With all of the attention that “smart grid” technology is getting lately, the article a few weeks ago in the Wall Street Journal about Nigeria’s power sector was bracing.
The article described a plan by the Nigerian government to spend over $5 billion to repair its power sector. That outlay represents 40% of the country’s rainy-day excess crude-oil account.
Why the giant investment? Only a minority of Nigerians are even connected to the electric grid. And those that are suffer from frequent and unpredictable blackouts.
According to the Bretton Woods Project, a British group that analyzes the activities of the World Bank and the IMF,
Many parts of the country go for days without access. Power is often rationed, meaning that communities receive electricity only on alternate days, and rarely for the full day when they do. Bills are generally issued on the basis of arbitrary estimates, often charging consumers for much more than they have consumed. Mass disconnections of entire communities are common, on the grounds that some households in the area have been facilitating illegal tapping or refusing to pay their bill. This obliges all those affected to either pay a hefty bribe and/or reconnection fee. Often out of desperation to access a supply of energy that many simply can not afford, illegal tapping, vandalisation of power lines and non-payment of bills is common.
According to Wall Street Journal article, some big companies operating in Nigeria have resorted to running their own power generators, driving up their costs some 10% to 20% compared to operations in neighboring countries. “Other foreign companies have pulled out of Nigeria, citing high energy costs as one of the primary reasons for doing so.”
Over the years, billions of dollars have been channeled to the power sector by the previous Nigerian government, but most of the money went accounted for, according to the article. Government corruption and misallocation of funds in resource-rich developing countries is all too common. According to the brilliant book The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It, “over the last thirty years Nigeria has received something on the order of $280 billion [in oil revenues]. This is far larger than any realist scale of aid to a bottom-billion country. Yet Nigeria has depressingly little to show for it.”
The Nigerian government intends to increase power production by a factor of 3x to 5x by the end of 2010.
The smart grid has been one the most popular topics on this blog. And it’s the subject of some sexy promotion by big infrastructure vendors such as General Electric and IBM. IBM has recently touted its big smart-grid project in Malta. Nigeria’s needs dwarf those of Malta’s for sure. And what they need as much as or more than smart technology, is smart and honest governance to enable them to deploy their billions for the benefit of their citizens and businesses. I wish them luck.
[More coverage of the Nigeria electric power sector’s challenges here.]