Resolving hiccup around 2,000 megawatts of unutilised electricity

Babatunde Fashola Minister of Power, Works and Housing, at a recent meeting with operators of the power sector, revealed that N73bn investment is needed to enable power distribution companies to adequately distribute the 2,000MW to customers.

He disclosed that of the N73bn investment required, about N57.9bn was needed to procure equipment while N15.2bn would serve as the cost of transportation and logistics.

As interesting as this proposal zis, industry experts are skeptical of this move owing to the uncertainties that have plague the power sector since privatisation some five years ago.

Despite Fashola regular meetings with electricity operators in the country to discuss critical issues with the sector, it remains to be seen when an appropriate solution to end the hiccups bedeviling the sector would emerge.

Industry closer watchers opined that the inability of the electricity distribution companies to collect revenue due them by consumers has made to them heavily indebted to generating companies which are also at the mercy of gas suppliers because of unsettled financial obligations.

Industry experts said absence of a cost reflective tariff remains the main factor inhibiting the growth of the power sector saying that investors would continue to shun the sector because of their clear inability to recoup their investment.

They said that investment would remain elusive in the power sector owing to the lack cost reflective tariff which has adversely affected gas supply to the sector.

Bart Nnaji former Minister of power said that Transmission constraint in the power value chain will continue until the government support segmentation of the transmission system. When this is done, it would engender competition among the segmented units and improve efficiency of the system.

He urged DisCos not to hold on tight to their assets but should rather allow investors to come adding that it is the only way it can work.

Recent statistics indicate that Discos’ remittances to NBET for energy have fallen from an average of 35 percent, whilst monthly revenue shortfalls have increased to an estimate of N25 billion.

Report has constantly showed that investors and stakeholders in the power sector as a result of the liquidity issues find it difficult to access more loans from Nigerian banks due to their inability to meet the payment obligations connected with previous debts.

This worrying situation has no doubt affected the capacity of the power firms to improve on electricity supply to consumers for domestic and industrial uses.

Industry close watchers are worried that if this situation persist, industries and other users will carry on with the burden of providing own electricity outside the national grid for the foreseeable future.

The announcement by the Federal Government through the Federal Executive Council of the approval N701 Billion as Power Assurance Guarantee for the NBET is seen as spirit lifting to cushion revenue gap in the industry which has grown too large over a short period of time.

Nevertheless, current move towards transparency while desirable is inspired by crises in the sector and operators faced with draught of ideas to rescue the situation.

KELECHI EWUZIE