$10bn Required Annually for Ten Years to Revive Power Section, Minister Says

The Federal government has emphasised that for the power sector to operate at peak performance, an annual investment of $10 billion is imperative, just as it also disclosed that the country would allocate N2.9 trillion to achieve full sector subsidy.

Speaking yesterday in Abuja at a one-day investigative hearing on halting the new electricity tariff increase by the Nigerian Electricity Regulatory Commission (NERC) for onward implementation by the Distribution Companies (DisCos), the Minister of Power, Adebayo Adelabu said that the 10 billion dollars was needed annually in the next ten years to revive the nation’s power sector and end the liquidity challenge.

This is as Senators have called on the Minister of Power, Adebayo Adelabu and the Nigerian Electricity Regulatory Commission, NERC, to as a matter of urgency, reverse the recent decision to increase electricity tariff for band A customers in the country.

The investigative hearing by Senator Enyinnaya Abaribe, APGA, Abia South led Senate Committee on Power is also about the N2.9tn required for electricity subsidy payment, other debts owed in the sector, and the state of metering in the country as well as the $1.3 billion owed gas companies even as it asked why Nigerians were suddenly classified under various bands.

The Minister told the Senate Committee that the major challenge in the sector was absence of liquidity, saying that the sector has been operating on a subsidised tariff regime,given the absence of a cost-reflective tariff, just as he stressed the subsidy had not been funded over the years as huge liabilities was been owned the Generating Companies ( GenCos) and the Gas Companies.

Adelabu who noted that 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, however, pleaded with the Senators to support the process of paying the debt owed operators across the value chain of generation transmission and distribution.

According to him, the increase was based on supply and that any customer that do not receive 20 hours power supply will not be made to pay the new tarrif, adding that the government was committed to ensuring sustainable reform in the sector, even as he told the Senate that eight million meters would be acquired in the next four years.

The Minister who noted that there was the urgent need to clear the outstanding debt owed GenCos and Gas companies, said, “For this sector to be revived, government need 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.

According to him, poor metering remains a big issue too in the industry when he told the lawmakers about how a company, Ziklag Networks Limited allegedly collected N32 billion for a contract to supply meters but has refused to do so in 20 years.

“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 interest been shown by investors.”

According to Adelabu, to improve power supply, the government was investing in hydroelectric power, even as he said that construction of 700 megawatt power in Zungeru had commenced, while Kashimbila Hydroelectric power plant of 40 mega watt was awaiting evacuation to improve generation.

The Minister also disclosed that there was also an ongoing investment in 26 small hydropower dams to boost electricity production across the country.

Officials of the Central Bank of Nigeria were also on the ground to provide details on how to close the metering gap of 8 million meters.

In his submission, CBN Director of Development Financing, Sahaad Ahmad said the CBN provided an N55 billion loan which was assessed by all the 11 DISCOS, pointing out that only N6b has been paid back and that CBN’s intervention has done little to stop estimated billing as many customers remain unmetered.

The only group that seems comfortable with NERC and its action appears to be the Association of distribution companies.

Every other speaker -including the Manufacturers Association of Nigeria and a former NERC Chairman, Sam Amadi believes sufficient consultation was not done and that the increase was discriminatory and in violation of the law.

Chairman, National Electricity Regulatory Commission, NERC, Sanusi Garba solidly backed the position of the Minister, said that it was a “miracle” that the DISCOS remained afloat to supply electricity as at the 1st Quarter of 2024.

When it was time for the Senators to respond to the presentation of the Minister, they however decried the experiences of Nigerians on electricity supply over the years, despite the unbundling of the sector.

The toughest opposition came from the Senators themselves -who believe the DISCOS have done little to improve their capacity and are all out to rip off their customers to cover for their inefficiency.

On his part, the Vice Chairman of the Committee, Senator Lola Ashiru, APC, Kwara South who noted that Nigerians were paying for the inefficiency of power sector operators, said that there was a lot of inefficiency across the value chain of generation, transmission, and distribution, adding that poor Nigerians must be protected and that there was the need to consider a reversal of the tariff increase.

Also speaking, Senator Simon Lalong, APC, Plateau South who told the Minister that there was no consultation before the increase, said that issues of palliative should have been discussed and provided before the tarrif increase.

On his part, Chairman of the Committee, Senator Abaribe who noted that what Nigerians wanted was a solution to the issues and ways to ensure liquidity in the sector, also decried the non of appearance of a company “ZIGLAKS” over the failed agreement to provide prepaid meters for Nigerians, just as he alleged that the company had received N32 billion in 20 years to meter Nigerian electricity consumers.

Also speaking, Senator Adamu Aliero, PDP, Kebbi Central who also said that there was no due consultation before the tariff was increased, said that 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 tarrif increase.

Presentations were made by the Nigerian Electricity Regulatory Commission (NERC), Manufacturers Association of Nigeria (NAN), Association of Power Generation (Gencos), Electricity Distribution Companies (DisCos) among others.