The Senate is definitely displeased by the state of affairs in the electricity sector and has stated clear problems it believes should be tackled before any further injection of funds.
The Senate thus halted any plans the Federal Government (FG) may be having of raising a secured N309 billion bond to finance the deficiencies in the electricity sector, instructing the Federal Ministry of Power, Works and Housing as well as the Nigerian Electricity Regulatory Agency (NERC) to stop the Nigerian Bulk Electricity Trading Plc, NBET, form raising the bond.
For one, the increase in tariffs that have occurred twice since 2013 without significant improvement in any of the areas of investment, generation, transmission or distribution, has left them wondering where the funds were going and why results were not being achieved. Particularly, Senator Mustapha Bukar, representing Katsina North lamented the stagnant state of services in the sector.
Second, the Senate is worried that the FG’s proposed sale of bonds was only going to be paid as a charge on the market revenue stream, instead of the stakeholders concerned to cauterize the bleeding in revenue and improve the efficiency of operators.
Another source of concern was the effect, or rather lack of effect of the previous bailout funds to the tune of N213 billion given by the CBN through the Nigerian Electricity Sector Intervention (NESI). Without any tangible result from the use of that fund, the Senate is not convinced that the proposed bond will not suffer the same ill fate.
To further drive home the point, attention was drawn to the alarming rate at which market shortfall had continued to rise, which was calculated to be around N500 million monthly. With this and an expected rise in the shortfall, the bond may not really solve the problem for long.
“Continued incidence of market shortfall is a disincentive for new investors to venture the Nigerian electricity market. ‘’This implies that the projected generating capacity is an illusion. As a matter of fact, any increment in generating capacity would further aggravate and escalate the market shortfall,” Bukar said.
In addition to stopping the bond, the Senate also mandated its Committees on Power and Privatization to look into the performance of the all players in the power sector and compare with their performance agreement. It is hoped that with the moves of the Senate, the real problems of the sector can be unraveled and adequately dealt with.