By Tony Obiechina, AbujZainab Ahmed
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed has advocated another level of reform process to develop the power sector.
Speaking at a Senate Public Hearing on the “Power Sector Recovery Plan and the Impact of COVID-19 Pandemic”, the minister noted that key stakeholders in the sector have fallen short of their expected contributions for achieving the desired turn around envisaged by the reform initiatives.
” We are of the view that another level of reform process is required to develop an integrated approach for resolving regulatory and policy failures, establish a fiscally sustainable financing plan by the federal government to ensure full funding for tariff shortfalls and implementation of a comprehensive performance improvement plans”, she said.
The Power Holding Company of Nigeria (PHCN) was in 2013 unbundled to pave way for the emergence of six Generating Companies (GENCOs), 11 Distribution Companies (DISCOs), and one Transmission Companies of Nigeria. Both the GENCOS and DISCOs are fully privatised outfits
According to her, it is expected that the power sector should soon be on a sustainable recovery path when all initiated projects get all necessary approvals and implementation becomes fully operational.
Highlighting the challenges that have bedeviled the Nigerian power sector, the minister said: “To this end the FGN has initiated several projects in conjunction with Development Partners to revamp the Power Sector. These initiatives are work in progress with the World Bank, African Development Bank (AfDB), French Development Agency (AFD), and China-Exim Bank among others.
“The Projects include: Nigeria Electricity Transmission and Access Project – USD$486 million World Bank – Approved; Nigeria Electrification Project – USD$350 million (World Bank) and USD$200 million African Development bank (AfDB) – undergoing approval processes; North Core Dorsale Nord Interconnector Project – USD$26 million World Bank Regional – undergoing approval processes; Abuja Power Feeding Scheme – USD$170 million – AFD undergoing approval processes; Power Sector Recovery Program for Results (World Bank) – USD$750 million – ongoing approval processes; and Zungeru 700MW Hydro-Power Project – USD$984,323,013.08 (China EXIM Bank) – Approval.
Ahmed also stated that most of the aforelisted programs are part of the Power Sector Recovery Program “which is designed to restore the financial viability of Nigeria’s power sector, improve transparency and service delivery, resolve consumer complaints, reduce losses and energy theft and reset the Nigerian electricity supply industry for future growth.
She said, “The first part of the PSRP has recently been negotiated and expected to commence implementation once all necessary conditions and procedures have been met.
“These interventions are all made possible due to the role of the Federal Ministry of Finance, Budget and National Planning as the borrower and are at various stages of implementation,” she said further.
Speaking on outcome of the transition of the key components of the power sector from a publicly owned to largely privately owned, Ahmed said: “It did not bring the expected outcomes and the sector has been under a lot of stress, especially in terms of liquidity”.
According to her, the challenges in the sector include: Distribution Companies on the average currently report only about 40 percent of Aggregated Technical and Commercial Losses; Tariff regulation and all market contracts have not been enforced since privatization; and federal government has been spending billions to fund tariff shortfalls and its liabilities are increasing steadily every year.
