…Why Nigeria must fix power supply -AfDB Director
..As Reps C’ttee demands proper expenditure, details from ICRC,NERC, Other agencies
Jonas Ezieke with agency reports
The Nigerian electricity transmission system known as national grid collapsed again on Wednesday, plunging the country into darkness.
It would be recalled that this failure is the 12th collapse from January to December 11, 2024.
Within one week in October, the grid collapsed three times with its attendant blackouts, sparking reactions from Nigerians.
A tweet via the official handle of Nigeria’s National Grid confirmed that the grid collapsed at about 2:09 pm on Wednesday.
This collapse makes it a historic 12 times in a year that the grid has collapsed.
“The major grid setback has occurred and the restoration is to commence,” the handler wrote.
A financial expert, Mr Wale Shonibare, has urged the Federal Government to prioritise power sector infrastructure development to drive the country’s industrial growth.
Shonibare, made the call in an interview with the News Agency of Nigeria, (NAN) on the sidelines of the African Investment Forum, Market Days 2024, which ended recently in Rabat, Morocco.
Shonibare, the Director of Energy Financial Solutions, Policy and Regulation Department, African Development Bank Group, said that achieving industrialisation requires affordable baseload power.
According to him, it is a necessity for economic growth and development.
Shonibare cited China and Germany as examples, adding that producing cheap electricity leads to lower production costs and more competitive products.
Shonibare noted that Nigeria’s potential to become a manufacturing hub for West Africa and possibly all of Africa with adequate power infrastructure.
“If we can get that power issue right, then we can add value to our production. We don’t just sell raw materials,” he said.
Shonibare noted that to do an aluminium smelter, for example, 40 per cent of the cost would be power.
According to him, if Nigeria can get that right, the country will be producing aluminium and have an automotive market where it can make cars.
“So, all of these things are very linked,” he said.
He emphasised that the sustainability of utilities and a well-structured tariff system were essential for attracting investment in the sector.
“The sector has to make sense. The sector has to be liquid.
“It’s very important that we sort out things like the sustainability of our utilities; having the right tariff structures because the utilities buy the electricity.
“So, if the utilities are not sustainable, it’s very difficult to bring investment into the sector.
“I was very involved in the privatisation effort, mobilising investment when I was working in Nigeria about eight years ago.
“Look at what has happened to all those loans that were taken at that time. If we don’t demonstrate that Nigeria is a viable investment destination, that investment will go elsewhere. This is because capital is not sentimental,” he said.
According to him, in Nigeria, there is an emphasis on making sure that the country develop the infrastructure for evacuating the power.
He noted that Nigeria had a lot of stranded power that was not evacuated.
Shonibare emphasised the need to prioritise investments in transmission and distribution infrastructure to address Nigeria’s frequent grid collapses.
“We have the generation capacity, but power must reach the people, requiring robust transmission lines, distribution systems, substations, and effective collection,” he said, noting Nigeria’s significant metering gap.
He cautioned against focusing solely on generation, as a fragile grid hinders the integration of renewable energy.
He added, “Politicians often favour ribbon-cutting ceremonies tied to generation projects, but the entire value chain requires attention.”
Shonibare also called for urgent action to stabilise the grid, highlighting that once a stable platform is established, other critical aspects of the power sector can be developed effectively.
“We’ve learned a lot of lessons, and I still believe that in the long run, the privatisation and liberalisation of the sector in Nigeria is creating a lot of innovative businesses and approaches.
“States are taking more of the role, and the states are closer to the people. I think that’s a very good innovation, because then, the governors will be held accountable for providing electricity.
“We didn’t have that before, because power generation was on the exclusive list.
“I’m seeing a lot of talent coming out of Nigeria, and we have to mobilise our local financial sector. Nobody else is going to do it for us. If the sector is bankable, the money will come in.
“We saw it in telecoms. It needs to happen for the power sector,” he said.
