Hope rising
Persistent epileptic electricity supply continues to be a key factor in Nigeria’s protracted economic crisis and a major impediment to ameliorating high poverty levels, boosting economic productivity and generating prosperity.
- Nigerians can now expect better power supply with the planned settlement of N3.3trn legacy debt in phases
Persistent epileptic electricity supply continues to be a key factor in Nigeria’s protracted economic crisis and a major impediment to ameliorating high poverty levels, boosting economic productivity and generating prosperity. Unfortunately, the increase in electricity tariffs across the various bands of consumers in the last few years has not led to improved and more efficient power supply, thus resulting in widespread consumer frustration and dissatisfaction.
In the first quarter of this year, electricity generation in the country ranged between 4,300 and 4,694 Megawatts; a level of power availability clearly insufficient for a country of over 200 million people. The customer base of electricity consumers is put at 11.71 million of which 5.68 million are metered and 6.03 million are on the much resented and difficult to substantiate estimated billing.
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Only a minute cross-section of the population has access to electricity, with only 27% of the rural populace counted among these as at 2022.
Fresh hopes have arisen that this dismal situation can be transcended with the approval by President Bola Tinubu of a N3.3 trillion payment plan to settle accumulated debts in the sector over the last 10 years, from 2015, that had hobbled the efficient performance of the power generating companies with adverse consequences.
President Tinubu’s Special Adviser on Energy, Olu-Arowolo-Verhrijen, announced the new initiative being implemented under the Presidential Power Sector Financial Reforms Programme. Designed to boost liquidity and restore reliable electricity supply across the country, the debt is planned to be settled in phases.
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In this regard, it is noteworthy that agreements have been signed with 15 power stations that cover N2.3 trillion of the total amount of N3.3 trillion total debt. That the Federal Government has already raised N501 billion to commence the process out of which N223 billion has already been disbursed is an indication of the seriousness of the authorities in implementing the plan.
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However, sustaining and completing the debt repayment process will be the ultimate determinant of its success.
We call on government to take note of the criticism in some quarters that such a payment plan to liquidate legacy debts in the power sector had been announced in the past but not followed through. It is important that the plan be scrupulously adhered to this time.
The substantial part of the debt is owed to suppliers of gas; that is the most critical component in the power supply chain. Defraying this debt will boost the operational efficiency of the power generation companies, thus helping to boost and stabilise electricity supply.
Combined with other ongoing reforms such as better and expanded metering as well as the rehabilitation and expansion of the electricity transmission infrastructure through the Transmission Rehabilitation and Expansion Programme (TREP), the debt settlement initiative will help to actualise the country’s underdeveloped power supply potential.
However, matters could be complicated by the recent increase in the domestic price of gas, which has understandably prompted electricity generation companies to call on the Nigerian Electricity Regulatory Commission to urgently review electricity tariffs upward to reflect new cost realities. It is obvious that the gap between the new and old prices at which generation companies purchase gas can be met either by increase in tariffs or price subsidisation by government.
While hike in electricity tariffs will negatively affect already economically overburdened consumers, introduction of fresh subsidies might lead to renewed debt accumulation in the power sector. This is the dilemma that government and other stakeholders must join hands to resolve, particularly bearing in mind the importance of availability and affordability of efficient power supply to achieving economic rejuvenation, boosting manufacturing performance, enhancing the productivity of the informal sector and generating large scale employment.
