In a move to address the perennial liquidity crisis in the Nigerian Electricity Supply Industry (NESI) the federal government said it has begun the payment of gas supply debts amounting to N1.3 trillion.
Minister of Power Adebayo Adelabu, who made this known, said the federal government has initiated a payment plan and allocated N130 billion in cash to offset the debts owed to power generation companies in the country.
This is as the African Development Bank (AfDB) said it has earmarked US$1 billion fund to support Nigeria’s power sector reforms arising from the Electricity Act 2023.
Speaking at the ongoing 8th Africa Energy Marketplace 2024, in Abuja, the minister said that President Ahmed Bola Tinubu has directed the Minister of Finance to pay N130 billion being part of the N1.3 trillion owed to the sector while defray legacy debts would be settled through promissory notes, or payment guarantees.
Adelabu faulted the claim that the new tariff has increased the cost of production for manufacturers, leading to the high cost of goods and services.
“The electricity tariff was not targeted at improvising Nigerians or worsening the already bad economic situation of high inflation rate and naira losing value but targeted at resolving or reducing the hardship of the people.”
“Those on Band A, if they should do their arithmetic properly, to compare what they have been spending on energy provision from grid supply and energy generators put together, before the review of tariff, they have achieved nothing less than 30 to 40 per cent reduction in their total cost. That is the truth.”
“We are also electricity consumers, so we can attest to this fact. It is true that if you are in Band A, your bill would have doubled if not more. But check out what you have been spending on your generator servicing, diesel and petroleum procurement, it would have gone down considerably.
“So the argument of this new tariff having the capacity of increasing the cost of production and raising the prices of goods and services is not logical.
“Manufacturers under Band A should have a lower Energy cost by now, thereby, reducing their cost of production. Except those that have not been paying for electricity in the past. We can also come together to compare notes with practical examples. But how this new tariff regime will increase the cost of production is not valid because I am in that industry too,” Adelabu said.
Speaking earlier, AfDB’s vice president, Power, Energy, Climate Change and Green Growth Complex, Dr. Kevin Kariuki, said the bank is supporting Nigeria’s power sector with $1 billion.
Kariuki said the support fund would be channelled through a policy-based operation (PBO) with a significant energy component aimed at supporting the ongoing power sector reforms triggered by the new Electricity Act.
He also stated that the bank would finance the policy recommendations to actualize the expected outcomes from the National Integrated Electricity Policy and Strategic Implementation Plan.
The event was themed: “Towards Nigeria’s Sustainable Energy Future: Policy, Regulation, and Investment – A Policy Dialogue for the National Integrated Electricity Policy and Strategic Implementation Plan (NIEP-SIP)”.
Kariuki, who noted that there were challenges in the country’s power sector, disclosed that the bank would also finance a study for the Transmission Company of Nigeria (TCN) to explore the deployment of Battery Energy Storage Systems to enhance grid stability and facilitate greater uptake of renewable energy generation.
He said: “At AfDB we put our money where our mouth is! As is manifested by the fact we will be shortly seeking the board’s approval for a 1 billion US dollar policy-based operation (PBO) with a significant energy component aimed at supporting the ongoing power sector reforms triggered by the new Electricity Act.
“The timing of the AEMP and the proposed policy-based lending focused on the energy sector is therefore not coincidental. We will finance the policy recommendations to actualise the expected outcomes from the National Integrated Electricity Policy and Strategic Implementation Plan.
“The said enabling environment will maximise the value of ongoing investments, including the USD 256.2 million Nigeria Transmission Expansion Project that entails the construction of 500km of transmission lines and four substations with a capacity of over 1000MVA; and the USD 200 Million Nigeria Electrification Project, which will build 150 mini-grids.
”Moreover, we are financing a study for the Transmission Company of Nigeria to explore the deployment of Battery Energy Storage Systems to enhance grid stability and facilitate greater uptake of renewable energy generation.
“Which brings me to generation. Nigeria is part of our flagship USD 20 billion Desert to Power Initiative, which aims to generate 10,000 MW of solar power across 11 countries in the Sahel region to provide power to 250 million Africans”.
