Energy Supply And The Nigerian Economy

culled from GUARDIAN, March 13, 2005

The importance of energy in the development process of any nation is well-known and cannot be over-emphasised. Adequate energy is an important factor in the production process and an indispensable factor in social and economic development and overall quality of life of the population. Unfortunately, the supply of electricity, undoubtedly, the key energy source for industrial, commercial and domestic activity in the modern world, falls short of demand in Nigeria.

There are three basic infrastructural facilities that must be in place before any economy can thrive. These are energy (mostly electricity in the case of developing nations), water and good roads. Since we lack virtually all of these in Nigeria at present, it is not difficult to fathom why the economy is constantly in a state of distress. Aso Rock loyalists will always advocate that our President, Chief Olusegun Obasanjo, has good intentions to turn things around for good. But unfortunately, good intentions alone are never enough. Just as faith without work is valueless, so also is good intentions without deeds. We must be doers and not only speakers and planners. Actions of any Government must translate into benefits for the masses. And since the president has always advocated the 'Nigerian project' he, as the project manager, has responsibility to select a team that will give the client (the Nigerian masses) value for money. The bulk stops on his table.

The set of people managing the Nigerian economy, namely: President Obasanjo, Dr. (Mrs.) Ngozi Iweala-Okonjo, Professor Charles Soludo, Dr. (Mrs.) Oby Ezekwesili etc are no doubt, among the best anywhere in the world. There must be some fundamental latent problems why the economy has remained comatose and the masses, consequently, are being denied the 'dividends of democracy'. Meanwhile, the Government claims that the foundation for future prosperity is being laid and that we might not see the effects until some years from now. Any economic policy being embarked upon should have 'human face' and should be apparent when the expectations would be realised. What is not obvious to all Nigerians is that our economy is being patterned after the economies of the United States and that of Western Europe by the adoption of the 'conditionality' of IMF and World Bank, but without the infrastructural facilities of these countries, such as constant energy supply, water and serviceable roads.

The best way to improve on any economy is by ensuring that all these three basic facilities are available. Any other step such as privatisation, transparency, due process etc, is like putting the cart before the horse and this will not produce the desired effect. After about five years of implementing these policies, no positive results have manifested in any way.

Of these three basic amenities, road, water and energy (electricity); the greatest of them is electricity. It is common knowledge, that without electricity , we may not be able to pump and distribute water, without the same resource, there may be no raw and finished products to move about on the roads. In this modern age of mechanisation, large scale and productive farming depends largely on adequate availability of relevant energy. In the apparent lack of these elements, should we continue to hang unto theories associated with IMF, World Bank, micro and macro economies or should we stop the rigmarole, get back to the basics by ensuring the provision of energy (essentially electricity), water and roads for the immediate recovery of our economy? For obvious reasons, I have decided to narrow down this write-up to the provision of energy, because as explained above, its position will positively affect the other two.

The multi-dimensional role of adequate energy supply was obvious to the present administration when it came into power in May 1999. One major problem this administration promised to solve immediately, was that of electricity supply. In 1999, the total electricity available for use was about 2,000 MegaWatts (MW). Government as at 1999, realised that the minimum electricity requirement for the nation was about 4,000MW and there was the intention to reach that level within one year in office (i.e. 2000). Almost six years later in 2005 the electricity capacity available for use is less than 2,000MW even though as at 1999, Nigeria had a generating capacity of about 6,000MW, made up of 1,900MW from hydroelectric power and 4,040MW from thermal power. It is pertinent to ask why the Government cannot generate at least 4,000MW from an installed capacity of over 6,000MW. Just as our refineries are almost moribund, it is shameful that Nigeria cannot generate enough energy! Sometime in 1999, at the onset of this administration, in an article in The Guardian, I advocated the fixing of our refineries as a first step to solving our fuel supply problems. Six years later, the same recommendation is still valid.

As a nation, there must be a minimum standard of electricity generation and distribution below which we must never fall irrespective of, whatever happens to the water level at the Kainji dam and or the gas supply by the Nigerian Gas Company (NGC). We should by now be in a position to generate and distribute at least 4,000MW of electricity. We must always have alternatives for the bad days because this is what advanced countries of the world do, by adopting strategic plans. For instance, if today, because of political expediencies, Nigeria refuses to sell her crude oil to the United State of America, this will not be sufficient to ruin the economy of that nation since they would have envisaged the situation ever before it happened and mapped out plans to combat it. 'Fire brigade' solutions never endure.

Nigeria, with all the human and material resources at her disposal, has to be classified as poor. I happen to know some of the top managers of the National Electric Power Authority (NEPA). The Managing Director is a first class engineer from a first class institution; in fact, he is one of the best in the world. He has managed a multinational company successfully before coming over to NEPA. The same can be said of all the top managers of the authority. I can therefore guess two major reasons for the present abysmal performance of NEPA. First, it may be appropriate to focus our attention on the planning department of the authority. Quality planning is not only for the immediate (fire fighting approach), but more for the future. The planning section which should be directly responsible to the Managing Director, ought to have analysed the two most vaunted reasons for NEPA's constant failure and provided better alternatives as a way out of the present logjam. We are tired of being told of the low level of water at the Kanji Dam and insufficient supply of gas by the Nigerian Gas Company (NGC). For how long must we continue to listen to the same story over and every time as a way of passing the bulk? Since both excuses are not new, and we cannot live with them for ever, we should be in a position by now to overcome them. And if these prove insurmountable, why should we be ashamed to learn from Ghana and other neighbouring countries? How were they able to overcome similar problems? In addition, we must realise that Ghana has no natural gas, a valuable energy resource that Nigeria has in quantum.

The second is the issue of funding. Though NEPA's management and engineers may be top class, yet if they do not have sufficient fund and freehand to turn things around, we will continue to live in delusion. For reasons that are obvious, NEPA should not be privatised now until it can find its feet. Since the bug of privatisation, brought about by IMF and World Bank, caught up with us, I am of the opinion that most of the top managers and engineers, instead of devoting their energy to the revival of NEPA, are more concerned about their future in the unfolding dispensation.

Though this process of privatisation has been going on for the past five years, yet, as of today, we cannot find the light at the end of the tunnel. I support privatisation, only if it is properly managed. For now and until it can find its feet, NEPA should be regarded as part of the services such as water and roads that should be provided for the people. Even though the populace should be made to pay certain amount as levy, Government should ensure its constant availability so as to empower them to generate the adequate income necessary to bring about the required improvement in their standard of living. With higher income they will be in a position to afford increased tariff arising from privatisation.

Lack of adequate electricity negatively affects virtually all low level workers. These include but not limited to welders, barbers, business centres, refrigerator/air-conditioner technicians, show makers/repairers, laundry workers, tailors, etc. The middle class workers are equally affected. Nearly all small scale manufacturers have closed down their factories mainly due to lack of energy. The few who can afford to buy generators are unable to operate them because of the high cost of fuel. This is perhaps why many hold to the belief that the middle class has been wiped out in Nigeria as a result of our twisted economy, and this situation is dangerous for any society. One can also guess what price the upper class has to pay to provide generators at home, offices and factories. Unfortunately, at the end of the day, these prices are passed on to the low level workers (the end consumers). It is obvious that without the full participation of the low and middle classes, the economy of any nation cannot thrive, no matter how hard the experts try.

Bejide is the Managing Director/CEO EDG Oil & Gas Nigeria Limited in Lagos