Although Nigeria has abundant natural gas resources, it lacks the creditworthiness to maximize its fullest potential.
This is according to Dr Sam Amadi, the former chairman of the Nigerian Electricity Regulatory Commission (NERC).
He stated this during his interview with TVC News on Tuesday, December 27. He further explained what he meant, saying:
- “Nigeria is a gas country so we have enough molecules for our power plants, but what we do not have is the commerciality, the creditworthiness. The gas-to-power market is not very solvent, we are not paying as we ought to pay. Also, taking gas to where the generation companies are is a problem, so, those governance and commercial issues are there.”
Some progress made: Dr Amadi also highlighted the fact that some progress has been made when it comes to power sector reforms. He said the power tariffs are not so bad that the market should not work with them.
He stated further that Nigeria’s power sector challenges are systemic and the distribution owners may not have the capacity to invest long-term in the sector.
More improvement needed: Amadi added that many inefficiencies should be tackled in the short term, which can improve the power supply. He said:
- “Get the distribution companies (DisCos) to remit their market contribution up to 70 to 80%, and get the gas suppliers to be paid up to 80% of their invoice, in which case, we can incentivize the whole value chain. If we have the capacity for 6000 megawatts (MW), then we should be able to supply 5000 MW to homes and businesses every day and that will be a significant improvement in the country’s power supply.”
Dr Amadi said that after attention is given to tackling short-term challenges, a framework can be laid out for the medium to long term. The first thing to do according to him is to get non-partisan persons to review the national electric power policy. He said it was done in the year 2000 and the market has moved significantly.
- “The assumptions about economics and the public sector have since changed all over the world, so, it is not safe to make a fundamental error of assuming that the private sector is the answer to power sector challenges, without having an efficient public sector,” he stated.
Further recommendations: Dr Amadi further advised that the incoming administration in 2023 should come up with a new power sector roadmap that will improve operations of DisCos and ensure the independence of system operators that will run on a commercial basis and market participants can have a stake in ensuring that the system works very well on a nondiscriminatory basis.