Underinvestment, a major obstacle to power sector privatization result – AfDB

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Peace Obi
Insufficient investment has been said to be a major problem hindering Nigerians from reaping the desired result from the 2013 power sector privatization. And that to shore up the power supply in the country, the Federal Government through its national policy on power, targets 20 per cent of her power source from the renewable energy in the Nigeria energy mix by 2020.
Speaking during the 2018 Future Energy Nigeria that held in Lagos recently, the Country Director, African Development Bank, Nigeria, Ebrima Faal said that underinvestment in the nation’s power sector has created problems that privatization may not be able to resolve immediately.
The Country Director who was represented by Energy Sector Policy and Regulations Specialist, (AfDB) Dozie Okpalaobieri said, “Most people assumed that the 2013 privatization of the power sector would end the power problems in the country. Unfortunately, I think the underinvestment in the sector over the past couple of years has created challenges that not even the privatization will fix over night.”
Stating that the entire power sector value chain are faced with challenges of infrastructure, funding, gas supply issues, lack of investment attraction, among others Faal said that Power Sector Recovery Programme (PSRP) was government’s articulated response to the issues bedeviling the sector. “PSRP is a dynamic plan to addressing issues in the power sector. It is a response to the clamour for re-nationalization of the power sector.” He noted that the PSRP was designed “to restore the sector financial viability, improve power supply, to strengthen the sector’s institutional framework, implement clear policies that promote and encourage investor confidence and establish a contract-based electricity market.
“One of the challenges of the transmission network is that in some parts of the country, the network is stronger, while it is not in some other places. For example in the North, we don’t have as much transmission capacity, and we have a singular line going from one location to the other, and once there is an issue, it becomes a problem.
“One of the things the transmission companies are trying to do is to ensure that there is redundancy in the system. And one of the things African Development Bank is trying to do is to provide support in terms of the transmission rehabilitation and expansion programme.
The Minister of Power, Works and Housing, Mr. Babatunde Fashola, commending participants of the 2018 Future Energy Nigeria, noted that the conference has become an important feature in the landscape of power industry in West Africa that brings together experts, industry players from the public and private sector to share ideas and proffer solutions to power challenges in West African region.
Represented by the Director, Investment and Sector Development, Mrs. Emantonghan Osaisai, the Minister said that transitional electricity market was to commence not long after the sector privatization, but was stalled by some contentious issues such as inadequate cost reflective tariffs, low generation, reduction plan on aggregation technical, commercial and collection, ATC&C, losses and inadequate gas supply
Calling for a collaborative effort in tackling the issues, Fashola said, “We must now work together to develop emerging electricity market with a strong responsive, yet proactive regulator and other participants meeting all obligations including their respective business plans.
“The overall objective of the the power sector reform is to act as a catalyst for economic growth for the country. It was anticipated that the reform will spot the drive towards industrialisation, create more jobs, increase household income, improve youth development and social security and ultimately result in higher GDP.”
He said that the Federal Government had in its bid to resolve some of the challenges confronting the nation’s power sector, created different agencies, developed different peogrammes and initiatives to resolve the issues.
He said, “Given the objective of the reforms and government resolve to drive the reforms to a logical conclusion, government created various agencies in the electricity industry in order to provide an enabling environment for the market participants and prospective investors. Part of the reform process includes a look at and expansion of Nigeria’s energy mix. In this regard, Nigeria is making a systematic advancement into renewable energy segment of the power sector.
“Fortunately for Nigeria, nature has bestowed on us great potentials in the renewable sector. The national policy objective is to have 20 per cent of the renewable energy from the Nigeria energy mix by the year 2020. The government is poised to focus on renewable and tactic generation.”
In his keynote address, the Chief Executive Officer, Rosatom Central and Southern Africa, Mr. Dmitry Shornikov said that stable and affordable electricity remains one of the bedrocks of industrial revolution and sustainable economic growth. He noted that a platform like the Future Energy Nigeria becomes a veritable ground for finding a common solution to the power challenge in Africa.
He said that the importance of the industrial sector in a country’s economic development cannot be overemphasized, according to him, the future of every economy lies in its industrial sector which essentially makes it the heartbeat of economic development. “Industry demands a huge amount of dispatchable power, commonly known as baseload. It becomes more vital when one takes into consideration industrial processes for the beneficiation of raw materials, this requires steady power 24 hours.
“We firmly believe that each country needs to vary its energy source and strive for a balanced energy mix that will both support its Industrial and socio-economic inventions. Nuclear is a great addition to today’s energy mix. A new generation nuclear power pack has a design life of roughly 80 years. It generates very affordable power at a very stable and predictable prices.
“Nuclear has the highest capacity factor of all the current generating resources, meaning that it produces power just about 24 hours, 365 days in a year, exactly when it is needed. Nuclear power emits very little to zero C02 emissions. It is credibly efficient and therefore produces a little amount of waste,” Shornikov said.

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