The House of Representatives has decided to look into all of the financial interventions in the power industry since it was privatized, totaling more than N7 trillion, to see if the money was used wisely.
The House of Representatives passed the motion that Hon. Ademorin Kuye had proposed during yesterday’s plenary, which led to the passage of the resolution.
In his motion, Kuye noted that the Power Holding Company of Nigeria (PHCN) was unbundled by the federal government in 2013 and that 18 utility businesses were sold to private investors, giving rise to six generation companies (GenCos) and eleven distribution companies (DisCos).
Kuye continued, saying that although the industry had fallen short of Nigerians’ expectations, the privatization of the country’s electricity sector was required since the now-defunct PHCN had failed to draw in investments.
He emphasized that since November 2013, the federal government has invested more than N7 trillion in direct interventions in the power sector, notwithstanding the industry’s privatization. Among these, he said, was the Presidential Power Initiative, a calculated move to deal with Nigeria’s inconsistent and insufficient supply of electricity.
He stated that the country’s power sector would have collapsed due to lack of liquidity, subpar performance, suppressed tariffs, lack of infrastructure at the transmission and distribution ends, and lax regulations and oversight if not for the interventions of the Central Bank of Nigeria (CBN), which have cost over N1.3 trillion.
Kuye pointed out that the power industry had experienced a number of financial interventions after privatization, including those from foreign donor organizations. He said that an International Development Association (IDA) credit worth $486 million had been approved by the World Bank with the goal of improving the Nigerian electricity transmission grid’s wheeling capacity. This includes the expansion and renovation of transmission substations throughout the country.
He continued by saying that the TCN has received a $300 million credit from the African Development Bank (AfDB) to expand and renovate the northern corridor transmission lines that are now in place, especially in the north-west and north-central areas.
Kuye pointed out that the French Development Agency additionally supplied a facility of $170 million for the expansion of transmission infrastructure in the surrounding states and the city of Abuja.
The lawmaker added that Japan International Cooperation Agency (JICA) provided a facility of $238 million for transmission infrastructure expansion within the South-west region of Nigeria, among others.
He expressed concern that revenue generation and collection had been the major challenge of the power sector, as DisCos lamented revenue shortfalls attributed to low electricity tariff or electricity revenue that might be accruing to the wrong accounts.
Kuye also lamented that out of the 11 DisCos in Nigeria, banks had taken over six, which he listed as the AEDC, KADECO, KEDCO, BEDC, IBEDC and PHEDC, due to poor financial performance and management.
He stressed that the Aggregate Technical and Commercial Collection (ATC&C) loss was an actual measure of the performance of a power distribution system as it includes both technical losses and commercial losses. He said it showed the gap between input energy into the system and the units for which the payment was collected;
The lawmaker said improved ATC&C loss reduction would be achieved if DisCos adopted a combination of other strategies that would ensure reduction in technical and commercial losses in addition to aggressive deployment of meter assets.
Kuye noted that the Nigeria Electricity Supply Industry was facing threat due to the poor performance and transparency of DisCos and NERC’s ability to sanction erring stakeholders.
He expressed worry that the National Power Grid had collapsed over seven times this year, despite the huge investment in the power sector, which he said explained the persistent electricity shortage in the country.
The House mandated “the Committee on Power to investigate all the financial interventions in the power sector since privatisation with a view to determine whether the funds were judiciously utilised and report back within six weeks for further legislative action”.
