$10 Billion Required Annually To Revitalize The Power Sector — FG

Adelabu Adebayo

$10 billion annually is required to revitalize the power sector, according to FG

Adebayo Adelabu, the Minister of Power, declared that in order to revive the country's power industry and solve the liquidity crisis, the Federal Government will require $10 billion a year for the next ten years. But he pointed out that considering the size of the national budget, such a sum is not practical.

The Senate Committee on Power arranged a one-day investigation hearing on Monday in Abuja, where Adelabu made these statements. The session's main goal was to stop the Nigerian Electricity Regulatory Commission's proposed new electricity pricing rise, which the Distribution Companies were supposed to implement.

According to Adelabu, “For this sector to be revived, the government needs to spend nothing less than $10 billion annually in the next 10 years.

“This is because of the Infrastructure requirement for the stability of the sector, but government cannot afford that.”

He continued by saying that investors needed to have access to the power market in order to maintain the industry. Public schools in some areas, making the difficulties encountered by guardians, educators, and administrators even more severe

“We must make this sector attractive to investors and to lenders.

“So for us to attract investors and investment, we must make the sector attractive, and the only way it can be made attractive is that there must be commercial pricing.

“If the value is still at N66 and the government is not paying subsidy, the investors will not come.

“But now that we have increased tariff for a Band, there is interest been shown by investors.”

He added that the lack of liquidity was the sector's main problem and linked it to the use of a subsidized pricing regime in the absence of a cost-reflective tariff.

Adelabu admitted that the subsidies had not been sufficiently funded over time, resulting in the Generating Companies and the Gas Companies accruing large liabilities.

He pointed out that insufficient funding prevented the government from paying the outstanding N2.9 trillion subsidy, emphasizing the need for policies to support the industry.

The minister made a plea to lawmakers to help resolve the debt owing to operators in the generation, transmission, and distribution phases of the value chain.

He emphasized that consumers who do not receive at least 20 hours of power supply will not be subject to the increased cost, explaining that the tariff rise is dependent on supply availability. He emphasized the need of paying off outstanding debts owing to gas firms and generating companies (GenCos) and reiterated the government's commitment to ensuring lasting reform in the industry.

He emphasized government investments in hydroelectric power as a means of improving the supply of electricity. Zungeru's 700 megawatt power plant is under construction, while Kashimbila Hydroelectric Power Plant, which can generate 40 megawatts, is being evacuated to increase generation capacity.

The minister also discussed ongoing projects to build 26 minor hydroelectric dams with the goal of boosting the country's electricity output. Despite the sector's unbundling, committee members voiced unhappiness with Nigerians' experiences with energy delivery over time.

Senator Ola Ashiru, the vice chairman of the committee and a representative from Kwara South, stated in his remarks that Nigerians were disproportionately affected by inefficiencies in the power industry. He underlined how common inefficiencies are in the processes of generation, transmission, and distribution.

Ashiru recommended reevaluating the pricing rise and emphasized the significance of protecting Nigerians with modest incomes.

Senator Solomon Larlong expressed similar worries regarding insufficient consultations prior to the tariff rise. He underlined that before enacting the tariff increase, concerns about palliative measures must be resolved.

Senator Adamu Aliero spoke in favour of reverting the rise in the price of power.