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Opinion / Editorial

Nigeria’s Energy Crisis And Rising Cost of Living

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By Jide Ojo

Will I be right to say that Nigeria’s energy crisis has defied all solutions? I have this nagging feeling that this albatross of successive Nigerian governments is set to shame the Buhari administration. While Nigerians have grown used to not having public electricity supply from time immemorial, the phenomenon of fuel crisis reared its ugly head in the early 1990s. Before then, Nigerians never had to queue for Premium Motor Spirit popularly called petrol and allied products like kerosene, diesel and aviation (Jet A1) fuel. Perhaps, that was so because many Nigerians at that time did not have personal cars while generators of all sizes were yet to be introduced into the Nigerian market from Asia.

I recall that before the shipment of generators to this country, whenever we witnessed the frequent seizure of public power supply, we cursed, sulked and resigned to fate. Only the transistor radio could be powered by batteries, not television sets and other home appliances like bulbs, electric cookers, sound systems, air conditioning systems and fans. Some smart business moguls saw a “goldmine” and went abroad to import generators of various shapes and sizes. In a short while, the entire country was flooded with these contraptions and ever since we have become addicted to them for our daily survival.  That significantly increased our fuel consumption. Because there was no public electricity supply, every family started saving up to buy generators.

Ordinarily, the volume of fuel we need for domestic consumption should not be a problem. It is a natural resource found on our soil. However, we lack the technology for exploration and refinement. Thus, we prospected for foreign investors and licensed them to explore our crude oil while the government set up four refineries to process the explored crude into finished consumable products. The rationale behind our current energy crisis lies in our government’s crass inefficiency. Successive administrations failed to carry out a Turnaround Maintenance on the existing oil refineries under its control as and when due. With the growing population and increasing demand for petroleum products, the weak and comatose refineries in Port Harcourt, Warri and Kaduna could not meet local demands hence the resort to export of crude oil for refinement only to import the same at huge cost for domestic consumption. Note that in all this, the exploration aspect dominated by foreign investors like Shell, Total and Agip were meeting Nigeria’s Organisation of Petroleum Exporting Countries’ quota.

Nigeria’s behemoth called the Nigerian National Petroleum Corporation is a colossal failure. It has failed to live up to its core mandate. Of course, it serves the pecuniary interest of the Presidency and key government officials who use the corporation to achieve personal financial goals for selfish ends. The NNPC is corruption personified. One needs to read the Nigerian Extractive Industries Transparency Initiative published reports to appreciate the magnitude of economic heist perpetrated by the operators of the NNPC.

Let’s connect the dots between petroleum products and electricity. Nigeria’s first effort at electricity generation was through the establishment of hydro power corporations in Kainji and Shiroro dams in Niger State. As efforts were made to diversify sources of power which could be got from coal, wind, gas, water and sun, decision was made by government to embark on the construction of thermal power plants with the aim of using our abundant gas resources much of which is being flared to generate electricity. That decision gave birth to thermal stations at Egbin, Geregu, Omotosho, Alaoji, Aba, Olorunsogo, Ibom, Ihovbor, Okpai, Calabar, Omoku and Egbema, among others.

Unfortunately, there were intractable problems with gas supply to power these thermal stations. First is the problem of appropriate pricing of gas. These thermal stations, we are told, are unwilling to pay competitive price for the gas supply to them because of government regulation of the electricity tariff. That has been largely resolved by the Multi-Year Tariff Order put in place by government some years ago. The more lingering challenge now is that of vandalism of the gas pipelines by some economic saboteurs.

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While gas shortage to our thermal stations present clear and present danger to our goal of achieving self-sufficiency in electricity generation, it is not the only problem. There are other challenges such as the very weak transmission lines; energy theft by electricity consumers; refusal of consumers particularly government Ministries, Department and Agencies at all levels to pay for electricity consumed; the inability of electricity companies to provide pre-paid meters to ensure appropriate pricing; lack of technical, financial and managerial competence by licensed operators in the power sector, among others. A school of thought believes the cabal milking the country through importation and sales of generators are behind the vandalism of the gas pipelines.This may not be untrue.

As with electricity, carrying out successful Turnaround Maintenance has become impossible with the Ministry of Petroleum Resources and its cash cow, the NNPC. Efforts to attract private investors into the processing of crude oil into refined products have not been successful too. This is largely because of policy inconsistencies of the regulatory agencies coupled with government stranglehold on the sector. Worse off is the introduction of petrol subsidy which has remained ineffectual in cushioning the effect of rise in the cost of crude oil in the international market. Many unscrupulous businessmen have been collecting subsidy for refined petroleum products they did not import or under-supply. Those licensed to build private refineries in Nigeria are afraid that with government overbearing influence on the sector they may not be allowed to charge cost recovery price to enable them recoup their huge investment. That is why only Aliko Dangote is brave enough to damn the odds by building a private refinery in Nigeria at present. Other challenges being faced include pipeline vandalism, illegal oil bunkering, and high cost of doing business in Nigeria.

The unsavoury impact of the energy crisis on the Nigerian masses is more worrying. The ugly phenomenon has made the cost of living to skyrocket. While public electricity supply has defied all logic despite over $16bn investment in the sector, the inability of Nigerians to access petrol for their cars as well as other commercial and domestic uses has made life unbearable. These have made many small and medium enterprises to collapse thereby compounding the worsening unemployment situation in the country. Those entrepreneurs whose businesses are tottering on the verge of collapse are finding it difficult to pay workers’ salaries even after rightsizing and downsizing their work force. Government workers are not faring any better. Many state governors and local government chairmen are owing their workers a backlog of salaries all because of the fall in the price of crude oil in the international market.

The economic distress has concomitantly led to social dislocation with many marriages on the verge of collapse due to the breadwinners’ inability to cater for their families. Many children have dropped out of school.  Many avoidable deaths are happening because people do not have the financial wherewithal to access health care services. The phenomenon of suicide is also on the increase. High dependency ratio by the few who are working has worsted lives of average Nigerian employees. Man-hours are lost at filling stations queuing for petrol. Unwholesome storage of petroleum products by end users have equally led to many fire incidences with human casualties.

Follow me on twitter @jideojong


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