Economy risks collapse over bill banning power generating sets

If the bill seeking to outlaw the use of electricity generating sets eventually becomes a law, the economy may be heading for collapse as the vast majority of electricity consumers in the country, especially the manufacturers, depend mainly on alternative sources due to insufficient grid supply.

Stakeholders, who reacted to the bill now before the Senate, described the proposed law as laughable, and the promoter ignorant and lacking understanding of the nation’s operating environment.

The Senator representing Niger south district, Bima Enagi, yesterday, introduced the bill seeking to outlaw the use of electricity generating sets, popularly known as generators in the country.

The bill, which passed first reading at the plenary session, proposes ban on the importation and use of all kinds of generators.

It states that anybody who “Imports generating sets; or knowingly sells generating sets shall be guilty of an offence and be liable on conviction to be sentenced to imprisonment for a term not less than ten years.”

The bill added that all persons are hereby directed to “stop the use of electricity generating sets which run on diesel/petrol/kerosene of all capacities with immediate effect in the country”.

The proposal came at a time when a lot of Nigerians depend on generators for electricity generation in their homes and businesses owing to irregular power supply.

With the country only able to generate an average of 3,781MW in 2019 from a yearly average of 3,807MW in 2018, the Federal Government plans to spend N9.05billion on the purchase, maintenance and fuelling of generators across the ministries, departments and agencies nationwide, this year.

The government also earmarked a separate N75.4million for maintenance and fuelling of generators in some of its foreign missions abroad.

The details are contained in the 2020 budget that was proposed and signed by President Muhammadu Buhari last year.

If the bill becomes a law, most Nigerians would be left in darkness and the economy would collapse as the critical sectors depend largely on electricity generating sets to sustain their operations.

Presently, energy spend constitutes 30 to 40 percent of manufacturers’ expenditure, with many operators intensifying their self-generating capacity beyond the 13,223.67 mega watts (MW) of electricity recorded in 2016, according to a survey carried out by the Nigerian Energy Support Programme and Deutsche Zusammenarbeit (GZ).

According to the Manufacturers Association of Nigeria (MAN), the operating environment remains challenging and depresses productivity in the manufacturing sector.

An official from MAN stated that the promoter of the bill lacked knowledge of the realities in the operating environment, adding that even in advanced economies, generators were used as standby.

The official noted that even though cheaper energy from the grid would be preferred and better, banning generating sets would not increase grid supply but put pressure on it.

To the Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, the proposition is not a realistic one and does not show that its promoter is in touch with the reality of the power situation in the country.

“Is it the fault of Nigerians that they have to rely on generators for power supply? The heavy dependence on generators is a direct consequence of the failure of the power sector.

“Even with the power sector reform, the failure has persisted. What we expect from the legislators is a proposal on how to urgently fix the power problem in the country. Power issue is perhaps the biggest challenge facing us as a nation. It is taking a huge toll on businesses as well as on the welfare of the people.

"We should learn to have a causative perspective to problem solving. The way to provide a sustainable solution is to locate the cause of the problem, not to be grappling with symptoms of the problem. It is strange that the bill passed the first reading,” he added.

MAN had to establish its Manufacturers Power Development Company (MPDC), as a vehicle to achieve the gradual transition from dependence on distribution companies for electricity to its Independent Power Projects (IPPs).

Specifically, the operators cited poor electricity and gas supplies/non-reliability of gas supply/scarcity of diesel/high cost of LPG as the highest impediment to production in the country.

Expenditure on alternative energy in the first half (H1) of 2019 declined to N32.68 billion, from N43.18 billion reported in the corresponding period of 2018, representing a 24.3 percent drop, a new report by MAN said.

Manufacturers spent N49.92 billion on alternative energy in the second half of 2018, according to the report, which covered members of MAN, who are above 2,000.

“Electricity supply, particularly from the distribution companies (DisCos), though a core challenge of the manufacturing sector, has been improving albeit marginally since the second half of 2018,” MAN admitted in the report.

The association said average hours of electricity supply in the H1 of 2019 was 10 per day, while the average number of outages within the period was five times daily. The number of outages, however, represented an increase of one from four times daily recorded in the second half of 2018.

Source/credit: the Guardian