President Bola Ahmed Tinubu Monday said that 10 years after the Power Sector was privatised its objectives have not been met, saying that over 90 million still Nigerians lack access to electricity.
To this end, the Minister of Power, Chief Adebayo Adelabu, had also announced that the renewal of licneces of power sector operators like Gencos and Discos would not be automaticity.
Speaking at the Nigerian Electricity Supply Industry (NESI) Market Participants and Stakeholders Roundtable (NMPSR) in Abuja, Tinubu also lamented that the country’s national grid only serves about 15% of the country’s demand.
The roundtable had ” NESI Privatisation and its 10years milestone: The journey so far, opportunities and prospects”, as its theme.
Represented by his Special Adviser on Power and Infrastructure, Mallam Sadiq Wanka, Tinubu, however, called for intensified efforts to address commercial issues and improve the investment attractiveness of the sector.
He said: “The 10th anniversary of the privatization of the power sector, is the perfect opportunity to reflect as a sector and as a Government on the progress achieved and the challenges faced since the unbundling and privatization of the integrated national utility.
“10 years on, I believe 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 pre-privatization.
“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. 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.
“In the short term, we must intensify efforts to address commercial issues and improve the investment attractiveness of the sector. 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 its 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.
“Operationally, there are a number of key imperatives that we must pursue:
80% of grid generation today is from gas. We intend 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 endeavour arrangements.
” 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”.
No automatic licence renewal – Power minister
Meanwhile, the Minister of Power, Chief Adebayo Adelabu, who spoke earlier had faulted the privatisation of the power sector, saying that it was not good for a developing country like Nigeria.
Rather, Adelabu recommended the commercialization of the power sector and declared that the renewal of the licences of the sector’s operators would not be automatic.
He said: ” It is a good thing we are coming together today to review the state of things in the NESI supply industry 10 years after privatization, which was done in 2013. The question to ask ourselves is, have we achieved the objectives of privatization on a grade of 0 to 100? What is our score? I will say no, which is why it is pertinent for all the industry players, and all the stakeholders to come to a roundtable and discuss what were the reasons responsible for this, and what are the things that we need to do to achieve the objective of privatization.
“I’ve made mentioned in my speech that most countries throughout the world do not privatize their electricity supply value chain, from generation to transmission, to distribution. But it’s bad enough that we have done this, how can we walk around the current status to achieve our priorities and objectives?
” And I made mention of it that’s 10 years down the line. The licences are expiring and it’s now the time for renewal, renewal is not automatic. Any of the privatized companies that have not lived up to expectations, will not have their licence renewed. We have to consider whether you have complied with the terms and conditions of the licence you are given.
“We will look at the technical capacity of gencos, and of the discos. We’ll look at the financial credibility of the discos, how much investment you have made since you got his licences, and how much improvement have you made to the infrastructures based on the agreements when you were given these licences?
“These are very serious conversations we need to have with the private sector operators at the distribution or the generating company level”.
NASS pledges support for NESI, stakeholders
Though both chambers of the National Assembly identified some of the successes and challenges recorded in the power sector, they pledged their commitment to the NESI operators and its stakeholders to inject massive investment and expertise into the sector.
The Senate President, Godswill Akpabio, who was represented by the Chairman Senate Committee on Power, Senator Enyinnaya Abaribe, said: “On our part, as legislators, particularly at the Senate, we are happy to have played a role in seeking to progress the sector by recently enacting the Electricity Act, 2023, thereby supplanting EPSRA.
“Under the new Act, we sought to address the inconsistencies, the areas of lacunae, incorporate changes borne of the evolution of a privatized NESI, establish the grounds of broader participation of the states in the electricity value chain, as well as put in place mechanisms or measures to dissuade those who would increase our challenges by stealing electricity or vandalizing related equipment.
“We remain committed to working with all the NESI operators and stakeholders in building an environment that will allow for the injection of the massive investment, expertise, and creativity that is necessary to move NESI to our collective aspiration and goal of consistent and efficient power supply”.
Also speaking, the Speaker of the House of Representatives, Hon. Tajudeen Abbas, who was also represented by the Chairman of the House Committee on Power, Hon. Victor Onyemaechi Nwokolo, said: ” Today, as we gather to acknowledge the achievements made in the power sector over the past decade since its privatization, it is crucial that we do not lose sight of the fact that power continues to be a significant obstacle to our national development. Despite the progress made, the problem of inadequate power supply remains persistent and seemingly insurmountable.
” As representatives of the people, we are deeply concerned about the issue of electricity supply in Nigeria. Despite the efforts made by the legislature over the years to enact legislation that provides legal support to the operations of the power sector, numerous challenges persist. In response to these challenges, the 10th House of Representatives has prioritized the power sector in its Legislative Agenda”.
