Nigerians Count Losses From Electricity Grid Collapse

3D Electric powerlines over sunrise

BUSINESS outfits across the country and the generality of Nigerians are still counting their losses from the collapse of the national power grid on Monday.

The energy component of production cost alone has gone over and above the pre-power grid collapse of 40 per cent, industry sources said yesterday.

Transportation fares and food prizes have also risen sharply on account of the current fuel scarcity.

Government officials have been vague in their responses to inquiries on how soon the problems would be solved, although Power Minister Abubakar Aliyu said yesterday that the Federal Government planned to restore and add 2,550MW to the national grid after the latest system collapse.

He said the gas pipeline affected by acts of vandalism has been restored and the Okpai power plant has resumed power generation and is currently contributing an average of 300MW.

The Director, Learning and Development/Projects at the Nigeria Employers’ Consultative Association (NECA), Celine Oni, described the national grid collapse as worrisome and unfortunate for the nation.

Many businesses, according to her, have been “forced to incur huge costs in the provision of expensive back-up in order to minimise the expected outage costs.”

She said: “The average costs of this alternative are three times the cost of publicly supplied electricity. Currently, most large companies, just like small and medium scale enterprises (SMEs), have to bear heavy costs for the installation and maintenance of infrastructural facilities, which ordinarily is the responsibility of the government.

“This makes the prices of goods and services high and therefore uncompetitive when compared with other West African countries.

“Already, the closing of huge numbers of manufacturing companies in recent times have worsened Nigeria’s growing unemployment rate as the workforce immediately become frontline victims.

“It was tightly estimated that over 40% of production cost by Nigerian businesses goes into production/generation of energy. However, with the rising/skyrocketing prices of gas, diesel and PMS, the cost in generating electricity by businesses will aggravate further, making their products becoming non-competitive with their counterparts elsewhere.

“With the opening of international borders through the implementation of the Africa Continental Free Trade Agreement (AfCFTA) and other trade protocols, survival of Nigeria businesses is becoming more disastrous.”

Her views were corroborated by Dr. Muda Yusuf, an economist and erstwhile Director General of the Lagos Chamber of Commerce and Industry (LCCI), who said ”this is about the worst time such a thing should be happening. It has shot up a lot of costs.’

He added: “The fall back option is very expensive. When cost goes up, it affects turnover, sales, profit margin, and the wellbeing of the people is also affected. It also drives inflation.

“In the last one to two years, Nigerians have been lamenting the high inflation rate. This is because once there’s inflation, the cost of everything goes up astronomically. Both on the side of the citizens, businesses are badly affected; it has been very tough for small businesses and not many of them can survive this for too long.”

Energy expert at the University of Ibadan, Prof. Adeola Adenikinju, stated that the prevailing development would drastically affect businesses and households.

“It will further worsen the economic situation. If both energy shocks last for a longer-term, then they would lead to an increase in price inflation and drag economic growth,” he said.

Investigation by The Nation revealed that some of the deposit money banks have begun to ration the use of diesel to reduce overheads and as part of cost-cutting measures.

Staffers of some of the banks who would not be named confided in The Nation that the protracted power cut has a huge implication on cost of daily logistics such as procurement of diesel and other alternative energy sources.

“These days, most of the deposit money banks are rationing the use of diesel and other alternative sources of power supply. With the huge cost of procuring diesel, this measure is in order for now,’ a source said.

Another source in one of the banks said: “Running cost, especially power supply has been at a huge cost to banks. As such, many are now rejigging their operations with cost reduction as their core.”

FG plans addition of 2,550mw to grid, says Power Minister

In an update yesterday on the electricity supply system collapse, Power Minister Abubakar Aliyu said the Federal Government planned to restore and add 2,550MW to the national grid after the latest system collapse.

Aliyu had convened a meeting on Monday to discuss the restoration of normal supply of electricity supply nationwide and the development of a framework for sustainable improvement of supply.

Aliyu said the progress so far made includes the restoration of the vandalized gas pipeline and resumption of power generation at Okpai.

He said the Nigerian Bulk Electricity Trading Plc had been directed to enter into fast-track negotiation with NAOC on an interim energy sales agreement with a view  to bringing the new Okpai Il power plant on the grid thereby contributing additional 400MW of generation capacity.

According to him, “in order to optimise the capacity utilisation of the power plants owned by the Niger Delta Power Holding Company Ltd (NDPHC), the Nigerian Electricity Regulatory Commission has approved a special gas pricing for emergency contracting of gas from the Nigerian Gas Marketing Company Ltd.

“We expect an on-grid improvement of about 800MW generation capacity from the NDPHC plants.

In the medium term, we have agreed with NGPIC (…a subsidiary of NNPC) on the framework for the overhaul of the Okoloma gas processing plant thereby restoring the full capacity of the 650MW Afam VI combined cycle power plant.”

He explained that while the recent spate of system collapse is regrettable, it was a direct consequence of a snap on a 330kV transmission line.

The mitigation measures for avoiding such incidence of blackouts are being implemented through several interventions including the Presidential Power Initiative. NATION