President Bola Ahmed Tinubu has decried the poor state of the Nigeria’s electricity sector, stating that ten years post privatisation deal, over 90 million Nigerians still lack access to electricity.
Tinubu stated this during the 2023 Nigeria Electricity Supply Industry (NESI) market participants and stakeholder roundtable held in Abuja on Monday.
The privatization of the NESI, took place in 2013 which expectations to herald turning point in Nigeria’s energy sector, transitioning it from the era of the Power Holding Company of Nigeria (PHCN) to a system of private investor ownership and participation.
However, the progress in NESI, post-privatization has not fully met the lofty expectations set forth in the National Electricity Power Policy, 2001 (NEPP), the Electric Power Sector Reform Act, 2005 (EPSRA) now Electricity Act 2023, and the Road Map for Power Sector Reform, 2010.
According to the President, who was represented by Sodiq Wanka, special adviser on energy and infrastructure, under the office of the vice president, the privatization arrangement failed to meet key objectives which includes: improve the efficiency of the power sector, unlock private sector investments and unleash the potential of the nation through an energized economy.
“10 years on, I believe it is fair to say that the objectives of sector privatization have by and large, not been met. Over 90 million Nigerians lack access to electricity. The national grid only serves about 15 percent of the country’s demand.
“This has left households and factories to rely on expensive self-generation, which supplies a staggering 40 percent 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 3000MW to typically just over 4,000MW today. Versus a 40,000MW target by 2020 that the Federal Government had set pre-privatization.The reasons for the underperformance of the sector in the last decade are well known. There are deep commercial, governance and operational issues that have beleaguered the sector,” he said.
Read also: Nigeria signs $463m deal to boost electricity access
The president, speaking further noted that the sector has suffered from chronic underinvestment, especially in transmission and distribution. He said that many of the successor utilities of the power holding company 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 be asking ourselves in our engagements in the next three days, is how do we move forward from here?
“In the short term, we must intensify efforts to address commercial issues and improve the investment attractiveness of the sector,” he said.
Tinubu also stressed that all licensees must not only have the technical capacity to deliver on their license, but must also have the financial muscle to invest and grow their operations.
According to him, preliminary analysis shows that DISCOS today are under-capitalized to the tune of close to N2trillion, “We must facilitate a reorganization and a recapitalization process that brings in new partners and new capital to jumpstart performance in this critical section of the value chain.”
In his remarks, Abbas Tajudeen, speaker of House of Representatives said that access to electricity has remained a significant obstacle to the overal national development adding that despite progress made, the problem of inadequate power supply remains persistent and seemingly insurmountable.
According to him, the current estimation of energy delivery of 4,000MW to a population of over two hundred million 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.
Victor Nwokolo, representing the speaker said, “there is no gainsaying that one of the factors that have hindered economic development in our country is epileptic electricity supply and lack of some other basic infrastructure.
“We must delve into why privatization has succeeded in other countries but has not yielded the same results in Nigeria. Additionally, we need to understand why smaller neighboring countries that rely on Nigeria for electricity have stable power supply while we continue to experience frequent outages.
Read also: Nigeria signs $463m deal to boost electricity access
“It is crucial that we identify the mistakes we have made and determine what actions need to be taken by the government to ensure the success of this sector. As representatives of the people, we are deeply concerned about the issue of electricity supply in Nigeria. Despite the efforts made by the legislature over the years to enact legislation that provides legal support to the operations of the power sector, numerous challenges persist.
He explained that in response to the challenges in the sector, the 10th House of Representatives has prioritized the power sector in its legislative agenda, with the aim of addressing issues such as insufficient generation and transmission capacity, energy theft, inefficient distribution, tariffs, and corruption, among others.
According to him, the House will equally prioritize investments in the transmission and distribution infrastructure to reduce technical and non-technical losses; decentralize energy productions by promoting off grid solutions, especially in rural areas where grid connectivity is challenging.
For Godswill Akpabio, President of the Senate, the legislators, particularly at the Senate, have played a role in seeking to progress the sector by recently enacting the Electricity Act, 2023.
He explained that under the new Act, the legislaors seek to address the inconsistencies, the areas of lacunae in the sector, while incorporating changes borne of the evolution of a privatized electricity supply industry.
Represented by Enyinnaya Abaribe, senator representing Abia South Senatorial District, Akpabio said that the Act also seek to establish grounds of a broader participation of the states in the electricity value chain, as well as put in place mechanisms or measures to dissuade those who would increase the national challenges by stealing electricity or vandalizing 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,” he said.
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