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Stakeholders, consumers lament gross power failure as DisCos, GenCos’ operating licences expire November 1

*President Bola Ahmed Tinubu, GCFR, at a recent stakeholders’ conference in Abuja, rather seeks more time for the power sector to improve, hints at the need for cost-reflective tariffs, and N2 trillion for sector recapitalisation amid expiration of the operating licences of 17 electricity Generation and Distribution Companies November 1, 2023

Gbenga Kayode | ConsumerConnect

The Federal Government of Nigeria has lamented  the national electricity grid only serves about 15 percent of the country’s demand since the privatisation of the significant power sector in the last 10 years.

ConsumerConnect reports President Bola Ahmed Tinubu, President Bola Tinubu, Mr. Adebayo Adelabu, Honourable for Minister for Power; Senate President Godswill Akpabio, and the Bureau of Public Works Enterprises (BPE) all repeated the blame games that have held the sector in disarray as they gathered at a stakeholders’ conference Monday, October 30, 2023, in Abuja, FCT.

Industry stakeholders Monday, October 30, 2023, had organised the power conference with the theme, “NESI Privatisation & Its 10-year Milestone: The Journey So Far, Opportunities And Prospects”, in Abuja, FCT,  just as licences of the 17 electricity Distribution Companies (DisCos) and Generation Companies (GenCos) are due for renewal or revocation Wednesday, November 1, 2023.

Recall the previous administration had privatised the power assets without meaningful and enduring solution in the last 10 years.

The Federal Government, November 1, 2013, through the Bureau of Public Enterprises had privatised the power sector for whopping $2.5 billion.

It was gathered that since the privatisation exercise 10 years ago, everything had been degenerating as  Nigeria’s electricity grid, projected to hit 40,000 megawatts by 2020 with an investment of $3.5 billion yearly, has remained at an average of 4,000MW as of Sunday, October 29 this year.

As the stakeholders particularly, have lamented that the apparent gross underperformance and limited investments in the electricity generation, transmission, distribution and supply value chain had left millions of power consumers, including households, businesses, factories and organisation to resort to and rely on “expensive self-generation”, which supplies a staggering 40 percent of the country’s demand since the sector was privatised 2013.

Electricity sector requires N2 trillion for recapitalisation, improved performance -Tinubu

Instead of endless lamentations over the dislocating consequences of poor performance of the vital sector of the country’s economy, President Tinubu rather asked Nigerians for more time to fix the identified electricity challenges, as the 17 generation and distribution licences are due for revocation or renewal this Wednesday.

This is in spite of the  reported over $7.5 billion spent on transmission lines.

The Federal Government also had spent N7 trillion to avert the seemingly ending incidence of collapse of the generation and distribution end as the situation remained perpetually on crutches.

The Nigerian President, represented at the forum by Sodiq Wanka, his Special Assistant on Energy Infrastructure, affirmed the national electricity grid only serves about 15 percent of the country’s demand as of now.

He as well lamented that the development negatively affected several households and factories, which have been forced to rely on expensive self-generation.

Tinubu stated: “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 3,000MW to typically just over 4,000MW today. Versus a 40,000MW target by 2020 that the Federal Government had set pre-privatisation.”

The President further hinted at the need for a plan to rebase tariffs, stressing that adequate cost recovery for investments is sacrosanct.

Tinubu said five months into this administration and two months after appointing Mr. Adelabu to drive the sector, there has to be a clear path to extinguishing historic sector debts to various value chain stakeholders.

“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,” said the President.

According to him, DisCos require a capital injection of about N2 trillion.

Tinubu added that gas challenges, data, a presidential task force on power and other initiatives should be in place to significantly to improve the lot of the sector.

Sector needs new approaches, time for consultation with stakeholders: Adelabu

In his presentation at the electricity conference, Minister for Power Adelabu also asked the stakeholders and Nigerian power consumers in general for more time to deal with the issues in the critical sector of the economy.

The Minister contended that taking decisions in a haste would not solve the challenges in the sector.

He also suggested that all industry stakeholders would have to come together to decide on the future of the power sector.

To him, new approaches are needed with enough time for consultation.

Adelabu said: “I wish to urge the private sector to ensure that the confidence reposed in them through the privatisation of the power sector is maintained by adhering to the terms and conditions of their licence.

“Otherwise the Government will take an appropriate decision to make the sector perform the way it is supposed to work by invoking the necessary clauses in the terms and conditions in the licences and the performance agreement signed with the Federal the Federal Government as well as the sections of the 2023 EPRS Act.”

Scope of Electricity Act 2023, by Senate President Akpabio

Senate President Akpabio, in his speech at the event, said the Electricity Act, 2023 would address the inconsistencies, resolve areas of lacunae, incorporate changes borne of the evolution of a privatised NESI, establish the grounds of a broader participation of the states in the electricity value chain.

