President Bola Ahmed Tinubu has said that the national grid only serves 15% of Nigeria’s power demand.
He said this at the Nigerian Electricity Supply Industry (NESI) Roundtable in Abuja on Monday, October 30.
According to the President who was represented by the Special Adviser, Energy and Infrastructure, Office of the Vice President, Sodiq Wanka, Nigeria’s power sector privatization has failed to meet its objectives. He said:
- “10 years on, I believe it is fair to say that the objectives of sector privatization have, by and large, not been met. Over 90 million Nigerians lack access to electricity.
- “The national grid only serves about 15% of the country’s demand. This has left households and factories relying on expensive self-generation, which supplies 40% of the country’s demand.
“What is worse is that the total amount of electricity that can be wheeled through the national grid has remained relatively flat in the last 10 years. The grid capacity has increased from just over 3,000 megawatts (MW) to roughly 4,000 MW today. Versus a 40,000MW target by 2020 that the Federal Government had set pre-privatization.”
Impending tariff review
President Tinubu also highlighted the fact that there needs to be a distribution companies’ recapitalization.
According to him, electricity tariffs are not cost-reflective, however, he assured that a reconciliation exercise is already ongoing to get rid of debts activate investments and resolve financial capacity challenges.
He said:
- “As of Q2 2023, for every kWh (kilowatt-hour) of electricity sent to the grid, only 60% is paid for. But as we know, even the tariff paid for that unit of electricity is far from being cost-reflective, especially in light of the recent devaluation of the naira.
- “The sector has suffered chronic underinvestment, especially in transmission and distribution. Many of the successor utilities of the Power Holding Company of Nigeria (PHCN) have failed to meet their performance improvement targets due to technical and financial capacity issues.
“We are in a vicious cycle of under-performance and under-investment, and everyone has a different view of which value chain player should be blamed for continued sector malaise. But we are where we are!
- “And the real question we should ask ourselves in our engagements in the next three days is, how do we move forward from here? We must be clear on shortfalls and how we will finance them.
- “And there must be a clear path to extinguishing historic sector debts to various value chain stakeholders. A reconciliation exercise in this regard is already underway,”