Thursday, May 30, 2024

Nigeria to Spend $10bn To Revive Sector- Power Minister

The Minister of Power, Adebayo Adelabu, said on Monday in Abuja that Nigeria would need an annual $10 billion for the next 10 years to revive the country’s ailing electricity generation, distribution and supply chain.

Adelabu said that the sum must be spread across the period to end the liquidity challenge in the sector.

The Minister’s disclosure was made at a one-day investigative hearing on halting the proposed increase in electricity tariff by 11 electricity distribution companies.

The session was organised by the Senate Committee on Power, amidst the biting economic situation in Nigeria.

The Minister also said the federal government would need N2.8trn to subsidise electricity this year alone.

House of Reps Vow to Address Electricity Tariff Hike

Adelabu said, “The government will need about N2.8 trillion to subsidise electricity this year, and we looked at the government budget itself, we looked at the provision for subsidy, we discovered and confirmed that the government could not afford to pay.

“This government budget is N28 trillion N2 trillion is a subsidy for power separately. It is over 10 per cent of the budget, which is not realistic for us to ask the government to pay, ” the Minister said.

His position drew the anger of the lawmakers who in their various contributions bemoaned the country’s power situation.

The Senators decried the experiences of Nigerians on electricity supply over the years, despite the unbundling of the sector.

For instance, Senator Lola Ashiru said Nigerians were paying for inefficiency of power sector operators.

Ashiru, who is the Vice Chairman of the committee said there was a lot of inefficiency across the value chain of generation, transmission and distribution.

He said poor Nigerians must be protected, adding that there was a need to consider a reversal of the tariff increase.

Similarly, Senator Solomon Lalong said there was no consultation before the increase, adding that issues of palliative should have been discussed and provided before the tariff increase.

Senator 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 meters for Nigerians.

He alleged that the company had received N32 billion in 20 years to meter Nigerian electricity consumers.

On his part, Senator Adamu Aliero said due consultation was not carried out 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.

Stakeholders that made presentations at the investigative hearing included the Nigerian Electricity Regulatory Commission (NERC), Manufacturers Association of Nigeria (MAN), Association of Power Generation (Gencos), Electricity Distribution Companies (DisCos) among others.

Addressing the gathering, the Minister said, “For this sector to be revived, the 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 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 subsidy, the investors will not come.

“But now that we have increased tarrif for a Band, there are interests been shown by investors.”

He attributed the major challenge in the sector to the absence of liquidity, adding that the sector has been operating on a subsidized tariff regime, given the absence of a cost reflective tariff.

This is as he pointed out that subsidies had not been funded over the years as huge liabilities were owed to 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 operators across the value chain of generation transmission and distribution.

He further said the increase is based on supply, saying that any customer that does not receive 20 hours power supply will not be made to pay the new tariff.

He said the government was committed to ensuring sustainable reform in the sector, saying that there was a need to clear the outstanding debt owed to GenCos and Gas companies.

To improve power supply, he said the government was investing in hydroelectric power, adding that construction of 700-megawatt power in   Zungeru had commenced, while Kashimbila Hydroelectric power plant of 40 megawatt was awaiting evacuation to improve generation.

The minister said there was also an ongoing investment of 26 small hydropower dams to boost electricity production across the country.

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