Nigeria: Over 90 Million Nigerians Lack Access to Electricity - Tinubu

31 October 2023

"(Ten) years on, I believe it is fair to say that the objectives of sector privatisation have, by and large, not been met," Mr Tinubu said.

President Bola Tinubu said on Monday that over 90 million Nigerians lack access to electricity in the country.

Mr Tinubu disclosed this at the 10th anniversary of the privatisation of Nigeria's power sector and the 1st Nigerian Electricity Supply Industry (NESI) market participants and stakeholders roundtable (NMPSR) held in Abuja on Monday.

Nigeria has struggled with poor power supply for decades, a challenge that is estimated to cost businesses about $29 billion yearly, according to the World Bank.

The power sector was privatised in 2013 with the distribution and generation sub-sectors split and sold to private owners. This was aimed at enhancing the power distribution in the country.

Only the transmission component, through the Transmission Company of Nigeria, remains a public property.

Speaking on Monday, Mr Tinubu represented by Sodiq Wanka, the Special Adviser to the President on Energy and Power Infrastructure, said 10 years after the privatisation of the power sector, the objectives of the privatisation have not been met.

"The key objectives of the privatisation effort were to improve the efficiency of the power sector, unlock private sector investments and unleash the potential of the nation through an energised economy.

"10 years on, I believe it is fair to say that the objectives of sector privatisation have by and large, not been met. Over 90 million Nigerians lack access to electricity," Mr Tinubu said.

He said the national grid only serves about 15 per cent of the country's demand.

This, he said, has left households and factories to rely on expensive self-generation, which supplies a staggering 40 per cent 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 MW to typically just over 4,000MW today. Versus a 40,000MW target by 2020 that the federal government had set pre-privatisation," he added.

He explained that the reasons for the underperformance of the sector in the last decade are well known.

"There are deep commercial, governance and operational issues that have beleaguered the sector."

He said as of Q2 2023, for every kWh of electricity sent to the grid, only 60 per cent of it 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 from chronic underinvestment, especially in transmission and distribution."

Mr Tinubu further explained that many of the successor utilities of the 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 be asking ourselves in our engagements in the next three days, is how do we move forward from here?" he said.

He said only around 45 per cent of NESI customers are metered today, with wide variations across DISCOS.

He added that the scale of investment needed to meter current and new customers and replace obsolete meters is not trivial.

"The government is committed to supporting the metering drive through the World Bank DISREP programme which should add at least 1.25 million meters, while activating the meter acquisition fund to procure another 4 million meters.

"But we must also realise that long-term sustainable metering should be within the remit of DISCOS and their partners.

"We need to have a clear plan to rebase tariffs, so we recognise the real costs and loss levels of the entire value chain, and we allow for adequate cost recovery for investments. We need to be clear on what shortfalls are 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," he said.

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