Shortly after Adebayo Adelabu, Nigeria’s new minister of Power gave a speech about how the country’s electricity sector challenges aren’t unsolvable, reports began trickling in that the national grid has collapsed, the second time in a week, providing a visceral reminder of how easy it is to underestimate Nigeria’s power challenges.
“I’ve diagnosed the issues to a large extent, and I’ve found out that the solutions are not as difficult as we all believe,” Adelabu said at an energy conference in Lagos, and an hour later, millions of Nigerians were thrown into darkness power generation dropped from dropped below 50MW.
In the speech at the Nigeria Energy conference organised by Informa Markets, Adelabu pledged to collaborate with investors and partner groups capable of supporting a national ambition of raising power generation by 20,000MW by 2030 and ramp up collections to 80 percent of all invoices issued in the next seven years.
This is coming at a time when power distribution companies cannot meet revenue requirements under their various contracts spurring lenders to call their debts. Generation companies bogged by debts cannot meet new commitments towards their gas suppliers and the Transmission Company can’t contain a creaking grid.
Following the removal of subsidies which worsened the cost of living crises, the electricity sector regulator has resorted to surreptitious increase of tariffs because of fear of popular angst. The tariff methodology in use, the Multi-Year Tariff Order prescribes a biannual tariff review based on macroeconomic conditions, including inflation, foreign exchange, and the cost of gas.
Adelabu said that in the challenges also lie critical opportunities, such as unleashing power from renewable energy sources, for example, solar, hydro, wind, etc., which will reduce the country’s carbon footprint in terms of emission and create jobs and stimulate economic growth.
The minister also said among his priorities was encouraging investment in cutting-edge technologies and innovative solutions that can transform the way power is produced, transmitted, distributed, and consumed. He also said he would be collaborating, sharing knowledge, and building partnerships that transcend borders and ideologies.
“Although some progress has been made across the power sector, there still remains a huge gap, especially in delivering adequate and stable power supply to consumers nationwide,” he said.
While the minister was heavy on what needs to be done to make the power sector thrive such as improving transmission, raising generation, and ensuring that consumers pay for power through adequate metering, the speech was light on how these could be done.
in 2013, Nigeria privatised the power sector hoping to replicate the success of the telecommunication sector. While the government sold the distribution and generation utilities to investors, it could not find buyers for the transmission company. Poor funding has hampered the transmission company such that a creaking grid cancels out reforms made in the upstream and downstream value chains.
Apart from challenges with the transmission segment, the DisCos are unable to collect the full value of electricity distributed each month crippling the ability of generation companies to pay for gas used to fire the thermal plants.
Adelabu said a new mindset was now required asking investors to enter the sector with long-term investments. “Investors must understand this,” he implored, assuring that when eventually break even and start making profits, “sincerely, you will all be amazed,” he said.
“As a politician, as a minister of power, I also have limited time to spend, and I must make an impact. I am determined to make an impact,” he said.