May 25, 2024

Ministerial screening: El Rufai proposes amendments of Electricity Act 2023, PIA, merger of gas, power sectors as solution to Nigeria’s electricity crisis

El Rufai

Oredola Adeola
 Mallam Nasir El Rufai, former Governor of Kaduna State and Ministerial nominee, has suggested the amendment of  the new electricity act 2023 and the Petroleum Industrial Act (2021) as enablers to the plan to merge the gas and power sectors together under one Federal Ministry, which according to him, is the only way to resolve the persistent electricity crisis affecting the power sector for over 20 years and to bring the power sector to a level it can guarantee stable and reliable electricity for all Nigerians.
El Rufai made this known during his Ministerial screening on Wednesday before the national assembly, in his reaction to questions asked by the Senators about the challenges facing Nigeria’s electricity sector.

According to him, “If given the opportunity to serve as a Minister of Energy, I promise to work harder to attract fresh capital and investors with technical and financial capacity into the energy distribution chain. This will enable the system to expand and become more efficient.

The former Kaduna State Governor said that Nigeria has failed to ramp up generation and distribution capacities. He also noted that the country has failed to handle the issue of privatization of the Discos and the issues of subsidies and liquidity around them.
He revealed that the various government guarantees to the power sector, have so far costed the government more than 1.6 trillions after privatalization.
According to El Rufai, the Nigerian government should prioritize improving power generation since the country has an installed capacity of 13,000 megawatts but only produces between 4,000 and 5,000 megawatts.
He explained that most of the generation stations cannot produce due to poor gas supply, with about 80% of the generation coming from gas and the rest from hydro plants.
El Rufai therefore suggested that the Nigerian government should merge the gas sector and power under one Federal Ministry to resolve the persistent gas crisis that has lasted for over 20 years. 
He noted that power sector crisis in Nigeria has defied every Nigerian President because of lack of vision and political will to address the various issues affecting the power sector.
He therefore affirmed that President Bola Tinubu is committed to ensuring that Nigeria has stable and reliable electricity supply.
El Rufai said that the gas sector in Nigeria needs to work in tandem with the power sector to unlock gas molecules from the fields to all the various power stations, backed by infrastructure.
He noted that generating plants across the country can function at an optimal level, if there is a conscious attempt to make gas available to the plants.
He also disclosed that the terrible fiscal terms including legacy debts owed by the Federal Government to the gas suppliers should also be addressed for all the GenCos to work at optimal level.
The former Governor of Kaduna state also described politics being deployed in the transmission segment of the electricity value chain as one of the major issues influencing the delivery of the power sector.
He said that Nigeria needs to detach politics completely from procurement of transmission infrastructure and focus on ensure that the right thing is done to improve the transmission infrastructure across the country.
According to him, we need to close the loop in our transmission system so that the 13 system collapse we had in 2022 are not repeated again in the country’s history.
“Even if we are able to generate 13,000megawatt today our transmission infrastructure can only do 5,000MW and the highest it can do is 6,000MW. We therefore need fund and allocation to expand the transmission infrastructure.
“Nigeria needs to organize itself and remove politics completely from transmission procurement and focus on improving the transmission infrastructure,” he said.
El Rufai highlighted the privatization of the distribution companies in 2013, with 60% of the shares owned by the private sector and 40% held by the government.
He said that the government’s plan to list the 40% shares on the stock exchange, making every Nigerian a shareholder, has not been implemented even after 10 years.

He also mentioned that the government is still subsidizing electricity, with a total of 1.6 trillion Naira being used for subsidies despite the privatization of the power sector.
Speaking about the performance of the distribution companies, El Rufai pointed out that out of the eleven privatized companies, only three are performing well, while the rest are either under bank supervision or have been taken over by banks due to unpaid loans.

He emphasized the importance of addressing the issues in the distribution sector, as it is the final stage of electricity supply.

He said, “If the distribution companies are unable to collect payments or have insufficient funds, they will not be able to pay for the power supplied by the generation companies. In such cases, the government has to cover the gap or invoke the partial rate guarantee that must be paid by the federal government.”

El Rufai suggested that the ownership of the distribution companies may need to change, as banks currently own about six of them and are not proficient in running companies.

He emphasized the need for cost-reflective electricity tariffs and addressing the liquidity situation in the electricity supply industry.
“The opportunity to do this exist, because six out of the eleven are in receivership, three are doing okay the others are 50/50, but a holistic approach is needed.
El Rufai emphasized that addressing the power crisis requires the collective support of everyone, including not just the President but also the National Assembly.  He highlighted the need for a collaborative effort in tackling this issue.
El-Rufai expressed President Tinubu’s vision of achieving uninterrupted electricity within seven years in Nigeria.

He highlighted the fact that neighboring countries like Benin Republic, Cameroon, and Niger, which are smaller in size, have reliable electricity while Nigeria, with its abundant resources, still experiences power outages.

 He emphasized the need for collaboration and urged the national assembly to partner in making this vision a reality. 
 
 
He also mentioned that parts of Nigeria are not covered by the electricity grid. The new electricity act provides states with greater involvement in the electricity supply industry.

 El-Rufai, therefore, affirmed that Nigeria will attract resources into the renewable energy sector, utilizing solar, wind, and even nuclear energy. He also mentioned the possibility of using oil reserves to establish power stations for the stability of the power system.