Can we decentralize Power generation?

I read with glee that last week between 5000 -10,000 people in Lagos marched to the Lagos State Secretariat to peacefully protest the crippling lack of power in Nigeria. Just a few months ago, angry youth in Zaria had protested about electricity as well. Hopefully the manufacturing sector and private businesses will join in the clamour for something to be done about the disgraceful lack of power in the blind giant of Africa.

I read with gloom that another $4.6 billion as been allegedly spent on power generation this year – this in addition to the controversial $16B which we are told is really $3.6 billion, spent by the Obasanjo administration on the same power sector.

And yet, by all indications it is doubtful if we will get as much as 4000 megawatts by the end of 2009.

As I pointed out in a previous article – ‘PHCN get rid of your freeloaders’; apart from the all pervading selfish interests of a few Nigerians, the problem lies with the Electric Power Sector Reform Act 2005 (the ‘EPSR Act’), the 1999 Constitution and the National Electricity Regulatory Commission (NERC).

States have a right under the Section 14 of the Concurrent List of the 1999 Constitution to generate electricity for areas not covered by the national grid but Section 63(1) of the EPSR Act deliberately restricts this right by requiring State power projects to be licensed by NERC.

Why? Why is it so important for the Federal Government to maintain control over State production of electricity? Why did the Obasanjo administration scuttle the efforts of Lagos State to independently power the State? Could it be because if States take control of power generation it will become glaring to Nigerians that the lack of power that we suffer from is not for lack of solutions but for lack of will?

We know that the Federal Government does not have a monopoly over the process of power generation, so why do the executives act like it does? The Wall Street Journal recently reported that the Bonny Utility Company funded with only $5million dollars in 2001 by Shell, Total, Eni and NNPC has managed to provide its customers with power 95% of the time. According to the article: “clients get power free of charge, up to a certain limit…and now has over 8000 paying customers. The revenue from paying customers covers half of the company’s costs and has created previously impossible public service and commercial opportunities, including a doubling of operations at a hospital”. Since 2005, a similar arrangement is supposedly benefiting the forty thousand people who live in Onelga, in Delta State and more and more of these independent power projects are being executed – badly when government is involved and successfully when managed privately.

The crux: decentralize power generation in Nigeria. As the National Assembly gears up to finally tackle the issue of constitutional reform, at the top of their list should be to give States more constitutional powers. The Federal Government has had close to fifty years to get power (and many other things) right and has failed.

Instead of the ridiculous collaborative arrangement where the Federal Government, States and Local Governments are to contribute billions of dollars from their Excess Crude allocations revenue accounts to the rehabilitation of existing power plants and new power projects under the National Integrated Power Programme (NIPP), why don’t the States get a chance to manage power generation instead of the constant excuses we get from the FG, its Ministry of Power, PHCN and most recently, NERC? Are the States and Local Governments also going to be involved in awarding the contracts and appointing the people who are going to be responsible for executing the projects?

One of the reasons for federalism is to aid development, yet our Constitution has helped to cripple the States so that they are ineffective. From all indications, one of the main issues for consideration for the constitutional review is the creation of more states. Arguably at least one reason why the clamour for more States is so loud is because people are frustrated with the lack of development and think that if every hamlet was a capital and every chief a governor, development will magically appear. What we need is States with more powers – ironically since we model ourselves on the American presidential system, why are we not considering the United States Constitution, which gives the States a lot more power and independence than our States have?

Competition within the States and most critically, at least for now, within the power sector is absolutely vital for the development of Nigeria and Pastor Sam Adeyemi, the organizer of the protests in Lagos sums it up nicely: "We call on the Federal Government to break the monopoly of the Power Holding Company of Nigeria and allow private investors and state governments to generate and distribute electricity. The strategy that worked for telecommunications should be made to work for power supply."

If we amend the Constitution to allow States to generate electricity, we can also simultaneously privatize PHCN and reduce the bureaucracies of having NERC and a Federal Ministry of Power. The difference under this scenario is that Nigerians will not be held to ransom if the usual privatisation process results in the NITEL or petroleum refinery scenarios.

Like anything there are disadvantages to providing the States with more power but the benefits outweigh the risks and at this point in our history, shouldn’t we be ready to try something different? I can predict the naysayers who will talk about uneven development but this is just an excuse for mediocrity – our development is uneven, both within and outside the country. If competition between the States and within the power sector will result in more electricity for consumers, most Nigerians will support this – after all, the majority of us are not benefiting from the inefficiencies of our power sector.