Electricity Crisis: Agora Policy Recommends Reprivatisation Of DisCos

Agora Policy, an Abuja-based think tank, has recommended ways the incoming administration can resolve issues affecting the Nigerian power sector.

In its policy memo titled ‘Addressing Nigeria’s Lingering Power Challenge’, Agora Policy said the centrality of adequate and reliable electricity supply to individual welfare, economic growth and overall national development cannot be overemphasised.

The organisation said various initiatives and reforms aimed at creating an optimal power sector for the country have fallen short.

Quoting World Bank data, Agora Policy said Nigeria has the largest energy access deficit in the world.

The organisation said 85 million Nigerians, representing 43 percent of the country’s population, do not have access to grid electricity.

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While acknowledging the efforts that the government has made so far, Agora Policy, however, said the “little progress that has been made in the power sector since 1999 is neither at par with our population growth nor adequate for the energy needs necessary to achieve our economic potential”.

Recommending policies for the incoming government, the organisation said there is a need for the government to stop thinking of installed generation capacity and start to think in terms of the amount of electricity delivered.

“This is an important paradigm shift with positive impact for government, as having such policy mindset changes the prioritisation and allocation of public and private resources to projects, interventions and initiatives across the electricity value chain that will increase the energy output, availability, reliability and quality of electricity delivered to end-users,” Agora Policy said.

Other policy suggestions include continuing with the implementation of the Buhari administration’s power sector programme; developing a new national electricity policy framework and amending the Electric Power Sector Reform Act (EPSRA); and establishing a standing high-level inter-ministerial energy committee.

Agora Policy also advised the incoming administration to empower states to develop sub-national electricity markets; improve the energy mix and address energy transition issues; resolve privatisation issues; and improve gas supply to the power sector.

“The incoming administration also needs to look at re-privatising some of the DisCos that have been taken over by lenders due to default by core investors in meeting the acquisition loan repayment terms to the lenders, or under some form of administration by the NERC and the CBN,” Agora Policy said.

“The failed DisCos in administration should be broken into smaller franchise areas preferably along state boundaries, and privatised as new entities.

“Lastly, there is the “unspoken” issue of the payment of the huge market debts in the sector. For instance, GenCos claim that they are owed over $1 billion by the NBET. It is unclear how the new government would address the payment of these debts.

“There is a temptation to delve into more tactical issues and challenges in the power sector such as resolving the metering gap, estimated billing, resolution of financial distress in the power sector and other operational issues affecting the electricity industry.

“Putting together the tactical plan to resolve the issues should be left with the power sector team to be assembled by the incoming administration.”