Poor Exercise of Power, Leads to Less Power for Nigerians

Although Nigeria is plentiful in oil and natural gas, the country is plagued by widespread power outages that leave families without electricity, businesses unable to work for indefinite periods of time and government services incapable of functioning properly. Dr Olufunmilayo Harvey recounts the incredible struggles facing Nigeria’s healthcare system saying, “There were situations where doctors were performing surgeries and carrying out deliveries using torchlight.” In 2019 alone, Nigeria suffered 12 grid collapses, despite government promises of reforms and new investment. The BBC documented the severity of situation.
Seeking a course correction, the Buhari Administration’s Minister for State and Petroleum Resources, Timipre Sylva has now declared 2020 as the “year of Gas for the Nation.” While it is a neat slogan, there is no substance behind it.
Former chair of the Nigerian Electricity Regulatory Commission (NERC), Ransome Owan has stated that the government has continuously failed to show the level of commitment and leadership required to end gas flaring in the country. “We are not working on connectivity; people are flaring gas not because they want to. We have to resolve to solve the infrastructure challenge to enable us to achieve the goals of gas-to-power programmes in Nigeria and Africa at large,” Owan said. According to a report by PwC, the Nigerian economy lost a whopping N233 billion ($643m) to gas flaring in 2018 alone.
How can it be that a country so abundant in natural resources is unable to provide sufficient energy for its people?
The clearest example is the P&ID project, which didn’t even come to fruition because the government failed to meet its contractual commitments. Had it been successfully implemented, the project would have led to a significant reduction in flaring and blackouts.
Back in 2010, the Gas Supply and Processing Agreement (GSPA) between P&ID and Nigeria would have built a state of the art gas processing plant.  That plant was supposed to refine Nigeria’s natural gas (“wet gas”) into non-associated natural gas (“lean gas”), which Nigeria would receive free of charge to help power its electrical grid. It is instructive to think of the problems that ordinary Nigerians face today, and how the opportunity of the P&ID project was wasted by the government. Had the P&ID project gone forward, the country could have looked markedly different:

  • Production of enough refined gas to generate 2,000 megawatts of electricity for the national grid in the first two years of the contract
  • Millions in revenue flowing to the Nigerian Treasury would lessen budget deficits and borrowing, and freeing up monies for domestic investment
  • Gas flaring would have been dramatically reduced, preventing the environmental damage that currently takes place on a massive scale

Sadly, the government decision to abandon the P&ID contract meant these benefits never came to pass. Instead, in a desperate attempt to evade paying the arbitration award to P&ID, Attorney General Abubakar Malami launched a campaign of harassment and violations of human rights. He now claims the GSPA is a fraud. These claims are built on fabricated evidence, illegal detentions, coercion of witnesses, threats to family members, and forced confessions.

The Tribunal panel of experts, and the English Commercial Court Judge, have consistently ruled that Nigeria is in the wrong, in its attempts to undermine P&ID. The Buhari Administration needs  to find investors to solve the problems of power outages and flaring – unfortunately, many investors will look at the P&ID case (and other similar cases) and conclude that AG Malami has no regard for the rule of law. Why, then, would investors commit to Nigeria?

How is it that a country with such abundant natural resources is unable to provide sufficient electricity for its people? Answer: it is certainly not a lack of resources keeping Nigerians in the dark, it is mismanagement by the Nigerian Government.