Teaching Comparative Government and Politics

Tuesday, August 26, 2014

A partial explanation

Nigeria seems unable to produce electricity. Public utilities, subsidies to government agencies and private corporations have done little to make things better. Timi Soleye, a business consultant, offers this explanation.

However good and interesting it is, I have two problems with it. Nowhere in his explanation does he approach the problem of corruption. He doesn't even try to ask or answer the question of who walked off with the millions of dollars worth of public spending on power generation that have produced little more than concrete foundations of planned power plants. And, he claims, ironically, that Nigeria is the greenest country on earth because it generates so little electricity. He ought to take into account the pollution produced by the hundreds of thousands of small, diesel-powered generators used by people to produce their own electricity.

Why Nigeria Generates So Little Power

Nigeria is the greenest populous country in the world, but it is so entirely by accident. We fuel a population north of 170 million -- the seventh largest in the world -- on an available installed grid electricity generation capacity of fewer than 6GW…

[T]he average Nigerian, who uses 136KWH per year, consumes just 3 percent of the power of the average South African, 5 percent of the average Chinese citizen and, under a quarter of the average Indian…

In Nigeria only one in four have access to the grid, and of those that do only a small minority have supplies of electricity for more than a few hours a day. "Epileptic" power outages are characteristic of a sector starved of investment: first as a state-owned monopoly and now, following privatization, from poorly conceived price controls and private regional distribution monopolies that have scared away necessary capital, impeded competition and discouraged new entrants to the market…

The newly established Nigerian Bulk Electricity Trading plc (NBET) is now the sole purchaser of power from the national grid. It would seem its only purpose is to obstruct development in the power sector. The NBET fixes the price at which power is sold and the internal rate of return (IRR) for power projects.

If we baked bread like we generate power then we'd starve…

This means that in Nigeria the majority of electricity is generated by expensive small private diesel and petrol generators, and if a household cannot afford a generator they go without. Ironically then fixing the price and profitability of power does not just create shortfalls in supply but, in aggregate, results in some of the most expensive electricity in the world; which most Nigerian's can scarcely afford…