National Grid: “Privatisation Of Power Sector Has Failed” – Tinubu

President Bola Tinubu, on Monday, said Nigeria’s power sector privatization had failed to meet its objectives, as the national grid was serving only about 15 percent of the country’s electricity demand despite being privatized 10 years ago.

Tinubu, who spoke during the Nigeria Electricity Supply Industry market participants and stakeholder roundtable that focused on privatization, also called for the recapitalization of power distribution companies.

He said preliminary analysis showed that the Discos were currently under-capitalized to close to N2tn, adding that Nigeria’s power tariffs should be rebased.

Represented by the Special Adviser, Energy and Infrastructure, Office of the Vice President, Sodiq Wanka, the President said;

10 years on, I believe it is fair to say that the objectives of sector privatization have, by and large, not been met. Over 90 million Nigerians lack access to electricity

The national grid only serves about 15 percent of the country’s demand. This has left households and factories relying on expensive self-generation, which supplies 40 percent of the country’s demand

What is worse is that the total amount of electricity that can be wheeled through the national grid has remained relatively flat in the last 10 years. The grid capacity has increased from just over 3,000MW to roughly 4,000MW today. Versus a 40,000MW target by 2020 that the Federal Government had set pre-privatisation

The President stated that the reasons for the sector’s underperformance in the last decade were well known, including deep commercial, governance and operational issues that had beleaguered the sector.

Tinubu stated that;

As of Q2 2023, for every kWh (kilowatt-hour) of electricity sent to the grid, only 60 per cent is paid for. But as we know, even the tariff paid for that unit of electricity is far from being cost-reflective, especially in light of the recent devaluation of the naira

The sector has suffered chronic underinvestment, especially in transmission and distribution. Many of the successor utilities of the PHCN have failed to meet their performance improvement targets due to technical and financial capacity issues

We are in a vicious cycle of under-performance and under-investment, and everyone has a different view of which value chain player should be blamed for continued sector malaise

But we are where we are! And the real question we should ask ourselves in our engagements in the next three days is, how do we move forward from here?

He noted that in the short term, stakeholders in the sector must intensify efforts to address commercial issues and improve the investment attractiveness of the sector.

He said the sector should have a clear plan to rebase tariffs to recognise the actual costs and loss levels of the entire value chain and allow for adequate investment cost recovery.

The President stated;

In terms of sector governance, Tinubu said it was vital to create an environment where the worst performers would not continue to drag the sector down.

He said;