Nigeria's Power Minister Adelabu Supports Eliminating Utility Subsidies
Nigerians may begin to pay a full-cost electricity tariff as Bayo Adelabu
Nigeria continues to pay West Africa's lowest electricity supply tariff. Minister of Power claims that the gas shortage and debt are to blame for Nigeria's electricity crisis, and he supports the removal of electricity subsidies if the government is unable to pay for them.
Chief Adebayo Adelabu, the minister of power, has voiced concerns about the poor state of the nation's electricity supply, which he attributes to a number of factors including unpaid debts for subsidies. If the federal government is unable to cover the market's subsidies, Nigeria should switch to a fully cost-reflective tariff regime, Adelabu says, according to Arise News.
According to the Minister, there is currently a shortage of gas, resulting in under-capacity utilisation of less than 25% in the National Independent Power Plants (NIPPs) that are managed and operated by Niger Delta Power Holding Company Plc (NDPHC).
Adelabu made the claims on Wednesday while on a nationwide inspection tour of federal power installations. He visited the 500 megawatt (mw) Omotosho Generating Plant in Ondo State and the 750 megawatt (mw) Olorunsogo Power Generating Plant in Ogun State.
The minister says: “We have been to Olorunsogo and we are now in the Omotosho Power Plant. These are big power plants. I am impressed with the size and the technology of the power plants here. Their operational history is also impressive. And I am amazed at the level of underutilisation of these power installations. Each of them operates below 25 per cent capacity, when we are still complaining that power generation is low in this country. The under-capacity utilisation is due to a variety of reasons.
“The major part of it is the shortage in gas supply to these installations, which is why I needed to see these plants myself, to look at what can we do to improve the operational capacity of these plants.. What can we do to repair those turbines that are down? What can we do to support these power plants to operate at impressive capacity, so that power supply will improve nationwide.”
He assured to discuss better methods of cooperation and coordination with the power companies' management at a later time. in order for the federal government to assist them in increasing their operational capacity and, as a result, raise the distribution companies' level of power supply. Additionally, he noted that the government-owned power companies were now undervalued, arguing that before they could be sold, the government needed to undertake a number of projects to restore their higher capacity and increased valuation.
Adelabu insisted that Nigeria would lose money if the plants were sold in their current condition because the country had made significant investments in those power plants, which have only been in operation for 12 years. In order to ensure a regular gas supply to the Gencos and ultimately resolve the issue of undercapacity utilisation of the plants, the minister stated that a roundtable meeting and collaboration with the Minister of State for Petroleum (Gas) were necessary to address the gas supply challenge.
At this point, Adelabu stated that if the federal government is unable to cover the market's subsidy obligations, Nigeria ought to switch to a fully cost- reflective tariff regime.
He said explicitly, “And once they are owed, they are also unable to pay the gas suppliers. When the gas suppliers are not paid, they will be unwilling to supply regular gas to them. So where are these debts piling up? Where are they coming from? Part of it are the Discos are owing some portion of these debts while the federal government is also owing a huge portion of these debts, which relate to the unfunded portion of the subsidy that they pledge.
“So, I will do everything within my capacity. I have already had a meeting with the honourable Minister of Finance and Coordinating Minister of the Economy as well as the honourable Minister of Budget and National Planning, and the Special Adviser to the President on Energy, on how we can fund the outstanding subsidy unpaid by federal government.”
He stated that the relevant ministers' meeting would resume on Thursday and that they would be talking about how to support the power industry by providing the necessary liquidity and paying off a portion of the outstanding debts owed to the generating companies.
The power minister stated that going forward, Nigeria needed to discuss whether to pay the true cost of power, which he claimed was no longer inexpensive. He claims that Nigeria continues to pay the lowest electricity tariff in all of West Africa, with countries like Ghana, Ivory Coast, Niger, and the like paying nearly twice as much.
“So, if the government is insisting on continuing with the subsidy, then it has to be funded, so that there's no debt piling up for the generating companies. That's the only way out of the current power situation,” he maintained.
However, Adelabu assured Nigerians of an improvement in nationwide power supply in the coming weeks, saying the drop in supply experienced in the past three weeks was a temporary situation and resulted from shortages in gas supply to the power Gencos. He also promised that the government would pay down a major part of the debts owed the Gencos in the next couple of days, adding, “And I believe that gas supply will improve to the power generating companies and power supply to the entire nation will also improve.“
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