Kaduna state governor, Malam Nasir El-Rufai has said that the Federal Government will never be able to solve the electricity problem in the country because of the revenue available to it.
The governor, who made the remark at the 9th edition of the Nigeria Energy Conference in Lagos, said state governments are willing to come to the aid of the FG in tackling the challenges. He stressed that the solution to the poor power supply in the country depends on a power sector reform.
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“The state governments are willing and able to come to the aid of the FG in addressing these power challenges. But the solution ultimately, is to have a power sector reform act that addresses the problems of the sector, the liquidity and tariff problems so that we’ll be able to attract private investment. The fiscal space available to the FG is such that it can never be able to solve the power deficits in Nigeria. The solution is to replicate what we did in the telecom sector by ensuring that we create the right legal, legislative and regulatory environment to attract the private sector to invest in our electricity supply industry,” he said.
While noting that Nigeria requires for its growth and development the delivery of affordable, reliable and sustainable energy for homes and businesses, the former director of the Bureau of Public Enterprises, BPE, said the country lost many years of efforts and investment in its energy sector because late president Musa Yar’Adua abandoned what it termed the clear roadmap of sectoral reforms set out by the Olusegun Obasanjo government in electric power, oil and gas sectors.
“As examples, the investments in power generation and transmission infrastructure that were initiated by the Obasanjo government were either put on hold between 2007 and 2010, or were largely jettisoned by its immediate successor. The first version of the Petroleum Industry Bill, which the BPE had led in drafting, was ready by 2003, but was not presented to the National Assembly until 2008. The rest of the story of the reforms of these two sectors is well known to everyone here,” he said.
El-Rufai, who said the dismal state of the power sector betrayed the hopes that informed the Electric Power Sector Reform Act that was passed in 2005, bemoaned the untidy manner in which electricity assets were privatised. He said many of the distribution companies that bought the assets have not shown the expected technical capability and entrepreneurial passion to deliver a compelling service for their customers.
He added that while the reforms in the telecommunications sector liberated the industry with the FG earning about $1.5bn from the auction of telecoms licenses alone, the privatized electric power sector, he said, remains a drain on government resources absorbing as much as N1.6 trillion in support by the Central Bank of Nigeria, CBN and the Federal Ministry of Finance by the end of 2021.
“There are interventions proposed by the World Bank to provide another $750m to the sector in a performance-for-results programme. In contrast, the telecoms sector has never needed any intervention of this nature since deregulation in 2001,” he said while adding that “one thing that is immediately apparent is that the telecoms licenses were bought by established players who knew the industry, had a long-term view of the market, and were prepared to add value. The same cannot be said of the companies that cornered the electricity distribution companies. The situation in the power sector suggests that while there are significant roles for the state and federal governments, the private sector has to be the largest source of investments, management and know-how for sustainable and affordable electricity provision. If these structural bottlenecks are not addressed within a public policy perspective that gives primacy to serious private sector leadership in the sector, even the most determined Minister of Power can only engage in heroic, but largely futile, labour”.
He added that the same trajectory of experiences, disappointments and financial bleeding apply almost exactly to the oil and gas sector, which he said has made the Nigerian National Petroleum Corporation, NNPC, even after its notional conversion to a limited liability company, one of the biggest threats to the fiscal health of the Federal, State and Local Governments.
The Kaduna state governor said the Nigerian Governors’ Forum believes that the solution to the electricity supply deficits lie in a three-way collaboration between the Federal Government, the State Governments and the private sector in the expansion of generation, transmission and distribution capacity in the country, in a soundly regulated environment that is market-driven.
He said the subnational governments have a key role to play which has made the Northern States Governors’ Forum incorporated a special purpose vehicle to build 100MW solar plants across the 19 states and the FCT, with initial total capacity of 2,000MW, that may be expanded to 4,000MW.
“Kaduna State has already provided the land for its own 100MW solar farm to be developed under this initiative, in addition to 10 other Northern States. These 2,000MW are expected to be mostly off-grid to avoid over-burdening our perennially national weak transmission network,” he said, noting that the projects are approaching financial closure.
He added that Kaduna state, which has conducted preliminary surveys and mapped out over 8,000 off-grid communities which are ready to partner with private solar developers to provide smart and reliable minigrids to energize their livelihoods, is also building two 100MW and one 50MW grid-connected solar power plants with private sector partners.
“The Kaduna State Government has also acquired two gas-powered turbines for an 84MW thermal power plant, and they are expected to be shipped into the country shortly. This will add to the existing capacity for power generation in the state, through the 215MW plant in Kudenda and the 30MW from the Gurara dam, both owned by the Federal Government. We are in discussions with the Federal Government to concession these two power plants to our Kaduna Power Supply Company,” he said.
Meanwhile Key stakeholders have pledged commitment to the growth of Nigeria’s energy Sector. They emphasised efficient collaboration among key stakeholders at the conference.
The Minister of Power, Engr. Abubakar D. Aliyu, FNSE, who was represented by the Permanent Secretary of the ministry, Mr. Temitope Fashedemi, said, “we understand Nigeria’s economic development aspiration demands a higher energy capacity than what we have available presently. Our current unmet energy needs are huge, and they are bound to increase due to urbanization and population expansion. This makes it clear that access to energy is critical in advancing our country’s development agenda. Consequently, an enabling policy and investments in modern energy technologies is required”.
Exhibition Director, Nigeria Energy, Ade Yesufu, said the three-day high level knowledge packed conference will feature insightful panel discussions across building power capacity, financing power projects, increasing efficiency through new technologies and exploring renewable energy mix with special focus on green hydrogen
