The Minister of Power, Engr. Sale Mamman assumed office in August 2019 and shortly after making some trips to inspect some major power projects, the minister unveiled a blueprint for reforming the power sector.
The Daily Trust in this piece dissects this blueprint targeted at five focal areas covering the sector challenges.
The Federal Ministry of Power in discharging its mandate to provide overall leadership and policy direction to the power sector, to promote efficient and sustainable sector development, as enshrined in the Electrical Power Sector Reform Act 2005 (EPSRA), deemed it fit to take stock of the Nigerian electricity market.
The power sector in Nigeria is a market in transition, and like most privatization efforts observed from international experience, there are teething challenges. Hence, the basic thrust of the blueprint is the need to institute and enhance coordination in the power sector. This will be among government owned agencies, the private agencies and utility firms.
Mamman’s focal areas for a new power sector Among the five focal areas for the minister’s reform project is that of ‘Infrastructural Alignment’.
The blueprint document obtained by Daily Trust notes that, “the first focus of the Ministry is to depress the gap between the available capacity and what ends up being distributed by the Distribution Companies (DisCos), thus significantly reducing the losses and risks associated with undelivered capacity.”
To attain this, the document said the Ministry will work with all stakeholders to ensure that government’s much welcome Electrification Plan proceeds unencumbered, particularly the earlier phases of delivery which focus on relieving pressure in the transmission and distribution system. That will improve the wheeling capacity of the Transmission Company of Nigeria (TCN) and the DisCos’ ability to distribute the excess capacity to ratepayers (electricity consumers).
The next on track is the issue of ‘Market Efficiency and Transparency’. To achieve this, the Ministry intends to coordinate with the Nigerian Electricity Regulatory Commission (NERC), Ministry of Finance (MoF), the Central Bank of Nigeria (CBN), development partners and other stakeholders, to consolidate on a portfolio of activities that could bring the success.
Analysis of the document indicates that some of these activities include the refinement of the commercial, technical, and regulatory components of transaction agreements for the Generation Companies (GenCos) and DisCos; promotion of fiscal discipline and effective utilisation of sector loans including the World Bank Partial Risk Guarantee (PRG), and the Payment Assurance Facility.
The minister will also work to enforce market discipline and contract effectiveness by the regulator in tandem with establishing a predictable and equitable regulatory regime from the perspective of electricity consumers and investors. It said doing this will lead to unlocked investments as tariffs approach cost reflective levels. The third focal area is fixing the ‘Corporate Governance and Sector Policy Coordination’.
The Ministry of Power under the Engr. Mamman-led administration said it was working to ensure that there was the maintenance of a single point of policy direction for governance to be effective. “As such, the Ministry would look to stem the prevalence of disparate policy promulgations” and sustain good sectoral governance. Next on the blueprint is the ‘Increase to Energy Access’.
According to the document, energy access is a perennial issue particularly in Sub-Saharan Africa where over half of the 1.2 billion world population without access to electricity resides.
The minister’s document however said electrification rate in Nigeria was improving ,thanks to the efforts of the federal government in exploring new rural electrification strategies and novel concepts especially the Energizing Economies and Education Programmes by the Rural Electrification Agency (REA). “The Ministry recognizes that more can be done to boost electrification rates to closely mimic those of our peers, create viable businesses and well-paying jobs for Nigerians,” the document said but added that a limiting factor was the high cost of expanding traditional infrastructure which is also complex and time consuming.
The new approach to deal with this is to go the renewable energy way, it noted. “To power rural communities through mini-grids and micro-grids, the ministry will promote partnerships with the private sector using REA, NERC and its investment promotion unit to optimise regulation and policy to increase access to those that need it the most,” it said.
The fifth focal area in the minister’s blueprint is the ‘Execution of Legacy Projects’. Already the Minister has made some trips in 2019 to assess the portfolio of projects currently sitting in the books of the Ministry at various levels of progress. The document said it is with the objective of ensuring timely delivery and coordination with other ongoing complementary initiatives. Among these projects are the 3050 megawatts (MW) Mambilla hydrpower, 710MW Zungeru hydropower, the 14 Solar Independent Power Plants (IPPs), 40MW Kashimbilla hydropower, 40MW Dadin Kowa hydropower, and the 240MW Afam Fast Power. “They will be accelerated and completed within the shortest possible time,” the ministry said.
The Ministry said it seeks the support of stakeholders and members of the public to key into the renewed efforts to reposition the sector in the hope of achieving the benefits of the planned market reforms. “Indeed, we would need all hands on deck to successfully rewrite our privatization experience, as it is observed that every market transitions differently, and we believe, here too, Nigeria is no exception,” it noted.