• Friday, March 29, 2024
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Transcorp outlines two major mistakes in privatisation of power sector

power sector

Valentine Ozigbo, president and CEO of Transnational Corporation of Nigeria Plc (Transcorp) has said mismanagement of expectations and non-implementation for the master plan are the two major mistakes made in the privatisation of Nigeria’s power sector.

Despite privatisation, the problems in Nigeria’s grid-connected power are enormous. Power plants do not get adequate gas supply which sees at least 8,000MW of their installed capacity of over 12,000MW constrained. Gas suppliers complain they do not receive full payment for gas supplied and pricing is regulated preventing legacy plants from paying commercial price for gas.

Yet, generation companies who use the gas as feedstock do not get their own market invoices fully settled too by the DisCos.

“Two key mistakes have been made in the past around the management of the sector. The first emanates from the mismanagement of expectations and the second is the non-implementation for the master plan,” Ozigbo told BusinessDay in an exclusive interview.

Ozigbo said Nigeria must look at the entire value chain issues together not in part and solve the problem holistically, aligning at the technical, commercial and political levels.

Nigeria’s power sector is riddled by debts and Transcorp Power is owed about $250 million.

“It is unfortunate that we are owed about N80 billion ($250 million). This type of exposure would have been more catastrophic if not for our strength and capacity, we would have collapsed with that level of debt,” Ozigbo said.

Ozigbo admitted that if Nigeria doesn’t have solutions to deal with the problem in the future there will be more accumulations as time progresses.

“There are plans to put some of this debt obligation in the budget as subventions that government will need to now take care of which will clear the arrears and fix the issues going forward however it must not be allowed to fester and continue in the future,” Ozigbo admitted.

As a Genco, Ozigbo said the existing agreement with government is to generate power and sell to a government agency which is known as Nigerian Bulk Electricity Trading (NBET), so the government has taken the sole responsibility to pay Transcorp its debts, not Discos.

Responding to a new World Bank loan announced by the federal government last year which is expected to pay special emphasis to transmission and distribution just like the Siemens deal, Ozigbo said there are boxes to be ticked when it comes to loan.

“I am optimistic that we will get it right and because the World Bank cannot lend money without asking the right questions or asking for proof they can payback. I hope the government applies the best execution skills towards ensuring the success of it,” Ozigbo said.

Recall in October last year, the Minister of Finance, Budget, and National Planning, Zainab Ahmed said the World Bank had approved a $3 billion loan request for the transmission and distribution of Nigeria’s power sector.

Many nations in the world have an adequate supply of electricity. Nigeria has been an exception. In spite of her rich human and natural resources, the country has struggled to maintain a stable and efficient power sector. This is even more hurtful, considering the array of technocrats that the nation parades, the series of meetings between stakeholders and regulatory interference, all availing to nothing.

“There are many gaps such as the inability to transmit everything we generate, power theft and government debt leading to many losses and inefficiencies where a few people are paying for power which is inadequate to cater for the value chain. Hence the importance of good policies cannot be overemphasised,” Ozigbo told BusinessDay.