By Biodun Olamosu
Introduction
The electric power industry is associated with economic development of any country. For industrial development to take place, the development of social infrastructures, including the provision of regular electricity must be taken for granted. Electricity is also of vital importance in commercial institutions and residential areas to stimulate life for welfare purposes. So, it is a necessary commodity that individuals, firms and other social formations can hardly do without.
Its introduction to the polity started with the advent of colonial administration in Lagos in 1886, when two generating sets were in place. Mining industries across the country including the Mining Company in Jos had electricity in the early 1900s before many locations in London. Other companies including Shell, NASCO (Jos), African Timber and Plywood Companies of Warri and Sapele also generated their own electric power.
Electricity supplies energy to households or for production purposes in the industries and for artisans. Electricity generation includes thermal gas power stations such as that of Egbin, Sapele, Afam i-II and Delta I-III stations. It also includes hydro-electric power like the Kainji, Jebba, and Shiroro dams. These depend on rivers for generation. Other types of electricity generation including solar, coal, nuclear and wind are known in other parts of the world but are yet to be exploited widely in Nigeria.
Historical Background
The Electricity Corporation of Nigeria (ECN) was established in 1951. Later, the Niger Dams Authority in charge of the major source of electric power solely responsible to serve the entire country for a long period of time was established in 1962. By the year 1972, NDA and ECN were merged to be named National Electric Power Authority. NEPA was then charged with the responsibility of generating, transmitting and distributing electricity for the whole country.
All of this changed in 2005 when the government came up with the idea of unbundling NEPA that was later named Power Holding Company of Nigeria (PHCN). The objective was to commercialise and privatizing other branches of electric power establishment such as generation, transmission and distribution functions.
State of Electric Power
Nigeria population has increased from about 50 million at independence to over 220 million today, while gross domestic product now stand at nearly $400 billion. This put her above any other countries in the sub-Saharan Africa as the largest economy. With this statistics the country is required to be in need of electric power far above what are available to it. It is disturbing to note that in 23 years (1999-2022) electric power generation only managed to crawl from 2,000MW, to 7,500 while distribution now stand at 5,000MW and transmission at 8,100MW.
This is far from the government’s planned target for the year 2020 put at 40,000MW that is even below expectation. In its expectation, United Capital Plc put this at 180,000MW. The latter seems reasonable taking into consideration volumes of Nigeria’s economy and population. In comparing her status in this regard with other African countries, it does not justify a record of fair performance. In the case of South Africa with a population of 80 million, the country consumes not less than 80,000MW per annum. Others that include Ghana and Tunisia with less population are ahead of Nigeria as they are able to produce twice and ten times respectively the volumes of electric power being consumed in Nigeria.
The major problem associated with the industry is that of poor investment and management. The machinery in use was already old and dilapidated while refurbishing were hardly being undertaken. Definitely the industry is in dire need of huge investment for capitalisation and this becomes imperative in order to reposition it to meet the needs of the moment. There is hardly any other way out than to update its investment propensity as the industry is strategic to the nation’s industrial progress.
See Table 1 below that illustrates the level of old and dilapidated equipment in use in the generation and transmission of electric power in the system.
Enough finance can be raised from revenues generated from oil in order to diversify the economy in this way. Unfortunately, successive governments only pay lip service to diversify the economy while not doing anything near this in practice. Apart from the finance required to procure necessary machineries needed for this purpose, the country is blessed with various natural resources such as rivers, wind, sun, gas, fossil fuel, coal and labour (skill) that could be harnessed in generating further electric power to bridge the huge gaps needed. Report confirms that nothing less than $2.5billion worth of gas available in quantum of 2.5billion cubic feet are being flared off on the field without plan for its preservation. The attitude of the authorities in allowing such wastage to pass could be traced to the abundance of gas in reserve than they could cope with. Gas reserve for the country is put at 124trillion cubic feet. The worst scenario is the case in respect of the solar – sun that we hardly think of any useful purpose of how to harness it for our own use. Such country as Germany that do not have as much sun as Nigeria and other countries in the Tropics, rely on this for a significant portion of their electric power needs.
FAILURE OF THE ELECTRIC POWER INDUSTRY
The blame game coming from the ruling elites on the failure of electric power supply has to be put in perspective. This is because the failure does not come by because of its role that is meant to serve the needs of the masses. The corporation in the main beyond the official narratives, it has always meant to serve the purpose of the elites that own industries, commercial firms, and households; while rural areas and the poor even in the cities were denied such services. This is largely for reason that the poor could not access the product as they could not afford to pay for it. This means that the subsidies offered by the corporation all those years in the pre-SAP period were meant to accentuate the interest of the elites in wealth accumulation. So the loss that the neo-liberalists are talking about in respect of ECN and NEPA came about in the service of the ruling elites. See the Table 2 below to confirm this truism.
One other reason for the draining of the corporation’s resources that made it difficult to break-even how much less gained profits had been because of the managements or authorities in place to control and administer the affairs of the corporation along capitalist orientation. Such managements are reflection of the image of the ruling class that they were there to represent with their associated philosophy of primitive accumulation. So such failure did not come about for reason of being run along the orientation of Public Utility Corporation but one that was at variance to it in satisfying the interest and ideology of individualism. If it is otherwise, the workers that were responsible in carrying out the day-to-day business of the organization would have been involved in its management and control.
