Nigeria’s power sector woes will require a yearly expenditure of $10 billion until 2034 to be addressed, according to the Minister of Power, Mr Adebayo Adelabu.
The minister admitted that there was a huge infrastructure gap in the power supply chain, which the federal government lacked the financial muscle to shoulder alone.
He recommended a multi-sectoral approach, including the involvement of the private sector, to harness the financial requirements needed to revive the sector and end the frequency of darkness in Africa’s most populous nation.
It was organised by the Senate Committee on Power, following a referral to the committee from the floor of the Senate.
Adelabu stated, “For this sector to be revived, the government needs to spend nothing less than $10 billion annually in the next 10 years.
“This is because of the infrastructure requirement for the stability of the sector, but the government cannot 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 the government is not paying subsidies, the investors will not come.
“But, now that we have increased the tariff for a band, there has been interest shown by investors.”
According to him, the major challenge in the sector is the absence of liquidity, adding that the sector has been operating on a subsidised tariff regime, given the absence of a cost-reflective tariff regime.
However, the minister said the subsidy had not been funded over the years as huge liabilities were owed to the generating companies (GenCos) and the gas companies.
He said the inability of the government to pay the outstanding N2.9 trillion subsidy was due to limited resources, hence the need to evolve measures to sustain the sector.
Adelabu appealed to senators to support the process of paying the debts owed to operators across the value chain of generation, transmission, and distribution.
He explained that the tariff increase was based on supply, noting that any customer who did not receive a 20-hour power supply would not be made to pay the new tariff.
The minister further said the government was committed to ensuring sustainable reforms in the sector, arguing that there was a need to clear the outstanding debt owed GenCos and gas companies.
Adelabu said to increase supply, the government was investing in hydroelectric power, adding that construction of 700 megawatts of power in Zungeru had commenced, while the Kashimbila hydroelectric power plant of 40 megawatts was awaiting evacuation to improve generation.
He said there was also an ongoing investment in 26 small hydropower dams to boost electricity production across the country.
But members of the committee, in their separate remarks, decried the experiences of Nigerians with electricity supply over the years, despite the unbundling of the sector.
For instance, Senator Solomon Lalong said there was no consultation before the increase, adding that issues of palliatives should have been discussed and provided for before the tariff increase.
On his part, Sen. Enyinnaya Abaribe, who is 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 metres to Nigerians.
Abaribe alleged that the company had received N32bn in 20 years to metre Nigerian electricity consumers.
Sen. Adamu Alero, while contributing to the discussions, said due consultation was not made before the tariff increase.
He said the public was not at peace with the increase, saying that the increase was over 200 per cent, hence the need for a reversal of the tariff increase.
The Electricity Regulatory Commission (NERC), Manufacturers Association of Nigeria (NAN), Association of Power Generation (Gencos), and Electricity Distribution Companies (DisCos) also made submissions to the committee.
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