Adelabu: FG Must Invest $10bn Annually to Guarantee Uninterrupted Power Supply

•Says Nigeria needs N2.8trn to subsidise power in 2024

Sunday Aborisade in Abuja

The Minister of Power, Adebayo Adelabu, said yesterday 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.

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 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 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 do 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 hydro electric  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  hydro power dams to boost electricity production across the country.