As the Nigerian’s power sector privatisation is not meeting it’s objectives as a National grid but only serving about 15% (Fifteen percent) of the country’s electrical demands, not minding it’s privatisations for over 10 years. The President attributed this a failure and then canvasses for Discos recapitalisation tariff review at N2tn.
The President spoke on Monday during the Nigeria Electricity Supply Industry market participants and stakeholder roundtable, which focuses on the privatisation. He also called for the recapitalisation of power distribution companies.
President Tinibu who was represented by the Special Adviser, Energy and Infrastructure, Office of the Vice President, Sodiq Wanka. He said, “10 years on, I believe it is fair to say that the objectives of sector privatisation have, by and large, not been met. Over 90 million Nigerians lack access to electricity.
“The national grid only serves about 15 per cent of the country’s demand. This has left households and factories relying on expensive self-generation, which supplies 40 per cent 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 3,000MW to roughly 4,000MW today. Versus a 40,000MW target by 2020 that the Federal Government had set pre-privatisation.”
The President stated that the reasons for the sector’s underperformance in the last decade were well known, including deep commercial, governance and operational issues that had beleaguered the sector.
“As of Q2 2023, for every kWh (kilowatt-hour) of electricity sent to the grid, only 60 per cent 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 chronic underinvestment, especially in transmission and distribution. Many of the successor utilities of the PHCN have failed to meet their performance improvement targets due to technical and financial capacity issues.
“We are in a vicious cycle of under-performance and under-investment, and everyone has a different view of which value chain player should be blamed for continued sector malaise.
“But we are where we are! And the real question we should ask ourselves in our engagements in the next three days is, how do we move forward from here?”.
He noted also that in the short term, stakeholders in the sector must intensify efforts to addressing commercial issues and improve the investment attractiveness of the sector.
The President maintained that, the sector should have a clear plan to rebase tariffs to recognise the actual costs and loss levels of the entire value chain and allow for adequate investment cost recovery.
“We must be clear on shortfalls 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,” the President stated.