Akpabio, represented at the conference by Senator Enyinnaya Abaribe, said the 2023 Act should also put in place mechanisms or measures to dissuade those who would increase our challenges by stealing electricity or vandalising 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.”

Epileptic electricity supply, ageing infrastructure bane of power sector -House Speaker

In his submission at the event, Rt. Hon. (Dr.) Tajudeen Abbas, Speaker of the House of Representatives, admitted that there is still much work to be done in the power sector.

Abbas, represented by Victor Nwokolo, equally lamented  that epileptic electricity supply and lack of some other basic infrastructure had hindered the growth of the sector over time.

“The current estimation of energy delivery of 4,000 Megawatts to a population of over two hundred million (200,000,000) Nigerians is grossly inadequate and falls short of efficient service and limits business opportunities, hinders investments, and raises the cost of production and goods for consumers,” he stated.

He urged the stakeholders to identify the mistakes made in the sector in order to determine what actions need to be taken by the government to ensure the success of this sector.

The House Speaker also said: “The 10th House of Representatives has prioritised the power sector in its Legislative Agenda.

“The aim is to address issues, such as insufficient generation and transmission capacity, energy theft, inefficient distribution, tariffs, and corruption, among others.

“The House will equally prioritise investments in the transmission and distribution infrastructure to reduce technical and non-technical losses; decentralise energy productions by promoting off grid solutions, especially in rural areas where grid connectivity is challenging: strengthen legislation to increase penalties for energy theft, meter tampering and vandalism of energy infrastructure; adopt legislative measures to promote renewable energy through tax incentives, grants for investments in renewable energy sources such as solar, wind and hydro and mandate regular and transparent audits of all entities in the energy sector to curb corruption in the industry.”

Making his contribution at the forum, Alex Okoh, Director-General of BPE, acknowledged that the sector is not where it should be going by the original intention and vision of the reforms.

He also noted there were years of mutual non-performance by both the private sector and public entities, huge market and tariff shortfalls, creating a huge liquidity problem and an imposing debt profile in the market, and other issues, such as severe lack of investments, invariably creating a complex web of challenges which now face the sector.

Hitherto, the Federal Government reportedly, had offered generation companies for  $1.269 billion, and the 10 DisCos, excluding Kaduna Electric were sold at $1.256 billion.

The government also sold 60 percent shares and retained 40 percent.

Besides the fund, the 11 DisCos paid N1 million for licence application fee to the Nigerian Electricity Regulatory Commission (NERC).

They equally paid $75,000 for a 10-year licence fee, according to report.

As 10-year licences of DisCos, GenCos expire November 1

Amid the multifarious challenges besetting the electricity sector of the economy in the past decade, licences of the DisCos and GenCos will hit the 10-year period and expire for renewal, or otherwise Wednesday, November 1, 2023.

Nonetheless, the Federal Government has not come clear on the next step as some stakeholders have expressed fear that the Tinubu administration may have been lobbied to look away from the total review of the sector, report noted.

Dan Kunle, an energy stakeholder, said it was not clear if President Tinubu administration is prepared to solve the problem of the power sector.

Kunle argued going by Tinubu’s utterances and statements, it looks like that the administration would address the issues in the sector but that he has not seen anything put together that could show that the power challenges would be addressed, said the report.

Kunle Olubiyo, Ore of the Nigerian Consumer Protection Network and Member, National Technical Investigative Panel on Power System Collapses, said the privatisation exercise, instead of creating competitive electricity market, had succeeded in entrenching private sector-driven market monopoly.

The consumer protection advocate said while the power companies were supposed to be publicly quoted, none of the companies have been duly quoted or formally listed on the floor of the Nigerian Capital Market in the last 10 years.

Olubiyo also affirmed that the sector is crippled by metering challenges, monopoly, lack of data, regulatory weaknesses among as the players fail to live up to expectations.

The Managing Director of Mainstream Energy, which oversees the operations of Jebba, Kainji and Zungeru Dams, Lamu Audu said the primary issue plaguing Nigeria’s power sector is liquidity.

Audu noted that the issue permeates all aspects of the industry, including generation, transmission and distribution.

“Given the financial constraints of the government, I recommend that the new administration considers the liberalisation of the power sector.

“While this transition may be painful, akin to the removal of subsidies, it is necessary to attract private investment and enable companies to charge tariffs that would allow them to recoup their investments,” stated he.

The company executive disclosed that prevailing economic challenges in the sector, especially the foreign exchange issue, would deter foreign investment into the power sector of the Nigerian economy.

Additional reporting by Isola Moses.

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