The ongoing crisis in the power sector, particularly the recurring collapse of the national grid, may worsen as more than 28 generation companies get ready to meet with the Federal Government today over a debt of N2.5 trillion.

Following the latest collapse of the national grid—the 11thsuch failure this year—there are indications that the Federal Government, which is considering using promissory notes or tax deductions to settle debts owed to the generating companies (GenCos), may take over a decade to clear these obligations amidst the fragile state of power infrastructure.

The Minister of Finance, Wale Edun, who chairs the Presidential Power Sector Debt Reduction Committee, alongside the Special Adviser to the President on Energy, Olu Verheijen, is expected to engage with the power companies.

Payment records from January to August indicate that, despite an increase in electricity tariffs, debts in the power sector continue to rise beyond initial expectations.

The Guardian learnt that GenCos submitted invoices totalling approximately N256.1 billion in January, of which only about eight per cent was paid. In February, an invoice of N208 billion saw a payment of around 9.29 per cent. March invoices rose to N235.1 billion, with a payment rate of nine per cent.

Payment performance improved in April, reaching 40 per cent for an invoice value of N212.7 billion. In May, the invoice amount increased to N240.7 billion, with a payment rate of 31.01 per cent. In June, the invoice value was N234.6 billion, with a payment rate of 31.73 per cent. July recorded the highest invoice value in the period at N261.6 billion, with a payment rate of about 35 per cent, while in August, the invoice value was N247.8 billion, with a payment rate of 33 per cent.

Although the Central Bank of Nigeria (CBN) has escrowed the accounts of the Distribution Companies (DisCos) to facilitate fund recovery, some stakeholders told The Guardian yesterday that many utility companies have not provided all their accounts to the CBN, leading to revenue leakages that ultimately burden taxpayers. This issue is further compounded by the prevalence of estimated billing, making collections challenging to trace.

Due to a lack of transparency regarding the amounts collected by the DisCos, some stakeholders have called for implementing The Revenue Stream Audit Paradigm (TRAP).

TRAP aims to create a transparent business environment for DisCos by standardising revenue collection and ensuring accountability. It seeks to streamline revenue accounting, benchmarking energy delivered against revenue collected to enhance efficiency and transparency in revenue collection. Additionally, TRAP proposes the introduction of a national e-payment portal for online payments, enabling real-time reporting to regulatory bodies.

Currently, DisCos rely on various payment methods, resulting in multiple accounting streams and a risk of revenue under-reporting.

TRAP has proposed a centralised, bank-only payment system for all transactions, prohibiting cash payments directly to DisCos. Under this framework, banks would handle all customer payments through a customised teller system, consolidating all DisCo accounts within the TRAP framework and subject to oversight from the Central Bank of Nigeria (CBN) and regulatory bodies.

With another grid collapse yesterday, the ongoing issue has severely impacted businesses nationwide, which are grappling with an unreliable power supply and rising operational costs.

The frequent blackouts, the second in November and the 11ththis year have forced many businesses, particularly small and medium-sized enterprises (SMEs), to rely on costly alternative power sources such as generators, further straining their financial resources.

Nigeria experienced yet another national blackout yesterday at 11:29 a.m., marking the 11thgrid collapse this year. Just two days after the previous incident, the blackout raised concerns about the reliability of the power sector.

According to data from the Nigerian System Operator, power generation dropped to zero megawatts (MW) from 2,323.65 MW at 11:00 a.m., affecting all 22 operational GenCos nationwide and plunging the entire country into darkness.

Nigeria experienced 11 instances of grid collapse in 2024, with the first occurring on February 4. This was followed by incidents on March 28, April 15, July 16, August 5, October 14, October 15, October 19 (twice), November 5, and November 7.

The lack of a stable electricity supply has led to operational downtime, increased energy costs, and reduced business productivity, undermining the country’s economic stability. The persistent grid failures have also heightened concerns over power infrastructure, prompting stakeholders to call for urgent government intervention to address systemic failures, increase power generation capacity, and overhaul the sector to mitigate its negative economic impact, especially as the festive season approaches.

The continuous grid collapses have caused significant economic losses, with businesses incurring higher costs to sustain operations amid the steep prices of alternative power sources.

In a statement, the Transmission Company of Nigeria (TCN) attributed the grid collapse to a sudden frequency spike from 50.33Hz to 51.44Hz, caused by issues at one of TCN’s substations, which was subsequently shut down to prevent further complications, according to General Manager of Public Affairs, Ndidi Mbah.

