Nigeria’s Minister of Power, Adebayo Adelabu says the Federal Government requires 10 billion dollars anually in the next ten years to revive the nation’s power sector and end the liquidity challenge.
Adelabu disclosed this in Abuja at a one day investigative hearing on halting the new electricity tarrif increase by the Nigerian Electricity Regulatory Commission (NERC) for onward implementation by the Distribution Companies (DisCos).
The investigative hearing was organised by the Senate Committee on Power.
“For this sector to be revived, government needs to spend nothing less than 10 billion dollars annually in the next 10 years. This is because of the Infrastructure requirement for the stability of the sector, but government can not afford that.
And so we must make this sector attractive to investors and to lenders. So for us to attract investors,and investment, we must make the sector attractive, and the only way it can be made attractive is that there must be commercial pricing.
If the value is still at N66 and government is not paying subsidy ,the investors will not come. But now that we have increased tarrif for a Band, there are interest been shown by investors,“ Adelabu explained.
The Minister said the major challenge in the sector was absence of liquidity, adding that the sector has been operating on a subsidised tarrif regime,given the absence of a cost reflective tarrif.
He, however, said the subsidy had not been funded over the years as huge liabilities was been owned the Generating Companies ( GenCos) and the Gas Companies.
Adelabu said the inability of the government to pay outstanding N2.9 trillion subsidy was due to limited resources, hence the need to evolve measures to sustain the sector.
He appealed to the lawmakers to support the process of paying the debt owed to operators across the value chain of generation transmission and distribution.
According to him, the increase is based on supply, adding that any customer that does not receive 20 hours power supply will not be made to pay the new tarrif.
He said the government was committed to ensuring sustainable reform in the sector, adding that there was need to clear the outstanding debt owed GenCos and Gas companies.
To improve power supply, he said government was investing in hydro electric power, adding that construction of 700 mega watt power in Zungeru had commenced, while Kashimbila Hydroelectric power plant of 40 mega watt was awaiting evacuation to improve generation.
The Minister said there was also an on going investment of 26 small hydro power dams to boost electricity production across the country.
However, members of the committee in their separate remarks decried the experiences of Nigerians on electricity supply over the years, despite the unbundling of the sector.
Senator Lola Ashiru said Nigerians were paying for inefficiency of power sector operators.
Senator Ashiru, who is Vice Chairman of the committee said there was a lot of inefficiency across the value chain of generation, transmission and distribution.
He said Nigerian masses must be protected, adding that there was need to consider a reversal of the tarrif increase.
Senator Solomon Larlong said there was no consultation, before the increase, adding that issues of palliative should have been discussed and provided before the tarrif increase.
Senator Enyinnaya Abaribe, who is the Chairman of the Committee said what Nigerians wanted was a solution to the issues and ways to ensure liquidity in the sector.
He also decried the non-appearance of a company “ZIGLAKS” over the failed agreement to provide prepaid meters for Nigerians.
He alleged that the company had received N32 billion in 20 years to meter Nigerian electricity consumers.
Senator Adamu Alero said due consultation was not made before the tariff increase.
Other stakeholders that made presentations at the investigative hearing include the Nigerian Electricity Regulatory Commission, Manufacturers Association of Nigeria, Association of Power Generation, and Electricity Distribution Companies among others.
Lantana
