Stakeholders in the Nigerian power sector have put additional investment needed for uninterrupted power supply at $7.7 billion.
Besides, they also stressed the need for the Federal Government to make available the N100 billion promised as subsidy to assist in the rehabilitation of power plants in the country.
Speaking at the Natural Gas Business Forum organised by the Nigerian Gas Association (NGA) in Lagos, a former Minister of Power, Prof Barth Nnaji, said cost reflected tariff is also necessary to attract the required investment for the sector to thrive.
Nnaji, who is also Chairman, Geometric Power Limited, said: “I think the intention of the privatisation is to take the generation and distribution arms of the power sector out of government’s hands. But it is intended that those who have taken the assets should be able to invest in the assets, as the government on its part should have the will to ensure what it promised distribution companies would get done so that the distribution should hold them accountable to the agreement so made.
“The agreement is that the government will give you these assets for a specific value, not a bided value but you should reduce losses – average technical, collection, and commercial losses, to a certain number that you bided for. But to do that requires a lot of cash to invest in the network, as well as the commercial aspect of the business, such as metering. If this is not being done, that’s a problem.
“On the side of government, there must be a cost-reflective tariff in place. This means that the cost associated with the business is what is paid. The business of power is what government has to be sensitive about. Nigerians pay low value in comparison to other parts of Africa in terms of power. We have to decide as a country whether we want power or darkness.
“But I say the cost of darkness is infinite while the cost of power is finite, and we should have the will to do something about cost-reflective tariff, otherwise, nobody will come here to invest and it’s not just mere talk’’.
Also speaking, a Director at Eko Electricity Distribution Company and Principal Partner, George Etomi and Partners, George Etomi, said the privatisation agreement had set clear Key Performance Indicators (KPIs) for the owners of the distribution companies but argued that the federal government did not fulfill its part of the agreement.
According to him, the government was supposed to provide N100 billion subsidy, ensure sanctity of contracts and also ensure that the investors inherited clean balance sheets, free from liabilities.
Etomi also added that government was supposed to give the investors six months shadow management of the power assets to enable them study the assets, stressing that government did not fulfill any of these obligations as a result of the pressure by the labour unions.
He said the sector is facing liquidity challenges because of government’s failure to meet its obligations as contained in the privatisation agreement, adding that even the $3.9 billion realised from the sale of the assets was used to pay the labour instead of deploying it to upgrade transmission as planned.
While moderating the panel session, the Chairman, Independent Petroleum Producers Group and Chief Executive Officer, First Exploration & Production, Ademola Adeyemi-Bero, noted that Government should have considered the fact that the private investors would require seven times the money they paid for the assets to upgrade them after take-over, before asking the investors to pay such high price to buy the assets.
A former Group Executive Director (GED) in charge of Gas and Power at the NNPC, Dr. David Ige, said the power sector faced tactical and non-tactical challenges, and identified the delay in the completion of the Escravos – Lagos Expansion, and the Bonga Divert, which was initiated in 2014 to supply 120 million standard cubic feet of gas per day (equivalent of 650MW), as some of the tactical challenges.