The Analyst

Power Sector Reform : Nigeria must avoid the Indian path

India experienced a massive power outage earlier in August which threw over 600million people into darkness for two days. Hospitals, sanitation plants and offices grounded to a halt, airports and factories had to rely on backup generators which put smear on the country’s reputation as an emerging economy. The immediate explanation for the blackout is an overload of the national network that links together regional grids. Three of the five transmission grid collapsed; cutting power to about half of the country’s population.

The lesson for Nigeria in the foregoing includes the commitment to ensure that the entire privatisation process is completed unhindered with little or no vested interest. At the end of the process, it is important to ensure that government involvement has been minimised to the barest minimum but limited to regulation and consumer protection, without stifling market in the entire value chain.

In this regards, tackling the biggest problem of the process, which appears to be the gas to power section of the value chain requires increased transparency and coordination among stakeholders. The Petroleum Industry Bill (PIB) when passed into law should provide the required governance and incentive for increased private investment in oil and gas sector to support efficient utilisation of the gas resources of the nation.

In the meantime, it is important that a middle ground is created to bring all the stakeholders together, beyond the inter-ministerial committee which ensures that critical issues hindering gas distribution is tackled. Government investment and control of the gas to power sector in the immediate time until the cost reflective gas price is achieved may be required. However, there is no gainsaying that the reform is on course.