The frequent collapse of the nation’s power grid has become a worrisome development in recent times. It further raises a lot of questions on the state of the power sector reform and the cost to the economy. With the frequent grid crashes, the country has not been able to generate more than 4,500 megawatts in the last six months. This has had its toll on businesses. According to the Renewable Energy Association of Nigeria (REAN), Nigeria has lost over $25 billion or N10.8trillion to grid collapse, while business owners have reportedly spent in excess of $14 billion (equivalent of N6.05 trillion) on generators yearly. This, the association says, is too expensive, fraught with health and environmental hazards.

The economic losses due to grid collapse is two per cent of the nation’s Gross Domestic Product (GDP). According to the 2020 Ease of Doing Business report, 47 per cent of Nigerians lack access to electricity supply, which they say is one of the major drawbacks to the contribution of the private sector to the economy. According to REAN, with 57.7 per cent of the population in the informal sector, comprising the Micro, Small and Medium Enterprises (MSMES), this critical sector makes up about 65 per cent of the GDP and over 80 per cent of employees, as well as 98 per cent of businesses that pay taxes in the informal sector.  Also, most of the MSMEs have identified unreliable electricity as a major challenge to their businesses. A survey of the MSMEs found that business owners are willing to switch to renewable energy with the right incentive and product guarantee.  Undoubtedly, the constant grid collapse is well documented as a major concern for the incoming administration next year, as no sustainable development can occur without a stable power supply.  

The national power grid is a network of electricity transmission lines connecting generating stations to loads across the country. It is designed to operate within certain stability limits in terms of voltage and frequency. Therefore, whenever the grid operates out of these stability ranges, it becomes unstable, resulting in power quality decrease and wide-scale supply disruption that eventually results in grid collapse. The Nigeria Electricity Regulatory Commission (NERC) said that in the last eight months, electricity consumers had been billed N1.12trillion, out of which N750billion had been paid as tariffs. With constant power outages, consumers are most times paying for blackouts. This year alone, the national grid is reported to have crashed seven times. Between January 2010 and June 2022, the nation›s power grid suffered 222 partial and total system collapse. In 2021, it collapsed 24 times, and 28 times in 2016. 

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The crashes had a great toll on the economy. The World Bank has corroborated the REAN findings.   According to the World Bank report, due to poor power supply in Nigeria, businesses lost in excess of N96.4trillion in the last nine years, at a yearly estimate of $29billion. The loss to the economy is almost double the cumulative national budget of N76 trillion from 2013 to 2022. The Manufacturers Association of Nigeria (MAN) affirmed that between 2015 and 2019, about 320 firms had shut down operations as a result of erratic power supply, while scores of others had relocated to neighbouring West African countries. Small and big businessess that depend on diesel for their operations are struggling to survive due to high cost of the product that increased by over 300 per cent between January and September this year.  

It remains to be seen how committed the Federal Government is in revamping the power sector in spite of the huge investment in the last few years. Such investments include the Memorandum of Understanding (MoU) with German-based Siemens and loans from the African Development Bank (AfDB) and the World Bank. The AfDB is partnering with the government on a $410 million transmission project and an additional $200 million through the Rural Electrification Agency (REA) that will make electricity available for the rural dwellers. Besides, in 2020, the World Bank approved Power Sector Recovery Operation (PSRO) loan to ensure the supply of 4,500mw/h of electricity to the national grid. This is in addition to the $550 million loan to the Federal Government to develop more grids and solar systems. 

The question is: where has all the money gone?  There is no doubt that the constant grid collapse has become a national embarrassment that requires urgent solution. Only recently, the Ministry of Power offered a halfhearted solution, saying government was planning to fast-track the purchase and installation of a Supervisory Control and Data Acquisition (SCADA) equipment to reduce the rate of grid failures. Considering the role of power supply to economic development, government should collaborate with private investors to improve the nation’s power infrastructure. The government must curb the incessant collapse of the power grid. Nigeria is endowed with vast oil, gas, hydro and solar resources with the potential to generate over 12,000mw from existing power plants. Effective harnessing of these power resources will avert the frequent grid crashes.