Nigerians can enjoy steady electricity if FG can invest $10bn yearly on power sector – Adelabu

According to Mr. Adebayo Adelabu, the Minister of Power, the Federal Government has to spend $10 billion a year for the next ten years in order to resuscitate the country’s power sector and solve its liquidity crisis.

He continued by saying that, given the magnitude of the budget, such was not possible in the nation.

Adelabu said this in Abuja on Monday, at a one-day investigative hearing on halting the new electricity tariff increase by the Nigerian Electricity Regulatory Commission for onward implementation by the Distribution Companies.

The investigative hearing was organized by the Senate Committee on Power.

Adelabu said, “For this sector to be revived, the government needs to spend nothing less than $10bn annually in the next 10 years. “This is because of the Infrastructure requirement for the stability of the sector, but government cannot afford that.”

He added that to sustain the sector, there was a need to open the power market to investors.

Adelabu stated, “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 tariff for a Band, there is interest been shown by investors.”

He further stated that the major challenge in the sector was the absence of liquidity, saying that the sector has been operating on a subsidized tariff regime, given the absence of a cost-reflective tariff.

He, however, said the subsidy had not been funded over the years as huge liabilities had been owned by the Generating Companies (and the Gas Companies.

He added that the inability of the government to pay the outstanding N2.9 tn subsidy was due to limited resources, hence the need to evolve measures to sustain the sector.

The minister appealed to the lawmakers to support the process of paying the debt owed to operators across the value chain of generation transmission and distribution.

According to him, the increase is based on supply, saying that any customer that does not receive 20 hours of 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 GenCos and Gas companies.

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

The minister noted that there was also an ongoing investment in 26 small hydropower dams to boost electricity production across the country. However, members of the committee in their separate remarks decried the experiences of Nigerians on electricity supply over the years, despite the unbundling of the sector.

In his remarks, Senator Ola Ashiru ( APC, Kwara South) said Nigerians were paying for the inefficiency of power sector operators. Ashiru, who is Vice Chairman of the committee said there were a lot of inefficiencies 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.

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

Also, Senator Adamu Aliero called for the reverse of the increase in the price of electricity.

He said, “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 committee chairman, Senator Eyinnaya Abaribe, said what Nigerians wanted was a solution to the issues and ways to ensure liquidity in the sector. He also decried the non of appearance of a company “ZIGLAKS” over the failed agreement to provide prepaid meters for Nigerians. He alleged that the company had received N32bn in 20 years to meter Nigerian electricity consumers.

The PUNCH earlier reported that the Senator representing Osun Central, Olubiyi Fadeyi, had lamented that he pays one million naira each for both power and purchase of diesel.

Other stakeholders that made presentations at the investigative hearing include the Nigerian Electricity Regulatory Commission, Manufacturers Association of Nigeria, Association of Power Generation, and Electricity Distribution Companies among others