By ABAH SUNDAY, Abuja
The Federal Government of Nigeria on Wednesday disclosed that the debt burden of the power sector at the moment is over N3 trillion.
Minister of Power Chief Adebayo Adelabu made the appeal at a media parley in his office on Wednesday in Abuja, noting that the debts were accumulated under previous administrations, and if not addressed, uninterrupted power supply being targeted in the near future could not be achieved.
According to the Minister, the Tinubu administration inherited over $1.3 billion debts owed the generation companies (GenCos) out of which 60 percent goes to gas supply, while the legacy debt stood at US$1.3 billion, now valued at about N2 trillion currently.
He maintained that for January the federal government is owing over N450 billion subsidy, and it is expected to pay over N3 trillion for the year, adding however that “we are working underground to salvage the situation”.
To this effect, he advocated a national discourse to consider if electricity should be regarded as a commercial product or a social service.
“Should it be considered as a commercial product or social service. There must be an agreement across divides on how we define electricity. If we don’t resolve subsidy, whatever we do is like working in the dark
“Depending on the outcome of the above, either implementation of a cost reflective tariff or a cashed backed federal government guaranteed subsidy funding regime to inject
liquidity into the sector should be adopted” he said
Also, the minister stated that for the power sector to run seamlessly, there should be increased investments across the value chain for infrastructural improvements, capacity expansion and transmission automation.
“Equally, there should be diversification of power generation to absorb renewables and facilitate the nation’s journey to energy transition target.
“Encourage distributed power strategy in conjunction with sub- national government focussing on embedded power model to reduce pressure on the national grid, and to ensure alternative electricity supply to the distribution companies (DisCos)
Other problems in the industry, he said, include, inadequate power evacuation capacity at generation companies (GenCos) locations, coupled with unstable and fragile transmission lines, devoid of automated frequency controls, lacking in fail-over or back-up capacity with frequent human disturbances through vandalisation and theft.
“Aging weak distribution infrastructure (lines and transformer) coupled with huge meter gap causing unbearably large technical and collection losses” he noted.
These, Adelabu said, are issues that look so simple on the surface and should ordinarily require little efforts to fix over time. However, it’s been quite difficult to get these problems fixed over the years due to the complications wrapping the entire value chain end to end.
The Minister also used the opportunity to appeal for patience from Nigerians over the epileptic power supply being experienced across the country, assuring that the narrative will soon change as government is making frantic efforts to overcome the myriad of challenges confronting the sector for improved service.
He also disclosed that in a bid to strengthen the grid against collapse which has been a recurring decimal in the system, efforts were being made to complete the SCADA project started many years back.
He said the worsening situation of power supply witnessed since January happened because the companies who supply gas to the generation companies (GenCos) demanded that the money owed them be paid before further delivery, hence part of the solutions being applied is to boost liquidity in the system.