Former commissioner, National Electricity Regulatory Company (NERC), Mr. Eyo Ekpo, said, the real problem with the power sector is that Nigeria is stuck with a power delivery model that is ‘extremely costly and inefficient.’
Ekpo, who made this assertion during the European Business Chamber (EuroCham Nigeria) Stakeholder Conference on ‘Gaining Traction in Power Sector Reforms,’ added that, Nigerian homes and businesses provide themselves 10 times more electricity through petrol and diesel generators than the country’s electric power companies supply them through the national grid.
The conference was organised to galvanise policy reforms that will unlock investment in Nigeria’s power sector and deliver stable electricity supply to Nigeria.
Nigerian homes and businesses produce 40,000 megawatts of electricity with diesel and petrol generators daily while they are supplied only about 4,000 megawatts through the national grid.
Ekpo likened this to ‘burning money’ because of the N40 per kilowatt per hour difference between the cost of self-generated power (about N130 per kilowatt hour) and grid power (N90 per kilowatt hour).
He calculated that Nigerians ‘waste’ N12 trillion every year, considerably higher than the national budget, by self-provision of power with backup generators rather than being supplied from the national grid.
Ekpo criticised the patronising decision of the government to hold down power tariffs, saying, “Nigerians want reliable supply of electricity through the national grid, Nigerians do not want low tariffs for grid-supplied power.”
Ekpo stated that, the problems of the Nigerian power sector are rooted in governance challenges rather than technical or financing difficulties.
He however said, the privitisation of the power sector in 2013 has not achieved its aims because Nigerians still overwhelmingly depend on back up generators.
Ekpo also urged the federal government to deepen power sector reforms by privatising the nation’s transmission network.
Another speaker at the event, the managing director of Siemens Nigeria, Seun Suleiman, noted that, one of the ‘low hanging fruits’ in the sector is to increase the capacity of the transmission system to deliver more of the about 7,000 in ‘fallow capacity’ in generation companies to distribution companies.
The minister of Power, Mr. Abubakar Aliyu, represented by the director of Transmission in the Ministry of Power, Mr. Emmanuel Nosike, stated that ‘his priority is increasing the capacity of the transmission system.’
He revealed that Nigeria requires 42,000 megawatts of electricity; but that the country has 13,000 installed capacity of which the national grid has the capacity to wheel and deliver only about 4,000 megawatts to homes and businesses.
Experts at the event noted that “without the development of a flexible tariff system that allows investors to cover their cost, there will not be new investment in increasing the generating, transmission and distribution capacities of the national grid.”