Unless President Muhammadu Buhari, 73, can subdue armed militants
attacking gas facilities that supply the nation’s power plants, his plans
to remedy an electricity shortage he called a “national shame” in his
inauguration speech a year ago will be stillborn. In March, Buhari said he
would increase power generation by 2,000 megawatts this year and raise it
by 2019 to 10,000 megawatts, double this year’s peak in early February.
Then militants in the oil-rich Niger River delta started repeatedly
blowing up gas pipelines, lowering electricity output to 1,000 megawatts
on May 23. The scarcity has battered an economy already in crisis because
of falling prices for its main export, oil, threatening a recession. As it
is, Africa’s largest economy currently generates about a 30th of South
Africa’s electricity production, for a population more than three times
its size.
“For all the plants, there’s no gas,” said Dallas Peavey Jr, chief
executive officer of Nigeria’s largest power facility, Egbin, whose output
has fallen to less than 10 percent of its 1,320-megawatt capacity. “We’re
sitting idle here.”
With Africa’s biggest gas reserves of more than 180 trillion cubic feet,
gas-generated power was touted as the obvious solution by a succession of
governments to end daily blackouts that cost the economy at least 2
percent of gross domestic product growth annually, according to the
Ministry of Finance. Gas-fired power plants provide about 80 percent of
Nigeria’s electricity supply, according to Pabina Yinkere, head of
research at Lagos-based Vetiva Capital Management Ltd.
With current power output the lowest in a decade, millions of Nigerians
either do without electricity or are forced to buy fuel for their own
generators. Even when output reached its 5,000-megawatt peak, most of the
country was in darkness, Yinkere said.
“Nigeria’s electricity consumption per capita is 142 kilowatt hours
compared to 4,328 KWH in South Africa,” Yinkere said.
The partial sale of 17 former state-owned power utilities three years ago
was meant to attract investment needed to expand the grid. Yet, private
investors have been hampered by increasing debt owed by government, an
inability to obtain foreign exchange to import equipment and, now,
militant attacks on key installations.
“If the vandalism is not addressed urgently and comprehensively,
electricity will continue to deteriorate and the government’s aspiration
to significantly increase power generation by 2019 would be a mirage,”
Desmond Ogba, managing counsel and head of energy projects at Lagos-based
law firm Templars, said in a phone interview .All but four of the
country’s 23 gas-powered generators have been shut down after militants
calling themselves the Niger Delta Avengers knocked out the Forcados
export pipeline in February, and the Escravos-Lagos link early May.
A Royal Dutch Shell plc spokesman, Precious Okolobo, said Wednesday
repairs were continuing on Forcados. The link will reopen in July,
Emmanuel Kachikwu, minister of state for petroleum, told reporters
Thursday in Vienna. Government officials say Escravos may not open until
September, according to Peavey.
“When people break the gas line it’s like breaking the diesel tank or your
petrol tank that supplies your generator at home and that’s why the power
situation is currently this bad,” Babatunde Fashola, the minister of
power, works and housing, said in a statement on May 21. “As soon as we
restore those gas pipelines, power will improve.”
Buhari has vowed to deal with the militants in the delta in a similar way
he has handled Boko Haram’s deadly campaign in northeastern Nigeria. The
army has fought the Islamist group for years and appears to have succeeded
in weakening it in recent months.
Rebels in the delta say they are fighting for a greater share of the
region’s oil resources and to protest poverty, unemployment and
environmental pollution from decades of hydrocarbon exploration and
production. A previous militant campaign abated in 2009 when the
government offered the fighters an amnesty and payments to disarm.
Insurgent leaders also received contracts worth millions of dollars to
protect the oil facilities.
The violence resumed when Buhari, a former army general, ended the
security contracts and reduced the monthly stipends.
In a speech marking his first year in office on May 29, Buhari signaled he
may reconsider the termination of stipends for the ex-fighters and said he
would curb violence through steps including talks with regional leaders
and “re-engineering” the amnesty program.
While authorities have stepped up security in the area, Kachikwu said
talks with militant representatives began a few days ago. “We’re going to
get it to be more inclusive,” he said. “We’ll talk with those who are
aggrieved, we’ll talk to our brothers who feel pain and are unhappy.”
“There are no quick fixes to the challenges,” Yinkere said. “The only way
out I see is for the government to negotiate with the militants. The
government needs to dialogue. Using force will not bring a solution to the
challenge.”
Until the violence ends and the gas supplies resume, Peavey has shelved
plans to double Egbin’s output.
“We can’t double the capacity if we can’t find the fuel,” he said.
Bloomberg