The Minister of Power, Mr. Adebayo Adelabu, emphasized that the Federal Government necessitates an annual allocation of $10 billion over the course of the next decade to rejuvenate the nation’s power sector and mitigate the persistent liquidity challenges.

He further underscored the impracticality of such a financial commitment within the current fiscal framework of the country, considering the size of the national budget.

Adelabu conveyed this assertion during a session held in Abuja on Monday, as part of a one-day investigative hearing convened to address the suspension of the proposed electricity tariff increase by the Nigerian Electricity Regulatory Commission (NERC), a measure intended for implementation by the Distribution Companies (DisCos).

The investigative hearing, orchestrated by the Senate Committee on Power, served as a platform to delve into the intricacies of the ongoing challenges plaguing the power sector.

The Minister said:

READ ALSO:

CBN Places Restrictions on Opay, Moniepoint, and Others for Onboarding New Customer Over Cryptocurrency

“For this sector to be revived, the government needs to spend nothing less than $10bn annually in the next 10 years. This is because of the Infrastructure requirement for the stability of the sector, but government cannot afford that.”

“We must make this sector attractive to investors and to lenders. So for us to attract investors and investment, we must make the sector attractive, and the only way it can be made attractive is that there must be commercial pricing.”

“If the value is still at N66 and the government is not paying subsidy, the investors will not come. But now that we have increased tariff for a Band, there is interest been shown by investors.”

Expanding on his remarks, the Minister emphasized the imperative of opening up the power market to attract investments as a means of ensuring the sector’s sustainability.

He elaborated on the predominant challenge faced by the sector, attributing it to the persistent liquidity shortfall exacerbated by the absence of a tariff structure reflective of the actual costs incurred.

The Minister underscored that the sector has long operated under a subsidized tariff regime, resulting in accumulated liabilities for both Generating Companies and Gas Companies. He pointed out that these subsidies have remained unfunded over the years, leading to substantial financial burdens.

Furthermore, he highlighted the government’s struggle to settle the substantial N2.9 trillion subsidy arrears, citing limited financial resources as the primary hindrance.

Consequently, he stressed the urgent necessity for the development of strategic measures aimed at ensuring the sustained viability of the power sector amidst these fiscal constraints.

READ ALSO:

EFCC Set to Prosecute Forex Racketeers: Crackdown on Illegal Trading

The minister earnestly implored the lawmakers to extend their support towards the settlement of the outstanding debts owed to operators spanning the entire value chain of electricity generation, transmission, and distribution.

Emphasizing the rationale behind the proposed tariff adjustment, he clarified that it is contingent upon the availability of adequate power supply, ensuring that consumers who do not receive a minimum of 20 hours of electricity per day will not be subjected to the revised tariff structure.

Affirming the government’s unwavering commitment to fostering sustainable reform within the sector, the minister underscored the pressing need to address the accumulated debts owed to Generating Companies (GenCos) and Gas Companies.

In a bid to enhance electricity generation, he highlighted ongoing investments in hydroelectric power projects, including the commencement of construction for a 700-megawatt power plant in Zungeru and the readiness for evacuation of the 40-megawatt Kashimbila Hydroelectric power plant.

Additionally, the minister outlined ongoing efforts to bolster electricity production through investments in 26 small hydropower dams spread across the nation.

However, during the proceedings, members of the committee voiced their discontent regarding the persistent challenges faced by Nigerians in accessing reliable electricity supply, despite the sector’s unbundling efforts in previous years.