… As Minister Says Renewal Of Licences Won’t Be Automatic
The Federal Government may have concluded plans to tinker with the power sector to enhance its services to the nation as President Bola Tinubu said on Monday that after 10 years of privatisation, the objectives have not been met.
He attributed the reasons for the underperformance of the sector to what he called “deep commercial, governance and operational issues that have beleaguered the sector.”
President Tinubu gave the hint Monday at the three-day long inaugural edition of Nigerian Electricity Supply Industry (NESI) Market Participants and Stakeholders Roundtable (NMPSR) taking place in Abuja.
President Tinubu decried the deteriorated condition of the power sector after a decade of privatisation.
Citing that preliminary study showed that power Distribution Companies (DisCos) are under-capitalized to the tune of close to N2 trillion, he said a reorganization and a recapitalization process must be facilitated that brings in new partners and new capital to jumpstart performance in this critical section of the value chain.
According to Tinubu who was represented by Sodiq Wanka, Special Assistant, Energy and Infrastructure, Office of the Vice President, “Over 90 million Nigerians lack access to electricity. The national grid only serves about 15% of the country’s demand. This has left households and factories to rely on expensive self-generation, which supplies a staggering 40% of the country’s demand.
“What is worse, is that the total amount of electricity that can be wheeled through the national grid has remained relatively flat in the last 10 years. The grid capacity has increased from just over 3000MW to typically just over 4,000MW today. Versus a 40,000MW target by 2020 that the Federal Government had set pre-privatization.
“As of Q2 2023, for every kWh of electricity sent to the grid, only 60% of it is paid for. But as we know, even the tariff paid for that unit of electricity is far from being cost-reflective, especially in light of recent devaluation of the Naira.
“The sector has suffered from chronic underinvestment, especially in transmission and distribution. Many of the successor utilities of the PHCN have failed to meet their performance improvement targets due to technical and financial capacity issues. We are in a vicious cycle of under-performance and under-investment, and everyone has a different view of which value chain player should be blamed for continued sector malaise.”
However, President Tinubu insisted that despite the prevailing anomaly in the power sector, “We have to create an environment where the worst performers do not continue to drag the sector down. All licensees must not only have the technical capacity to deliver on their license, but must also have the financial muscle to invest and grow their operations.
“Preliminary analysis shows that DISCOS today are under-capitalized to the tune of close to NGN 2 trillion. We must facilitate a reorganization and a recapitalization process that brings in new partners and new capital to jumpstart performance in this critical section of the value chain.”
Earlier, the Minister of power, Adebayo Adelabu, while applauding the organisers of the programme, urged the participants to diagnose the problems hindering the power sector, lamenting that 10 years after the privatisation, the citizens were yet to feel the impacts.
He said they should seek out the challenges and the solutions for the Nigeria Electricity Supply Industry (NESI).
He maintained that for Nigeria to achieve success in the NESI, every stakeholders in the value chain has a role to play and it has to be by collective efforts.
He questioned if the private investors been able to achieve the objectives of the privatisation after 10 years of privatisation, adding that the participants must be able to sincerely answer the question.
The power Minister maintained that efficient power sector must be able to contribute to industrial development and economic growth any nation.
He maintained that as the privatisation licenses are expiring, the renewal is not going to be automatic as considerations must be given technical efficiency and capital availability.
Adelabu maintained that privatisation of the power sector is not best for the developing country such as Nigeria, adding that the private sectors doesn’t have the tenacity, competence and commitment to drive the sector.
He said Government must be in change to set the pace and set the direction because the power sector drives every other economic growth.
News4 days ago
News1 week ago
News1 day ago