Liquidity, Funding critical to survival of Nigeria's Power Sector, says Minister

The Minister of Power, Adebayo Adelabu has lauded Foreign Development Partners for their support to the Sector.

Adelabu, who said this during a Meeting with Foreign Development Partners operating in the Country, urged them not to relent.

This is contained in a Statement issued on Friday by his Special Adviser, Strategic Communication and Public Relations, Bolaji Tunji.

The Minister reiterated the Federal Government’s commitment to continuous production, seamless transmission and impeccable distribution of Power.

He briefed the Partners on the Federal Government’s Transformation Master Plan under the Ministry to improve Power Supply across the Country.

“When we resumed here, we spent the first three months to diagnose and investigate issues that have affected development in the Power Sector.

“Why the Sector is still at the level it is today and the factors militating against the turnaround that is envisaged in the Sector.

“We consulted; we engaged all the Stakeholders. At the end of the Diagnosis and Investigation, we have a full understanding of the situation. We discovered that most of the problems in the Sector are not all Technical or Engineering-related,” he said.

The Minister said that the problem of the Sector had to do with Liquidity, Funding, Structural or Operational issues which anybody that has the commitment could resolve.

According to him, though they are simple issues, they are multiples, complicated and permeate all the Sectors in the Value Chain.

“We met as a Team to provide practical solutions and came up with a Timing Template on those issues that can be resolved in the short term, mid-term and those that can be resolved in the long haul.

“We capped these activities up in December 2023 when we had a Ministerial Retreat where we had the various Stakeholders across the Value Chain in attendance.

“We had serious discussions that lasted three days where we came up with what we have to do. We are focused on providing workable solutions to the various issues,” he said.

He said that the main problem of the sector was Liquidity and Funding, adding that the Sector was supposed to generate Revenue if allowed to operate a Commercial Model.

He further said that whereby all the Costs attributed to Generation of Power, Transmission and Distribution of Power were recovered through the Tariff while the Operators were given a good mark up.

He, however, said that the Sector was not allowed to charge a Cost Reflective Tariff, adding that Government promised Subsidy which was not a problem.

“Once the Sector suffers from Liquidity challenge, there will be no Investment in the Sector and that is why the Structures are dilapidated. It is important we resolve the Liquidity issue,” he said.

Adelabu also spoke on the pivotal Role of the States in the Power Sector, adding that the Electricity Distribution Companies (DisCos) as presently constituted, should be unbundled along State lines.

“We need to encourage the States to have their own Power Generating Companies, encourage them to establish Structures for Transmission and Distribution.

“Each State Government must also start showing interest in those in charge of Distribution in their States, while the Federal Government can track Generation and Transmission, the States should be able to track the Distribution Companies,” he said.

“We will ensure that the Rural Electrification Agency (REA) lives up to expectations by serving the underserved and the unserved Rural Communities that may not be commercially attractive to the DisCos.

“Also to focus on Distributed Power by intensifying efforts to raise the Volume of Renewable Energy to National Capacity, with focus on developing Small Hydro Power Plants along the 26 Small Dams in the County.

“We can hybridise this with Solar when the water level goes down,” he said.

He said that Solar option was being considered for the Northern Part of the Country including use of Windmills to generate Power Offshore, along the Coastal Part of the Country.

Responding, the Partners thanked the Minister for the comprehensive diagnosis of the challenges in the Sector including the Government’s Transformation Plan.

The Partners said they would need to further organise themselves in order to avoid overlap of Functions.

They also assured the Minister of. their continuous support since his briefing had given a clear direction on how to resolve some of the issues in the Power Sector Value Chain.