Eliminating Blame Game in Nigeria’s Power Sector Using Supply and Demand Side Models

Eliminating Blame Game in Nigeria’s Power Sector Using Supply and Demand Side Models

By Mutiu Iyanda

Is the privatisation the way to ensure sustainable power supply to households and businesses in Nigeria? It is obvious that this question was asked before Nigerian government considered privatisation of its national power agency in 2013, while private investors responded in affirmative, highlighting increased efficiency in electricity generation, transmission and distribution as a key benefit of the government’s action.

After the privatisation, expectation among the consumers is that increased efficiency will lead to stable electricity supply within a short period, but the narrative has been changed as the key actors in the power value chain continue trading blames over the corporate structure, government’s regulatory framework and capital impact on value delivery. There are no doubt people and businesses’ hope of throwing away their generating set has been dashed.  Power supply remains the main constraint of over 75% businesses operating in Nigeria. Despite the privatisation, experts and public analysts have not heaved a sigh of relief on the possible solutions to various problems in the sector.

The position of experts remains that Nigeria needs about $20 billion to revamp the power sector. To the civil society organisations, capital is not the problem of the sector, but the corruption which has been the main reason for having Nigerians and businesses in darkness while paying for the price. Is privatisation not supposed to reduce the corruption if total elimination is not possible? Like other private businesses, companies in the sector are expected to deploy their processes for sustainable value delivery and competitive differentiation, while assets and competencies should be used as drivers of profitability.

Actors and the Game

Instead of using processes and competencies for value delivery, analysis has established that players in the power sector engaged in a strategic blame game between January and June, 2019. From the Power Generating Companies to the Public Analysts, resource issues and value creation blame shots were traded during the period. Within the resource issues, generation, transmission and distribution infrastructure were bought and sold by the actors. Government interference, consumers’ debts, distribution and logistics problems were equally traded. As the actors engaged in the game, attack the accuser, denial, scapegoat, excuse, justification, apology and Victimage were employed as response strategies.

When an actor used attack the accuser, it actually attacked the actor(s) that accused it of wrongdoing towards generation, transmission or distribution instead of addressing the main issue preventing Nigerians and businesses from enjoying stable electricity. Denial, excuse and scapegoat response strategies were the centerpiece of reactions when an actor exonerated itself from the problem identified by another actor. As an alternative to clemency, analysis shows that an actor justified the issue raised by another actor leveraging internal and external information. Apology was used when actors discovered that they were actually wronged for not being proactive about the issues raised, while Victimage was adopted when it was obvious to the actors that wrongdoing that led to the issues did not emanate from them.

Source: Newspapers’ Reports, Infoprations Analysis, 2019

From the mined and analysed stories, infrastructure, distribution, capital and logistics blames were traded mostly during the period. Justification, excuse, scapegoat and Victimage were the dominant response strategies employed by the actors.  Out of 156 blame shots identified in the data, actors such as the Nigerian Society of Engineers, journalists, public analysts, consumers and other professionals traded over 39% of the blame shots. The Power Generating Companies (GENCOs) followed closely with 23.71% of the shots, while the Electricity Distribution Companies (14.74%) and Transmission Company of Nigeria (8.33%) occupied third and fourth positions respectively. In terms of response strategy, GENCOs overtook other actors (Nigerian Society of Engineers, journalists, public analysts, consumers and other professionals=23.66%) with 34.35% of the 131 response strategy actions found. DISCOs and the Federal Government followed by 12.97% and 9.16% of the response strategy actions respectively. While GENCOs preferred justification, excuse and scapegoat strategies, other actors (Nigerian Society of Engineers, journalists, public analysts, consumers and other professionals) prioritised justification and excuse.

Source: Newspapers’ Reports, Infoprations Analysis, 2019

Making Sense of Resources Issues

Consumers and the key actors need to make more sense of the insights generated from the issues that led to the blame game during the period. This is better understood within the Global Competitiveness Index. Since delivering and capturing value in the sector requires inputs from the supply-side and demand-side, strength of investor protection, intensity of local competition, government efficiency, the burden of government regulation, quality of overall infrastructure, quality of electricity and venture capital availability were chosen from the 2018 Index for supply-side. The demand-side had buyer sophistication, quality of demand conditions and degree of customer orientation.

Looking at these indicators, this piece hypothesized a significant variation in supply-side competitiveness indicators as a determinant of the blame shots. From the model, analysis reveals that SSC explained 94.80%, 70.80% and 55% variation in distribution, capital and infrastructure blame shots. The key lesson from the models is that the actors need to address the blame shots with the specific consideration of the indicators within the SSC. Holistic solutions to the blame shots depend on the proper diagnosis of the issues contributing to the country’s poor rankings within the indicators. Failure to address the issues would enhance the issues towards the continuous blame game in the sector in the next four months, analysis suggests.

Source: World Economic Forum, 2018; Newspapers’ Reports, Infoprations Analysis, 2019

Like the blame shots, issues in the supply-side competitiveness need to be resolved before ending excuse, scapegoat, justification and Victimage response strategies being used by the actors. Players need to break defensive attitude and behaviours. Instead, efforts should be on how to solve issues in the sector using collective approach. Government and regulators should have the courage to enforce the enabling laws and rules for the sector.

Source: Newspapers’ Reports, Infoprations Analysis, 2019

 

Source: World Economic Forum, 2018; Newspapers’ Reports, Infoprations Analysis, 2019

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3 thoughts on “Eliminating Blame Game in Nigeria’s Power Sector Using Supply and Demand Side Models

  1. $20 billion won’t revamp the power, the generation component alone can take all, it’s even not enough for additional 20GW, so we need to model the financing better. And for the civil society organisation to opine that capital is not the problem but corruption, says a lot about how we trivialize serious issues, and then use that toga of corruption to make them look so simple to address; sorry, capital is the major problem. If anyone is willing to write cheque of $50B, then you will see that capital has always been the problem. All the bickering and blame game is simply because there is no enough money to go round.

    The same thing happening in the power sector is what we should have been experiencing in the fuel (petrol) market, but because the government has been writing the cheques, we somewhat think the situation there is different. Let the government stop payment of subsidies and still go ahead to fix price of petrol; then you will see another collapse there.

    All the problems in the power sector are man-made, but in our selective judgements, we choose whom to blame at any given time, everyone is culpable, no one exonerated!

    The billions will come once we can guarantee that the sector is profitable, that’s not the case yet.

    Reply
    1. “The same thing happening in the power sector is what we should have been experiencing in the fuel (petrol) market, but because the government has been writing the cheques, we somewhat think the situation there is different. ” Paralyses everywhere which is unfortunate. I do hope govt finds answers especially now we have joined ACFTA.

      Reply
  2. If we are complaining of bad power supply as consumers; are we paying our due ? The government of the state are enacting electricity regulations with prejudice. Also, the investors are exploiting the innocent citizens from their scarce resources at all cost.

    Reply

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