Nigeria – “The national grid is now our second backup”

Nigeria – “The national grid is now our second backup”

I just finished reviewing monthly updates on our business. One line was humbling from one of our offices: “The national grid is now our second backup”. That is from my Owerri (Nigeria) office. They added a second generator as it was evident that national grid had gone. I looked at the fuel cost; I sobbed.

Mr. President: you need to give Nigeria, Nigerians and Nigerian businesses constant electricity. We cannot continue this way. It is not your fault but you promised to get this done. Mr. President, declare a state of emergency on electricity and do all necessary to provide power to our economy. Power is a catalyst Nigeria needs. If you just get it done, you will see an exponential impact in whatever policy the nation is working upon.

Yes, farmers will move into farming some crops knowing that they have cold rooms to preserve produce. Bricklayers will work in the day instead of praying for light to come. Mechanics, shoemakers, engineers, doctors, accountants, etc will be working for Nigeria and you (our President).

The problems are huge because the paralysis has taken years to morph. I have explained some of the components but we can only write. You knew about these issues, and you did promise to get the job done. Please do. We desperately need your help. I do not want to see generator as an asset in my financials!

The SMEs need power to run the economy. But discos would need the help of some of the big manufacturers who typically are the cheapest to serve and usually most profitable to link into the network. But for this to happen, those major players would expect the discos to demonstrate reliability before they commit to national grid. If we do not manage this interface, what would happen is to expect discos to become profitable by serving the masses (typically expensive due to higher marginal cost). Most times, that does not happen. The business of power utilities is hard: only two utilities are profitable in Africa.

Yes, market forces can re-balance this when other companies that can tap into a reliable national grid to offer competitive products which are obviously cheaper due to lower power costs arise. When that happens, the companies which generate their own power may be challenged to abandon that practice and then connect to national grid. They would make those decisions based on market forces and nothing more.


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