An insight into how the Federal Government will solve the perennial electricity crisis was given yesterday by ministerial nominee Nasir El-Rufai.
He spoke on President Bola Ahmed Tinubu’s long-term target of permanently ending outages in the country within seven years.
El-Rufai told senators when he appeared at the red chamber for screening.
He was reacting to questions pose to him what he would do differently if given the power portfolio.
He said: “The President asked me to work with him to address these problems. And I will do my best to do so.
“Right now, Nigeria has about 13,000 megawatts of installed generation capacity but we hardly do more than 4,000 or 5,000 megawatts, so, to improve generation, the first order of business is to look at what is constraining the full production of electricity from this 13,000 megawatts.
“Why we have 13,000 megawatts installed capacity and only four or 5000 being produced is that many of the generation stations cannot produce because of poor supply of gas.
“80 per cent of our generation is from gas and the balance is hydro. The gas-fired stations often don’t have supply of gas.
“Power stations that have been completed two or three years ago and they have produced nothing because there is no gas supply so that’s another thing that must be addressed.
“We must ensure that gas and power are together. And for this issue of gas supply, which has persisted for over 20 years to be resolved.
“If we’re able to generate 10,000 megawatts today, transmission infrastructure can only do 5000 Maybe 6000 at best, so, the second major constraint to electricity supply in Nigeria is the transmission infrastructure.
“We need to close the loop in our transmission system. So that the 13 system collapses we had in 2022 are not repeated again.
“With this, we can raise money to expand the transmission infrastructure. We just need to organise ourselves, remove politics from transmission, procurement and focus on improving transmission infrastructure.
“The third problem is distribution. In 2013, we privatised our distribution companies, 11 of them, so that 60 per cent goes to the private sector and 40 per cent to be held by government.
“The idea is that the 40 per cent is supposed to be listed on the stock exchange so that every Nigerian would be a shareholder in this company.
“But that has not happened 10 years after privatisation. The government is still in one way or the other subsidising electricity.
“As I said, the last time we checked, it was about N1.6 trillion in the privatised environment. This is unsustainable and unacceptable.
“But what do we do with the Distribution Companies that have been privatised?
“About five or six of them are under receivership because those that bought the companies borrowed from banks and have not been paying the banks so the banks have taken over five or six of them.
“And the last time we did a stress test on the Distribution Companies, only about three of them out of 11 are doing well.
“So there is a lot of work to be done regarding distribution because it’s very important being the last end of the electricity supply chain, if it does not work.
“If they don’t collect money, if they don’t have enough metering, then they will not be able to pay for power supplied by the Generation Companies.
“When they are unable to pay, the gap is what the government now pays, otherwise, they will invoke the actual risk guarantee posted by the Federal Government.
“This is a major problem and has to be addressed but in the short term the liquidity situation in the electricity supply industry has to be looked at.
“Tariffs must be cost reflective and even the ownership of these distribution companies may have to change because right now the banks are running about six of them.
“They control 60 per cent of the shares and banks are not good at running companies. They’re good at taking out whatever they need to recover their loan.
“So we intend, if given the opportunity to serve and work out the system in which perhaps we’ll be able to attract fresh capital, fresh new investors with technical and financial capacity into the distribution chain so that it can be expanded.
“The opportunity to do so exists because six as I said out of the 11 are in receivership, three are doing okay, the others are 50/50, but a holistic approach is needed.
“This is a problem that requires the support of everyone. It’s not just Mr. President who will lead from the front but also the National Assembly.
“Certain amendments to the Electricity Act 2023 may be needed, certain amendments to the Petroleum Industry Act too to bring the sector aligned so that we provide stable, reliable electricity.
“The President’s vision is that within seven years we will not have power outages in this country.
“The President is saddened by the fact that countries like Benin Republic, Cameroon, Niger Republic, our neighbours that are smaller countries are having stable power supply but we are not.”