The Minister of Power, Adebayo Adelabu, has addressed the shortcomings and failure of power privatisation in Nigeria, highlighting it as one of the challenges faced by the nation’s power sector.
Adelabu spoke during the keynote address of the BusinessDay Energy Conference, themed ‘Powering Nigeria’s Energy Future: Addressing Infrastructural Challenges for Sustainable Energy Development,’ held in Lagos on Friday, 7 June, at the Radisson Blu Hotel, Victoria Island.
The conference aimed to shed light on the challenges of power sector privatisation, among other problems bedevilling the nation’s power sector.
Historical Context of Nigeria’s Power Issues
He began by acknowledging the historical context of Nigeria’s power issues. “We started 40 years ago, or 30 years ago; we have not finished,” he noted, emphasising the longstanding and complex nature of the sector’s challenges.
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He pointed out that initial efforts were marred by foundational issues and the incomplete implementation of necessary reforms.
Unrealistic Expectations and Lack of Preparedness of Private Investors
One critical issue highlighted was the unrealistic expectations and lack of preparedness of the private investors who took over the power assets.
“The people that bought these plants and the people that also bought the DisCos felt power investment was like telecom investments,” Adelabu said.
He explained that many investors lacked the necessary capital to make substantial infrastructure improvements, having only the acquisition capital, which they mostly borrowed.
“They did not have enough money to invest in the sector,” he stressed, leading to a failure in reducing technical, commercial, and collection losses.
Regulatory and Tariff Issues
Adelabu also discussed regulatory and tariff issues that have exacerbated the sector’s problems. “Regulatory inconsistencies have been a major barrier,” he noted, pointing out that frequent changes in policies and the lack of a stable regulatory framework have deterred investments.
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Moreover, he criticised the unrealistic tariff structures that did not reflect the true cost of generating and distributing power.
“If the cost is one and people are paying 50 per cent, the government cannot afford to subsidise the rest,” he stated, underlining the financial strain this has placed on the government and the sector.
The Issue of Metering
The former deputy governor of the Central Bank of Nigeria also addressed the significant issue of metering, which has remained a contentious topic.
“The government has seen that this region still has too many people without meters,” Adelabu said. He outlined the government’s plan to procure a minimum of 2 million meters per year over the next five years as part of a broader initiative to address the metering gap.
Electricity as a Commercial Product
The power minister also highlighted the importance of seeing electricity as a commercial product rather than a social service.
“Most of the power generating plants are not government-owned; they are private sector investments,” he explained, emphasising the need for a business-oriented approach to managing and investing in the power sector.
Call for Collaborative Efforts and Strategic Reforms
Adelabu further called for collaborative efforts to rectify the ongoing issues, suggesting that a comprehensive review and strategic reforms are necessary for progress.
“We must be resilient to ensure we get the desired end that we want,” he urged, appealing for continued support and patience from all stakeholders.
