Posted by On Monday, President Tinubu claimed that the privatization of Nigeria’s power sector had been a failure.
Even though the national system was privatized a decade ago, Tinubu suggested that it was only meeting 15% of the country’s electrical consumption.
During a roundtable discussion on privatization in the Nigerian electricity supply industry, Tinubu advocated for the recapitalization of power distribution businesses.
“10 years on, I believe it is fair to say that the objectives of sector privatisation have, by and large, not been met,” the President, who was represented by Sodiq Wanka, Special Adviser, Energy and Infrastructure, Office of the Vice President, remarked. Unfortunately, more than 90 million people in Nigeria do not have access to modern energy.
“Only roughly 15% of the country’s demand is met by the national grid. This has resulted in 40% of the country’s demand being met by expensive self-generation from families and companies.
Worse, throughout the past decade, the maximum amount of electricity that may be transported over the national system has remained almost unchanged. From slightly over 3 000 MW, the system now has the ability to handle 4 000 MW. Rather than the Federal Government’s pre-privatization goal of 40,000MW by 2020.
The president said that the problems with commercialization, governance, and operations that have plagued the sector for the past decade are well documented.
As of Q2 2023, only 60% of the cost of each kilowatt-hour (kWh) of electricity exported to the grid is recovered. However, the recent devaluation of the naira means that even the tariff paid for that unit of electricity is not reflective of its true cost.
“The industry as a whole, but especially transmission and distribution, has been chronically underinvested in. Technical and financial capacity difficulties have prevented several of the PHCN’s successor utilities from meeting their performance improvement targets.
There is much disagreement over who, if anyone, throughout the value chain is to blame for the sector’s ongoing underperformance and lack of investment.
But we’re in the position we’re in! We need to spend the next three days asking ourselves, “How do we go forward from here?” in all of our activities.
He pointed out that, in the near term, industry players need to step up their efforts to fix commercial problems and make the industry more appealing to investors.
He argued that the industry needed a concrete strategy for rebasing tariffs in order to account for the full value chain’s actual costs and loss levels and permit sufficient investment cost recovery.
We need to be on the same page regarding budget gaps and how to cover them. There also has to be a transparent strategy for paying off long-standing industry debts to diverse value chain participants. The president said that a reconciliation effort had begun in this regard.