Nigeria has unfortunately either by omission or commission remained in darkness even when it possesses the potentials to be the energy (electricity) hub of the continent of Africa.
With much sunlight in the north for solar energy development, overflowing river in the south for hydroelectric generation and intimidating gas reserves in the Niger Delta to sustain thermal energy plants yet the country is celebrating darkness from one civilian administration to another.
Now, stakeholders are seeing fresh hope in the new administration of Bola Ahmed Tinubu, who had made genuine attempt as Lagos State governor to pioneer state-controlled power generation in the face of failing national grid.
During the twilight days of President Muhammadu Buhari in office as the 15th president and commander-in-chief, Federal Republic of Nigeria, the country however, witnessed a remarkable step in his administration to sign into law the power sector decentralisation bill, which allows private investors and state governments alike to generate, transmit and distribute electricity in areas that are currently under the existing Disco’s networks.
In the views of Mr. Abayomi Olusola Falana, Chairman/CEO, FalCore Power & Energy Limited, the signing into law of the power sector decentralisation bill was in the right direction given the potential effects of bringing effectiveness, efficiency and competition to the power sector in the country.
Falana, believes that the new law will attract necessary foreign investments into the power sector that is required to up and address the rehabilitation that needs to be undertaken across the electricity supply chain.
He said that 29th May, 2023 marks another beginning of a new political era in governance at the Federal Government level in Nigeria.
The new political era of the APC – led administration tagged with the slogan, “Era of Renewed Hope” under Asiwaju Bola Ahmed Tinubu, the elected 16th executive president of the Federal Republic of Nigeria, presents another opportunity to demonstrate a strong political will to tackle head on Nigeria’s ailing power sector challenges, anticipates Falana.
According to him, what needs to be in place to be able to surmount the existing challenges of achieving the optimal supply of electricity in Nigeria, should be identified and spelt out loudly as the critical issues for consideration by Tinubu.
As a renewable energy expert, he said the government should have to play a significant role to sustain the development of renewable energy power projects by creating the enabling environment to attract an influx of foreign investors interested in enhancing the nation’s existing electricity power supply outputs.
Falana said that the Federal Government Sovereign Guarantee (SG) should acknowledge the importance of the renewable energy power generation project to the nation’s economy as “Nationally Significant Project,” and support foreign investments in the development, construction and operation of electricity power supply infrastructure projects.
He said there should also be assurances that the project promoters / Independent Power Providers (IPP) will be able to open and maintain foreign currency accounts in any financial institution within or outside Nigeria and that tariff and concession regimes permitting recovery of actual project costs and a reasonable return on capital shall remain in full force and effect and shall be adjusted only to the extent necessary to guarantee the project sponsors no less than the agreed upon return on capital.
In addition there should be guarantee by the Central Bank of Nigeria (CBN) that it will allocate hard currency towards debt service and repatriation of capital or profits and that it will also ensure free convertibility, transfer and timely remissibility of foreign exchange whether converted through normal commercial channels or otherwise.
He further advised that federal government assistance such as grants of real property and utilities at nominal fees, exemptions from withholding taxes, income taxes, import duties and other taxes to enhance financeability of the energy power project.
It is also in his opinion that the federal government will not (in connection with any privatisation or otherwise) sell or otherwise transfer any interest in any primary obligor or project counterparty without taking steps to ensure that the project and the project sponsors and lenders will not suffer adversely thereby, and there should be assurances as to timely installation and completion of new ancillary infrastructure such as transportation and utilities necessary for the construction, operation and maintenance of the energy power project.
Also, Tinubu’s government has to provide assurances that the energy power project sponsors will be free to expand their operations and business in areas related to the project as and when such new opportunities are open to the private sector and indemnification by the federal government for any loss sustained by any project participant by reason of the invalidity or unenforceability of any provision of any agreement, permit, instrument or other document executed or delivered by any instrumentality of the federal government.
Submitting similar opinion, Adetayo Adegbemle, convener of PowerUpNigeria, an Electric Power Consumer Right Advocacy Group, demanded for a truly independent regulatory commission, devoid of political interference, and one of the best ways to achieve this is to bring in individuals who has shown commitment to the growth of the power sector in one capacity of the other.
The era of making political appointments and then expecting a quick delivery on key performance indicators should be dispelled with by Tinubu.
He said proper interview and presentation on what challenges facing the power sector should be done, and the best candidate be given the political powers to turn around the fate of the sector.
Once this can be achieved with NERC, it will send clear message and tone to whatever follows in the power sector, said Adegbemle.
He said one of the structures to be clearly made away with is the Presidential Power Initiative, which at best, should function as a desk in the ministry of power, who should handle such bilateral relationships with companies like the Siemens. Keeping such agency like the PPI is just increasing our overhead unnecessarily, duplicating tasks and command chains, and asking questions of the professionals in the Ministry of Power.
With the success recorded by the President Muhammadu Buhari in deepening the fuel/energy mix, Nigeria should be having more generation capacity coming mainstream, and current focus should therefore be on how to align the new wheeling capacity being achieved by the Transmission Company of Nigeria (TCN) and their numerous projects, with the offtakers in the Discos. Focus should also be on harnessing the present over N50billion the Manufacturers Association of Nigeria (MAN) spends on alternative energy into the national grid.
He argued that all the funds being expended on TCN projects would come to noughts if Electricity Distribution Companies (DisCos), are not able to utilise these capacities.
Market liquidity has become a perennial problem for the power sector, but our policy makers are not considering the root cause, and in dealing with the issue, how to solve this effectively.
He also opined that unless the issue of metering is resolved, the country would continue to experience stunted growth in the power sector.
This metering covers every interface in the power sector from the generators interface with Transmission, to transmission’s interface with the distributors, and ultimately to the distributors interface with final consumers.
In solving this problem, he advocated for an establishment of the local metering ecosystem and a local metering standards.
This in his opinion, will ultimately lead to deepening the nation’s local meter manufacturing capacities, removing the foreign exchange components in meter pricing, increasing/creating employment, and ultimately solving our local metering problems.
“Beyond encouraging local meter manufacturing ecosystem, we need to also establish local transformers manufacturing and repairs, we need to develop this local capacity.
“Resolving our huge local metering challenge will automatically also a more accurate figure of the number of connections that we have to the national grid, thereby helping with a more accurate data for national planning.
“Without knowing what our demands looks like will only make us to continue to make abstract plans that will continue to fail. I have heard many commentators saying that a nation of over 200 million people should have access to over 100, 000MW of electricity, but we cannot, and should not continue to extrapolate with scientific data to make sensible decisions.
“Yes, this can be achieved in 4 years if we have the political will to proceed, and if in making appointments, factors like what their earlier contributions has been.
“I will continue to hammer on national interest first as the basis to make appointments and forming policies. Without this, the power sector will continue in its doldrums, with potential to be great unachieved,” Adegbemle added.
