March 2, 2024

Minister of Power, Adelabu, recommends power sector commercialization instead of privatization, calls for unbundling of some DisCos

Adedokun Theophilus, Abuja

 

Minister of Power, Mr. Adebayo Adelabu has expressed skepticism towards the privatization of power sector assets and infrastructure suggesting that commercialization might be a more suitable approach based on the massive financial investment required, which he believes could be too expensive for the private sector to handle.

 

 

Adelabu made this observation during a one-day interaction session with journalists in Abuja.

 

 

According to him, commercialization may be a better alternative to privatization, given the significant financial investment needed by operators under privatization arrangements for the power sector assets and infrastructures.

 

 

He observed that the private sector may or may not be able to handle the huge financial investment outlay because of the long-term returns on investment.

 

 

Adelabu further called for the review of the structures of the electricity distribution companies (DisCos).

 

 

He recommended streamlining of the DisCos’ areas of coverage, which according to him, may be too large for each of the DisCos to manage effectively.

 

 

Responding to a question on the operations of the DisCos, the Minister also revealed that the Nigeria government may not be able to revisit the contract at the moment, but, noted that President Tinubu’s administration is working on territorial coverage by creating mini-DisCos in some States to enable efficient coverage.

 

 

Adelabu further encouraged the State governments to work and collaborate with the DisCos in their various States by playing more roles and investing in the power sector, taking advantage of the opportunities presented by the Nigerian Electricity Act, of 2023.

 

 

The Minister therefore emphasised that the Power Ministry would continue to dialogue with DisCos to deliberate on the best way to move the sector forward.

 

 

The Minister revealed that the challenges facing the power sector are multidimensional, assuring that his administration will work to deliver on President Tinubu’s renewed hope agenda in growing the economy of the country.

 

 

According to him, the power sector is critical to the development of Nigeria, adding that the rural economy depends on the power to grow their businesses.

 

 

“Small businesses, rural irrigation, cocktail businesses, and industries need power to operate. We need to produce a significant portion of what we consume otherwise the currency of another country we use for international trade will be so important to you, so we need to move to local sufficiency and increase our local dependency to increase our incremental progress on a yearly basis till we get to our desired destination,” he said.

 

Adelabu emphasised that the Nigerian government is not ready to increase the electricity tariff, adding that it is not politically expedient.

 

 

He said, “It is not reasonable to implement a tariff that is doubling the existing tariff. The cost of gas today is still done in dollars, and this is part of the reason for the tariff hike.

 

 

“Today, 75 to 80 percent of our power generation comes from gas power plants. Therefore, whenever there is an upward movement in the exchange rate it affects the tariff,” Adelabu noted.

 

In his comment concerning the five-year extension of  DisCos licenses, the Power Minister said that he has ordered an investigation into the reason for the extension.

 

 

He said, “When I came in, the licenses that I saw were for 10 years, 2013 to 2023. But along the line I spoke to the Nigerian Electricity Regulatory Commission, NERC Chairman, and he said, the licenses have been extended for another five years.

 

 

“We are trying to review this action and understand the rationale for the extension, to see if it is justifiable,” he said.

 

 

Adelabu therefore called on all relevant stakeholders in the power sector to come up with an achievable action plan that would help restore the hope of the Nigerian electricity consumers.