We therefore have to understand where those excuses are coming from and for what purpose. The neo-liberalist agenda that brought in place structural adjustment programme to address the situation were out to find means of capitalizing their enterprises and the state being affected by capitalism in crisis. So the same story across the world became the new order. Nigeria was not an exception in placing its heritage – assets for sale in the market at a giveaway price. Not a few of the present generation of the ruling class benefitted from this new way of empowering their members. This is the more reason none of them could be trusted against neo-liberalism as this is where their fortunes come from. Even when after 20-30 years the situation has been worse rather than being improved upon.
In characteristic of Nigerian elites in business that benefitted and lack long time investment culture, report has it that some of them sold what they bought as scraps while the estate portion of it – land and buildings were sold many times over the purchasing price of what they bought without adding value in whatever way to it. The various conditions in place as legal basis of carrying out the privatization processes were neglected.
This was unlike what happened in Bolivia, where their gas industry earlier privatized had to be renationalized upon the devastating effects of the privatization policy there on the economy. The Scandinavian experience where market forces was introduced but with public ownership was another experience at variance with that of the West that Nigeria followed like a copy cat and we are worse for it.
Above all, the whole idea of privatization and neoliberal agenda negate the county’s constitution, the grand norms of our laws. The government led by Labour should have confidence in the working class as reliable collaborators in the control and management of such monopoly corporation like that of the hitherto NEPA to achieve its purpose in providing electric power for the generality of Nigerians either at industrial level, artisans and for households under the policy of discriminatory price system without declaring a loss. So what is needed to reverse the multiplicity of crises confronting the country in all facet of life such as the case of insecurity, poverty, unemployment, underfunding of education and health, poor pay, etc. is to have pro poor government with attending policies that will be able to mobilize the working class along economic development.
Proper economic planning on scientific basis would be required like before and this will need to be followed in details. It is unimaginable for a serious government to think of depending on the private hands for viable economic result as it is impossible to control what you do not own. The present government like its predecessors will be disappointed on depending on Dangote oil solving the problem in the oil industry. If Dangote could do this, he would have checked the increasing price of cement where he is enjoying more or less a monopoly presently. There is also the need to correct the perspective associated with Obasanjo praising the experience of the Asian Tigers in their march towards industrial development but fail to understand how this was achieved by way of public ownership and regulation.
The hypocrisy of the capitalist state could be attested to by the way they switch at their convenience to adopt nationalization of industries when the system is in crisis by using the state apparatus to bailout private sector. When the situation is otherwise in the absence of crisis the capitalist state could not see the need for the intervention of the state as business are serving the best interest of the rich while they are ripping abundant profits at the expense of the poor that are not well served at such period.
The social inequality that is huge in defining the class relationships in the country is an important issue on how to move the country forward and change it for better. This is hardly discussed by our ruling elites, unlike in other climes where they put check on the rich to avoid monopoly. In our own clime, the poor income earners and self-employed in small business pay taxes only, while owners of big firms are given tax holiday.
Unemployed (under) just like the huge resources that go into corruption and unexploited natural resources are instances of wastage to the economy. This is against the situation when more hands are employed and well remunerated, it is on the basis of this that purchasing power can be guaranteed; upon which businesses, industries and commerce can strive and sales, turnover and profits can be assured.
More than 50 percent of the cause of insecurity and ethnic/religious agitations can be traced to indices of poverty of the able bodied young men and women; unemployed graduates that have been jobless for the greater parts of their lives.
Conclusions
There is no magic in the form of a special economic model that can resolve the problems of the electricity industry and other sectors. We need a proper understanding of the political economy and class relationships. This will allow the causes of economic underdevelopment to be identified and addressed. The current system is beneficial to the elite. While the poor working classes are the ones on the receiving end of the pro rich policies.
The debate on how to address the problem in the sector generally and the industry in particular has been centred on the right price to pay by the consumers and regulatory institutions. The experiences of the past three decades have shown that the neo-liberal policy of liberalising and raising prices has not resulted in improved services. Instead, electric power supply became worse than ever before.
The experience of neo-liberalism in practice is precarious as the private hands invited to participate do not have adequate finance. The government has therefore been charged with responsibility for helping to finance the sector. The private owners and the government are both relying on borrowing from the domestic banks. The domestic banks have been affected by this process and some of them have been declared insolvent on not a few occasions for this reason.
So the whole idea of privatization is nothing but shady deals amongst the ruling class to sell the country to meet their individual and corporate interests while the rest of the poor Nigerians are left to wallow in poverty. The need to seek for alternatives to neo-liberalism is imperative on the basis that this has failed to bailout the system of capitalism since the 1980s.
The electric power industry needs to be addressed for the multiplier effect it would have on the development of the economy and welfare facilities and so the reduction or eradication of poverty. But this can best be approached with the economy being run along public orientation and workers democratic control and management. This was the policy missing from the past experience of public monopoly corporations that only satisfied the interests of the ruling class.
The experience of Sweden and other Scandinavian countries in decentralising management and control of the sector provide veritable evidence to learn from. The only constraint associated with such pro-poor therapy is in having a government with leadership that is selfless and driven by the cause of the poor. Such leaders have to be convinced of this path towards development. The government also has to be forced to resist the pressure from traditional capitalists – domestic and foreign.
My proposal is therefore hinged on the political economy of the country’s underdevelopment. This needs to be understood along with the issues raised specifically associated with the electric power industry. We can then understand why the greater percentage of the population are in poverty and the country remains in darkness.
Biodun Olamosu
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