Meanwhile, the Constitutional Committee of the House of Representatives on Finance has ordered the Infrastructure Concession Regulatory Agency (ICRC), the Nigeria Electricity Regulatory Commission (NERC) the Nigeria Sugar Development Commission (NSDC) and others to provide proper details of their budget performances in order to ascertain their level of compliance with extant financial regulations laws.
The directive was given through resolutions when these agencies appeared before the Committee at its resumed interactive session being held by the Committee with key agencies on budget performance on Tuesday.
The ICRC was directed by the Committee to provide details of all concessionaires and the fees charged since 2008, after a presentation by the Director Infrastructure of the agency, Shehu Sani Danmusa who represented the Director General (DG), Dr.Jobson Ewalefoh.
Chairman of the Committee, Hon. James Faleke and members who picked holes in the presentation especially the breakdown of revenue and expenditures said, there is need for the agency to present a comprehensive detail as required by standard accounting and financial practices.
In his submission, the Chairman, NERC, Sunusi Garba who also presented the income and expenditure of the agency’s 2023 and 2024 informed the Committee that, the main sources of revenue of the agency is the Electricity market.
He said, “The law provides that we prepare a budget and take just enough from the electricity market to fund our operation. Meaning that the amount we take from the market depends on the budget that we prepare.
“So in the early days of the commission, when the market was a little bit immature, the commission was taking money from the market and the federal appropriation. But in the last, I think one, two years or even three years, the commission has been 100% dependent on the workings of the market for our revenues”.
However, Chairman of the Committee, Rep. Faleke interjected saying, “You take just enough? What is just enough? So how much do you take? We want to determine your revenue.Yes, so. So when you say just enough, it’s not a figure”.
The NERC Chairman replied saying that, financially, as a regulatory institution, the NERC is not designed to be a revenue-generating agency which Rep. Faleke disagreed because the agency is supposed to be self funded which the chairman answered in the affirmative.
Faleke added, “Yes. Are there rules? Who is the DFA? Are you the DFA? Where is the DFA? Okay. Are there rules guiding self-funded agencies in terms of deductions, in terms of remittances?”.
The Director Finance and Administration of the agency, explained that, the law establishing the commission provides that 80% of the operating surplus at the end of the year should be transferred to consolidated revenue,
Rep. Faleke said, “So how do we determine operating surplus if we don’t know your income? It’s not that I don’t know. I’m just saying that.You are trying to hide it. Remember, you said you take just enough.
“So, I mean, that’s my own area of concern. Okay, why don’t we say.If you can give us the figure. For example, all of us sitting here, we operate in the same market. We are like your customers.But we are more or less directly your customers, kay, We pay through your service providers”.
After the presentation, the Committee directed that, the NERC also submits all the details of its revenues, expenditures as well as invoices to industry players on energy purchases and reconciliations.
Similarly, the Committee also picked holes in the expenditures of the National Sugar Development Council (NSDC) over its frivolous spendings on non-essential like foreign travels, office renovations while neglecting core responsibilities to develop the Sugar sector.
In his presentation, the Director General (DG), NSDC, Kamal Bakari in his presentation informed that, the organisation is being funded principally by the Sugar Levy and other revenues.
However, the DFA explained that, other revenues which include; VAT, Withholding Tax and others realized as revenue was remitted to FIRS and receipted which they promised to provide them to the committee.
A member of the Committee also faulted the ougrower support funds spent compared to the production.
Chairman of the Committee, James Faleke noted that, said, the concern of the Committee was the Internally Generated Revenue (IGR) of the Commission.
He informed that, looking at the trajectory of the Commission and its activities, Nigeria has along way to go compared to Brazil which he said are cultivating millions of hectares through advanced mechanisms agriculture and are utilizing all the Sugar by products including producing fuel for cars.
The Committee therefore directed the Commission to do due diligence and provide it with a more comprehensive records that it will use to determine it’s budget performance.
Other federal government agencies that attended the hearing were also directed to do same while the Committee resolved to set up an Adhoc Committee to analyze the budget performance of the Securities and Exchange Commission.
