Nigeria: lack of electricity, the African giant plunged into darkness

Posted 23 March, 2022

For eight years, Damy Idowu struggled to keep his small barbershop in a commercial district of Lagos open despite Nigeria's runaway inflation, two recessions, and the coronavirus pandemic.

But, last week, the entrepreneur had to resolve to close shop, like many others in Nigeria - the African giant facing one of its worst energy crises in recent years.

"To operate, my living room needs electricity and I cannot afford to use the generator because of diesel prices," says Mr. Idowu.

In Nigeria, Africa's top oil producer, power outages are common as decrepit infrastructure often fails to deliver electricity to residents.

But the prolonged collapse of electricity networks in recent weeks, combined with a global rise in diesel prices due to the war in Ukraine, has plunged its 210 million inhabitants into darkness.

Due to frequent load shedding, most businesses depend on diesel-powered generators.

But since the Russian offensive in Ukraine, diesel prices have doubled in the country, dramatically increasing production costs.

In Lagos, the commercial capital, small businesses are particularly affected, and offices are now limiting working hours, the cost of electricity has become unaffordable.

 

Shut down factories

 

In Kano, an industrial city in the north of the country, many factories are prevented from running at full speed. Some owners have even stopped their production line.

This is the case of Umar Sani Marshall, owner of Marshall Biscuits, a confectionery factory that has stopped production in the past two weeks.

"The current situation is beyond comprehension," he told AFP, deploring production costs "preventing any profitability".

A significant shortfall comes at the worst time for this confectionery producer, just before the month of Ramadan when demand is usually very strong.

This energy crisis is hitting Nigeria's economy hard and comes on top of weeks of fuel shortages that caused massive traffic jams in the country's major cities last month.

It also undermines the morale of Nigerians, more than a third of whom live in extreme poverty.

At home, those can use gasoline or diesel generators to light their homes when the power is out. But Nigerians who cannot afford it find themselves in the dark.

Last week, the national grid collapsed twice in 48 hours.

Some main streets in Lagos are no longer lit at night, causing car accidents, while shopkeepers now illuminate their wares with light from their mobile phones.

Nigerian President Muhammadu Buhari has apologized for fuel shortages and summoned his energy minister on Monday to discuss power shortages.

Less than a year from the presidential election, the opposition party, the People's Democratic Party (PDP), warned on Sunday that this energy crisis could lead to popular protests.

But in Nigeria, the energy problems are structural.

According to local media, the country experienced 206 blackouts between 2010 and 2019, due to a weak grid and poor maintenance.

Power shortages are costing Nigeria around $29 billion, or some 2% of GDP, according to the World Bank.

 

Investment or corruption?

 

As for oil, Nigeria produces 1.4 million barrels of crude per day but refines very little. It depends almost entirely on fuel imports, which makes the local market vulnerable to supply disruptions.

With a rapidly growing population of 210 million, the country has experienced a boom in commercial and industrial activities over the past decade that are largely dependent on electricity.

Although the sector was privatized in 2013, over the years the demand for electricity has exceeded generation, transmission, and distribution capacities. And the few reforms undertaken by the government have not been enough to solve the problems.

According to the state-owned Transmission Company of Nigeria (TCN), generating companies are attributing the current outages to poor gas supply, faulty generating units, and maintenance.

But corruption, endemic in many sectors in Nigeria, is also singled out.

Civil society group SERAP on Sunday urged President Buhari to investigate suspicions of corruption, as some 11 trillion nairas (24 billion euros) has been spent on the electricity sector since 1999.

According to them, it is “the staggering amounts of public funds that have allegedly been stolen over the years from the power sector that are having catastrophic effects on the lives of millions of Nigerians”.

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