Tinubu declares power sector privatization a failure

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Tinubu declares power sector privatization a failure
Tinubu declares power sector privatization a failure

Ten years after the partial privatization of the Nigerian Electricity Supply Industry (NESI), the Federal Government has acknowledged the failure of the exercise to achieve its intended objectives.

President Bola Tinubu, speaking at the 2023 NESI Market Participants and Stakeholders Roundtable in Abuja, described the current state of power generation, transmission, and distribution, which stands at just over 4,000 Megawatts, as shameful.

He highlighted that after a decade of privatization, about 90 million Nigerians still lack access to electricity, and private sector investments have fallen short of expectations.

Tinubu noted that the primary goals of privatization were to improve the efficiency of the power sector, attract private sector investments, and stimulate economic growth.

However, these objectives have largely not been met. He pointed out that the national grid serves only about 15% of the country’s power demand, leaving households and factories to rely on expensive self-generation, which supplies 40% of the nation’s power needs.

Moreover, the total electricity capacity that can be transmitted through the national grid has remained relatively stagnant over the past decade, despite a pre-privatization target of 40,000 Megawatts by 2020.

The grid’s capacity has increased from just over 3,000 Megawatts to slightly above 4,000 Megawatts today, falling significantly short of expectations.

The Minister of Power, Mr. Adebayo Adelabu, expressed skepticism about the decision to privatize the sector, suggesting that commercialization might have been a better approach.

He stressed the need for all industry stakeholders to collaborate to discuss the reasons for the failures and identify steps to rectify the situation.

Adelabu also highlighted that operational licenses for distribution companies (DisCos) are set to expire after ten years.

Renewals will not be automatic, and companies that have not met the terms outlined in their original licenses will not have their licenses renewed.

Senate President Godswill Akpabio acknowledged the critical role of the energy sector in the country’s economic growth.

He emphasized that the parliament is committed to supporting the sector through legislation that will create a conducive business environment.

An amendment to the 2023 Electricity Act is in progress to account for the latest developments in the industry.

The Chairman of the Conference Organizing Committee, Prof. Stephen Ogaji, noted that the challenges facing the power sector are significant.

He emphasized the importance of the energy sector in a thriving economy and the collective commitment to shaping Nigeria’s energy future.

The NESI Roundtable brought together representatives from various sectors, including the public and private sectors, regulatory bodies, investors, technocrats, and visionaries, all working together to enhance and guide Nigeria’s energy trajectory.