Mbah added that TCN is actively engaged in substantial repair work on several critical transmission lines and substations, including the 330kV transmission lines along the Shiroro–Mando axis, major upgrades at the Jebba Transmission Substation, and restoration of the second Ugwuaji–Apir 330kV transmission line.

She noted that while these repairs and improvements are ongoing, some instability in the system will likely persist until all major works are completed.

“Following the submission of an investigative report on previous grid collapses, we have begun addressing identified weaknesses in the transmission system. Efforts are underway to resolve the issues highlighted in the report and improve overall grid stability and resilience through technical upgrades and strategic interventions based on the committee’s recommendations.

“We acknowledge the impact of these disruptions and ask for the public’s understanding and patience during this challenging period. TCN remains committed to improving electricity supply reliability, recognising the vital role of stable power in Nigeria’s socio-economic development.

“We assure the public that all necessary measures are being taken to ensure the grid’s long-term stability, in line with the recommendations of the investigative committee, while also addressing infrastructure damages, including vandalised transmission lines,” she stated.

The Minister for Power, Adebayo Adelabu, has directed the Transmission Company of Nigeria (TCN) and all relevant agencies within the ministry to immediately implement recommendations from the Inter-agency committee established to tackle persistent grid collapses in the power sector.

According to Bolaji Tunji, the Minister’s Special Adviser on Strategic Communications and Media, the minister emphasised the urgency of implementing the committee’s recommendations, which were submitted on Wednesday, November 6, 2024.

“The committee’s recommendations are comprehensive and aim to offer lasting solutions to the frequent grid collapses we have unfortunately witnessed in the country, both in the short and long term,” he said.

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, told The Guardian that repeated national grid failures are exacerbating challenges for businesses, particularly Micro, Small, and Medium Enterprises (MSMEs). He noted that alternatives such as petrol, diesel, or gas generators are increasingly costly.

He called for a state of emergency in the power sector to address the escalating frequency of national grid failures, which continues to disrupt electricity nationwide, severely affecting businesses and daily life.

Yusuf argued that these recurrent grid collapses have become a critical obstacle to Nigeria’s economic development, with industries bearing the financial burden of relying on costly backup power sources.

“It is almost impossible to operate a business without power, except to a limited extent for small-scale retail traders. For most other businesses, stable electricity is essential, and when you add these challenges to the already high costs of foreign exchange, interest rates, and other business expenses, the impact on operational and production costs is immense. Worse still, businesses cannot simply pass these additional costs onto consumers. This situation demands a state of emergency to address frequent grid collapses and halt their damaging effects,” he said.

Yusuf acknowledged the government’s recent efforts and the establishment of a committee by the Minister of Power but urged an accelerated response.

“There must be a sense of urgency because Nigerians cannot continue to endure this situation. Energy is essential for any business, and without it, there is little one can achieve. The alternatives are simply too expensive, making it critical that this recurring issue with the national grid is resolved,” he added.

Another expert, who preferred to remain anonymous, raised concerns about the effectiveness of previous reforms and investments in the power sector, particularly in grid maintenance.

He noted that increased security threats further complicate operational conditions for power generation, underscoring that resolving grid instability requires a multi-faceted approach. “Security must be ensured, and government agencies must be allowed to perform their roles independently,” he stressed.

“Nigerian Electricity Management Services Agency (NEMSA) is meant to regulate and ensure that the network and power supply are reliable, safe, and sustainable. But how effective are they in performing their duties?” he questioned.

Kunle Olubiyo, President of the Consumer Protection Network, argued that recurrent grid collapses highlight the inadequacies of the TCN, adding that unstable power supply has led to significant economic losses as businesses bear the high cost of alternative energy sources.

He cited ageing infrastructure as a primary cause of frequent grid collapses, with inadequate capacity and maintenance issues contributing to instability.

“Corruption, institutional interference, and the capture of TCN by executive and legislative arms of government are also factors behind grid failures. I would advise the Economic and Financial Crimes Commission (EFCC) to expedite its investigation into the TCN. Emergency funds meant for grid maintenance must be properly utilised. Diverting such resources to non-essential projects, such as SUVs or unrelated procurement, leads to a ‘second phase’ of grid collapse, rooted in corruption and greed,” he added. (The Guardian)

•