Lingering PIB and the power sector

The current clamour  by investors  in the  power sector for the quick passage of the Petroleum Industry Bill(PIB) should not be treated with levity.  Attention should be given to their agitations if the objectives of power sector privatization are to be achieved.

Investors in the power sector had during a recent interface session with the House committee on Privatisation and Commercialisation  appealed to the national assembly to pass the PIB so that a framework that would ensure adequate gas supply to the power sector will be put in place.

 While the revelations by the investors  during the visit are quite unsettling, it is obviously not the first time such appeal has been made. What is most worrisome  however is that the legislators  seem not to be responsive to the various appeals made to them about the need to pass the bill.

It is  rather unfortunate that such an important bill is being politicised at the expense of the general wellbeing  of the  national economy.

We support the power sector operators in their call for a quick passage of the PIB. The reason is simple. 

We desire a thriving power sector that is adequately supplied with gas for them to be able  to  generate and sell required electricity to Nigerians. Securing sufficient and steady gas supplies to the power generating companies impacts positively on the overall well being of operators in the power sector, and has tremendous impact on the revenue that goes to the investors. The level of revenue that they generate determines the level of investment that they would make in the sector.

The private sector investors in the power sector are also worried because the monies they invested in the purchase of assets  were borrowed from the banks and the banks have started knocking at their doors for repayment of the loans.

We recall that the Egbin Power Station Plc for instance lost about N8.134 per kilowatt hour to gas shortage which amounted to a whooping sum of N5.6billion per annum. No investor can really hang on for long with such difficult operating conditions.

 In a situation where electricity distribution companies such as Eko and Ikeja that ordinarily require about  2000 megawatts are given just about  500 megawatts, these are emerging threats that serve as a dis-incentive to investors.

The PIB has been in limbo for too long  and  its non passage is impacting negatively  on the  ability  to produce  and  process  gas  for  domestic  usage. If the bill is passed there would be a policy  direction as regards how  gas is produced and distributed.

 However passing the PIB alone is not enough to get  adequate gas to the power investors if the price regime for gas is still not market friendly uneconomical. 

The issue of shortage of gas is becoming more disquieting as many of the  generating  plants  are working below 60 per cent  of  their installed capacities.  This is clearly injurious to the economy  of this  country.

 The government and the legislators must rise to the occasion of ensuring that the power sector which  is very critical to the efficiency of the nation’s economy is properly driven by  an enabling environment  for adequate and stable gas supply. 

The onus lies on the legislators and the government to make this happen.