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Economics Of Electricity

September 6, 2015

I remember the end of 2009 when the Nigerian Attorney General announced that Nigeria had achieved the set 5-GigaWatts power generation. I told a friend, “Oh! I did not know that was the way; it is achievable then! Just announce it and it is done!”

Last weekend when I heard that Nigeria was close to 5-GW finally, I felt like shouting that it was not true! But then, the light just doesn’t go off again! It just stares at you night and day! I began to imagine the merits and the demerits.

MERITS:

  1. Success breeds success! For achieving 4.8-GW, the guys are now determined to hit 5-GW! And they are so going to hit it because they were at a meagre 2.5-GW about 3 months ago, coming from an all-time low of 175-MW four months ago! J
  2. Health effects. There are easy-to-overlook health benefits of this. First, may we never hear again of surgeries impossible because of power outages. May our homes be as quiet as this forever, free from the noise of generators. May we always sleep well at night. May the carcinogenic (Cancer-causing) fumes of diesel and petrol be gone forever from our bedrooms! Sleeping well is key to good health.
  3. Economic advantages. First, businesses will no longer spend 90% of their profits on diesel. That means they can talk about growth and business expansion in real terms. Also, citizens would spend less on personal power generation. Employees / citizens would then have more disposable income to patronize businesses. Businesses would produce more and employ more people who would then increase production and spending.
  4. Charity. In 2006, a Lagos church had a diesel budget of N11million. I can imagine that it has now gone up to may be N22million. If that money is set free, more hungry mouths will be fed, more street children will be rescued, more public schools will be upgraded by that church that is already contributing so so much!
  5. Less Fire Calls. My community is prone to power surges. Heavy ones! But since the power became stable, we’ve not had a single one! Power surge is the number 1 cause of building fires in Nigeria. They destroy and kill; but now, we can sleep with both eyes closed. Furthermore, we store less fuel now!
  6. Security. I got talking to a military man one day and asked why he lights up the whole premises at night. He explained that once the whole place is bright, no marauder would approach the light. Now our communities are better lit…and hopefully, safer!
  7. Food. First, at this time, you are not likely to buy dodgy fish or chicken, refrozen! Then you don’t have to throw away the food you spent hours cooking—food has stopped spoiling!!
  8. Road Transport. With less fuel consumption, we will have less fuel deliveries, and less fuel tanker accidents on the road!
  9. Jobs. On one hand, one tends to think that less consumption of petrol leads to job losses. But that may not be true. There are too many derivatives of crude oil for us to create numerous jobs. When we had Tyre factories in Nigeria, they still had to import carbon black, a derivative of crude oil. Are you reading this on a computer or phone? It contains more petroleum products than you can imagine. Hope you are not sitting on a plastic chair, and wearing rubber/foam slippers. And your car doesn’t use rubber tyres? It’s like we have been eating PONMO and complaining about how expensive leather materials are!
  10. GCE results. Students will now study at night with sufficient lighting, less headaches and better understanding.
  11. Road Traffic. What happens when you are waiting at the red light and instead of going green, it goes off? J Chaos!
  12. Telephony. I remember years ago when telephone calls used to go off with power cuts! Imagine that the GSM companies do not run on diesel, both data and call rates could go down a bit more!

 

So what are the demerits? Sadly, there are!

  1. Job cuts. The generator technician on my street is always in his shop now. I really feel for him! No one is servicing generators anymore. I try to warm mine once a week! He will have to transpose his skills to another industry or starve!
  2. Petroleum Marketers. Since we began to have light, our expenditure on Fuel has nose-dived. When was the last time you saw a poster on your gate with a phone number to call for home delivery of diesel?? Times have changed!
  3. Generator Merchants. When we needed generators, solar panels and windmills could have been provided. But short term gain was the only consideration and now… the party is over! They still don’t have to lose. The demand in Nigeria of today is calculated at about 10.5 GW and generation is only about 5 GW. I believe the 10.5 GW includes many Nigerians who are not yet on the national grid. So there is room to supply renewable energy. Besides, as things become calmer and businesses begin to grow, 10.5 GW will start shifting upward. However, the sun and the wind are free, and where gas is available, it is cheaper than diesel.

 

I can’t seem to think of as many demerits as merits. I hope it’s not over-optimism. But it appears there is much more to gain than to lose in having good power supply. So the next time you see an uncle lamenting being broke because subsidy payments have gone down, ask him to account for the so much he has got, else, it is not worth our investment.

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4 Comments
  1. Very beautiful piece…by far more than most of recent. Good one.

    Rather than we start bickering over who or to whom this clearly evident progress should be attributed and we politicise as we are prone to do almost everything, let’s just focus on how we can sustain the tempo…indeed increase it until in our lifetime we have children who grow up NOT knowing what it means to shout NEPAAAAAA.

    God thank you for Nigeria and lead us all the way to the promised land. Amen.

    Like

  2. adegbuyi oluwatosin permalink

    Sir,
    the Piece is on point,all we actually needed was a sincere will and believing things will work and then anything will be possible.
    For me, I see the demerits as a wake up call or should I say a means for advancements. if all concerned knows they are going to be knocked out of market then let them use the loads of cash they have stashed up and diversify. we have loads of sectors not yet exploited.
    God bless Nigeria.

    Like

  3. Monike permalink

    These are all good. But in some areas currently experiencing rapid growth, it was not anticipated, hence the light infrastructure has not been upgraded for eons, and it cannot cope with the supply. I have not had light for over a year in my area because of this infrastructure issue. What are the DISCOS doing about that? It is so frustrating, we just ignore now. My generator, elemax, bought it about 18 months ago, 300k, it’s already needing a change, I use it every single day! Some of us are suffering o, not enjoying what the rest of Nigeria is enjoying, and NERC doesn’t care, because we have written

    Like

  4. jjf permalink

    Thanks for the balanced view. Let’s hope that Buhari’s government will see this and double efforts to take us to the next level. Warm regards.

    Like

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