequences of the privatization of PHCN the
argument of the government according to Ayode (2012) is that the price increment
and total deregulation of electricity tariff would attract the “Foreign investors”
however, the privatization program has already entered into major crises as
anticipated there has not been in flow of the so-called foreign investors who
supported to come in with huge foreign exchange to save the power sector in
Nigeria.
b) Another concern is that the companies are owned by the few political elites and
their fronts (past presidents; Governors, Ministers to government contractors etc).
The same elements that was responsible for the crisis in the first instance. Most of
these companies have no experience in the power sector and little or no capacity to
manage the power sector.
c) The companies have not enough financial resources to meet the massive capital
requirement; Nigeria’s electricity sector requires huge capital to reagitate the
transmission and distribution network on order to be robust enough to meet the
national electricity demand.
d) There is no effective and fair regulation of the prevised power sector. Since
privatization take place in 2013 there have been numerous infractions; non -
compliance with extend rules and regulations, arbitrariness and impurity persist in
the Nigeria electricity industry.eg. unwillingness of the DIS COS to provide
prepaid maters to ensure appropriate pricing of electricity, instead still relies on
estimated billing, which is not justifiable, despite their overt malpractices. NERC

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 has been unwilling to enforce its authority as a regulator by applying appropriate
penalties and sanctions.
e) There has a conflict between TCN and DIS COS over local rejection allocated to
the DIS COS while NERC have refused to penalize the DIS COS for their mal
practices.
f) Transmission company of Nigeria TCN which is still owned by federal
Government have no willing capacity to transmit the total generation capacity
present. The operational capacity has dropped by 33 percent.
g) The lay-off of staff in the sector after privatization had led to under staff in the
sector thereby over labouring the which does not commensurate with their wages.

RECOMMENDATIONS

Having identified examined the power sector reform programme and the challenges
facing the nations privatized electricity industry in it is evident that the power sector has
delivered below expectation of Nigerians. In view of these, privatization cannot be seen
to be a one-off concluded programme. The following recommendations would suffice:

 The electric power reform act 2005 should be amended to prevent the ruling elites,
their business affiliates and fronts from hijacking subsequent tender and bidding
process to their advantage.
 Government should encourage the states at their level to initiate off- grid mini
power generation from renewable energy e.g., solar power and wind power serve
rural areas since their load demands are little.
 The electricity industry should be made attractive to foreign investors and lenders
who can meet the massive capital requirement of the industry.
 The present power grid system in Nigeria is very weak; there is critical need for
the TCN equipment to brought to an optimum operating condition so as to
accommodate the present generation capacity; this will strengthen the grid system
thereby reducing power outages (i.e., frequent system collapse).

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 The Nigerian Electricity Commission (NERC) in conjunction with Distribution
companies (Discos) should agree on deadline after which most if not all electricity
consumers in the country will not be billed if not provided with pre-paid meters.
This will mitigate the present incidence of estimated/outrageous billing.
 The Nigerian Electricity Commission (NERC) should not hesitate to enforce its
authority as a regulator by applying appropriate penalties and sanctions to those
who violate the rules, regulations and guide lines of the electricity market. This
will reduce, stop load rejection, level of impunity and arbitrariness in the sector.