Nigerian’s President Bola Tinubu has said that the objectives of the Power sector’s privatization have not been met as over ninety million percent of Nigerians still lack access to electricity.
President Tinubu made the disclosure at at the Nigerian Electricity Supply Industry, (NESI), Market Participant and Stakeholder Roundtable, Themed: privatization and its 10 years milestones the Journey so far, Opportunity and Prospects.
He noted that the key objectives of the privatization effort were to improve the efficiency of the power sector, unlock private sector investments, and unleash the potential of the nation through an energized economy.
The Nigerian leader represented by the Special Adviser on Energy and Infrastructure, Office of the Vice President, Sodiq Wanka, call on operator and Stakeholders in the power sector to intensify efforts to address commercial issues and improve the investment attractiveness of the sector.
According to him, “the reasons for the underperformance of the sector in the last decade are well known. There are deep commercial, governance and operational issues that have beleaguered the sector”.
“He believes it is fair to say that the objectives of sector privatization have by and large, not been met. 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 for the pre-privatization”, he said.
He disclosed that “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 the 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”, Tinubu said.
The Nigerian Leader reiterated that his government would intensify efforts to address commercial issues and improve the investment attractiveness of the Power sector, stressing that “only around 45% of NESI customers are metered today, with wide variations across DISCOS. The scale of investment needed to meter current and new customers and replace obsolete meters is not trivial.
“The Government is committed to supporting the metering drive through the World Bank DISREP programme which should add at least 1.25 million meters, while activating the Meter Acquisition Fund to procure another 4 million meters. But we must also realize that long-term sustainable metering should be within the remit of DISCOS and their partners.
“We need to have a clear plan to rebase tariffs, so we recognize the real costs and loss levels of the entire value chain, and we allow for adequate cost recovery for investments. We need to be clear on what shortfalls are and how we will finance them. And there must be a clear path to extinguishing historic sector debts to various value chain stakeholders. A reconciliation exercise in this regard is already underway”.
“we need to quickly develop and execute a clear roadmap for serving profitable pools of customers. This includes industrial and agricultural clusters and strengthened participation in the West African Power Pool in the immediate term.
“And we must deepen engagement with the Nigerian public on power including communicating sector strategy and key milestones and curbing energy theft through community engagement and penalties”, the president said.
Energy Generation
President Tinubu said, over “80% of grid generation today in Nigeria is from gas, disclosing that, Nigeria plans to convene all relevant stakeholders to develop a gas policy for the power sector delineating where the power sector will get gas from and how it will pay for it. We cannot build a sector on best endeavor arrangements, he emphasised.
“We need to have a single source of truth in terms of data in the sector, a national electrification plan that highlights the energy gaps, supported by clear investment plans on how to close the gaps.
“We need to institute a Presidential Taskforce that will monitor and unblock the progress of deployment of key projects in the sector. This includes projects that will help un-constrain the grid and deliver the full available generation capacity to our homes and factories.
“We have to accelerate the pace of deployment of renewable and solar in places where it makes sense. There is a real opportunity to accelerate the deployment of inter-connected and isolated mini-grids to deliver power close to the point of use. And will support the rollout of initiatives aimed at diesel displacement to reduce the carbon intensity of embedded power plants, while supporting innovative financing schemes for solar solutions in the home.” He added.
In terms of sector governance, the President said,
“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 reorganization and a recapitalization process that brings in new partners and new capital to jumpstart performance in this critical section of the value chain”.
As regards the Electricity Act 2023, President Bola Tinubu explained that there was need to clarify the role of States government in a new national electricity framework.
According to him, the National Electricity Regulatory Commission, NERC has begun Stakeholder engagement to define how to operationalise the key view of the Electricity Act in the country.
The Senate President, Godwin Akpabio, called for collective collaboration between the operators and stakeholders in building an environment that will allow for the injection of the massive investment in the power sector.
He said “It is fitting that ten years after the November 1, 2013 privatization and handover of PHCN successor companies to majority private investor ownership that we are gathered to assess how well and how far the journey of privatization has gone. It is not a gathering for patting ourselves on the back, for sure. It is, however, a gathering for a very sober assessment of what has been achieved, what has not been achieved, why it has not been achieved and how can we ameliorate the impediments that stand as obstacles to attaining the fundamental requirement of consistent 24/7 power supply that is sufficient to progress our country socio-economically” he said
In his keynote address, the Minister of Power in Nigeria, Adedayo Adelabu threatened to revoke the licenses of companies, whose performances fall below standard, saying that he would rather move for commercialization of the sector than privatization.
He said that the government will do performance assessment of all the distribution companies Discos and all generation companies GenCos.
In his opening remarks, the chairman planning committee of the roundtable discussion, Mr. Stephen Ogaji, said the event was a milestone towards a more robust and sustainable electricity supply in Nigeria.
“This event is a significant milestone in our journey towards a more robust and sustainable electricity supply industry in our great nation”.
Mr. Ogaji described the energy sector as a heartbeat of any thriving economy and the NESI Roundtable demonstrates the collective commitment to advancing this critical sector.
“We gather here today as representatives from various sectors – public and private, regulatory bodies, investors, technocrats, and visionaries – all driven by a shared purpose – to enhance and shape the trajectory of Nigeria’s energy future” .
“Our discussions, collaborations, and insights will pave the way for innovative err that can usher in an era of reliable, efficient, and sustainable electricity supply”
“Our nation’s progress relies heavily on the seamless functioning of the electricity supply industry. It powers industries, educates our youth, supports healthcare, and drives technological innovation – all precursors for the qualitative wellbeing and economic growth that are attributes of an advanced economy” he added.
Olusola Akintonde
