Nigeria’s Minister of Power, Adebayo Adelabu, has disclosed that the country’s electricity generation, distribution, and supply chain requires an annual investment of $10 billion over the next decade to overcome its current liquidity challenges.
This revelation comes as senators have rejected the recent hike in electricity tariff, deeming it unacceptable and anti-people.
The minister emphasized that this significant investment is necessary to end the sector’s liquidity crisis. He made this statement during a one-day investigative hearing on halting the increase in electricity tariffs, organized by the Senate Committee on Power. The hearing aimed to address the economic situation in Nigeria and the experiences of Nigerians with electricity supply over the years, despite the unbundling of the sector.
Lawmakers expressed concerns about the inefficiencies in the power sector, with Senator Enyinnaya Abaribe, Chairman of the Committee, stressing the need for solutions to the sector’s issues and ways to ensure liquidity. He also criticized the non-appearance of ZIGLAKS, a company that received N32 billion over 20 years to provide prepaid meters for Nigerians but failed to do so.
Other senators, including Lola Ashiru, Solomon Lalong, and Adamu Aliero, echoed the need to protect poor Nigerians and consider reversing the tariff increase, citing the lack of consultation before the hike and the need for palliatives to be discussed and provided.
The minister, however, insisted that commercial pricing is necessary to attract investors and lenders to the sector. He attributed the major challenge in the sector to the absence of liquidity, which has led to the operation of a subsidized tariff regime. The government’s inability to pay outstanding subsidies, amounting to N2.9 trillion, has resulted in huge liabilities owed to generation companies (GenCos) and gas companies.
Adelabu appealed to lawmakers to support the process of paying the debt owed operators across the value chain of generation, transmission, and distribution. He emphasized that the increase was based on supply, and customers who do not receive 20 hours of power supply should not be made to pay the new tariff.
The government is committed to ensuring sustainable reform in the sector, including clearing outstanding debts owed to GenCos and gas companies. Investments are being made in hydroelectric power, with the construction of a 700-megawatt power plant in Zungeru and the Kashimbila Hydroelectric Power Plant of 40 megawatts awaiting evacuation to improve generation. Additionally, 26 small hydro power dams are being invested in to boost electricity production across the country.
