Nnaji blames of decay in power sector on lack of investments
A former Minister of Power, Professor Barth Nnaji, yesterday blamed the decay in the country’s power sector, especially the lack of stable electricity supply on the paltry investments in the
A former Minister of Power, Professor Barth Nnaji, yesterday blamed the decay in the country’s power sector, especially the lack of stable electricity supply on the paltry investments in the sector. This, Nnaji blamed on policy inconsistency, weak infrastructure development and the discontinuation of a financing framework that had begun attracting global capital into electricity generation projects over the last decade.
Speaking at the 19th edition of the International Conference of the Nigerian Association of Energy Economics (NAEE), the former minister regretted that the country has over a decade been without financing any new major power plant, a development he blamed on the dismantling of a government-backed financing support mechanism introduced during his tenure as minister.
Nnaji spoke on the future of Nigeria’s energy mix, the role of natural gas in powering the economy, the financing bottlenecks facing major projects, and the long-standing delays around strategic assets such as the Mambilla hydropower project.
He explained that a in his time, a system- a partial risk guarantee instrument framework jointly put together by the power and finance ministries to make Nigerian power projects bankable for lenders and investors, was deliberately designed to de-risk investments and unlock financing from global lenders into the sector, and had already begun attracting large-scale investment into power generation through a government-backed risk guarantee system before it was cut short.
“Take, for example, what happened with partial risk guarantee instruments. A number of companies developed their power plants to the level where they could just finance them. And the world was galloping to us to finance power plants. Because we were getting a service guarantee.
“But as soon as the government changed, it got wiped away. And till today, we have not financed any new major power plant in Nigeria. That’s about 11 years ago,” he said.
Nnaji argued that Nigeria must take a realistic and pragmatic view of energy transition, especially in light of recent global events. He cited the Russia-Ukraine war as a turning point in the global energy debate, saying the conflict exposed the limits of an overly ideological transition away from fossil fuels, adding that upon the commencement of the war, Europe, which had been harassing the entire world about renewable energy, was the first to abandon the paradigm.
“And Germany, for example, went back to coal, which is the biggest pollutant in the world,” he said.
