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Power sector: Stakeholders seek enabling environment for ease of doing business

December 13, 2021

Experts and other stakeholders have called for an enabling environment that would give the private sector the confidence to invest in Nigeria’s power sector.

Speaking at the PwC Nigeria 12th annual power roundtable with the theme: “Sustainable power supply in Nigeria – what next?”, they stressed the need to increase efforts to achieve 100 per cent metering and sustenance of regulatory and policy alignment which has helped the government to bridge the gap between cost and service reflective tariffs versus allowable tariffs.

The stakeholders also advocated for awareness programmes and reorientation of the mindset of the populace, a shift from power being considered a public good that the government provides to a service which requires payment, as well as judicial reforms with respect to dispute resolution in the power sector, are critical.

Pedro Omontuemhen, Partner and Energy, Utilities & Resources Leader, PwC Nigeria, noted that the sector’s very capital-intensive nature means that much is still required to meet the country’s power needs.

He noted that from power production to transition and distribution, a lot of funding is required.

“The energy poverty in Nigeria can partly be attributed to a lack of adequate funding of the sector. For Nigeria to have stable electric power, the sector needs to be funded adequately,” Omontuemhen said.

Ahmad Rufai Zakari, the Senior Adviser to the President on Infrastructure, noted that the government has started a holistic review of policy in the power sector.

“This began with a regulatory and policy alignment that included raising tariffs in a sustainable way, which has helped to eliminate the gap between cost reflective tariffs and allowable tariffs,” Zakari said.

Read also: NNPC records N141.96bn trading surplus

He added, “It is expected that this will incentivise private investors, and particularly drive the Discos to achieve optimisation”.

Zakari noted that the next phase of government intervention is centred on providing the infrastructure that will enable stable electric power supply.

He explained how the Siemens Presidential Power initiative and credit facilities by the Central Bank of Nigeria (CBN) targeted at the power sector are some of the ways the government is financing this infrastructure.

Ebipere Clark, Special Assistant (Energy) to the Governor, CBN, emphasised the need to attract investments into the industry so that the industry pays for itself.

“Currently, irrespective of amounts being generated or distributed, cash is only being obtained for about 1.69GW to serve an industry distributing 4GW and capacity of generating 12.5GW,” Clark said.

Similarly, Adedoyin Adele-Fadipe, CEO Central Electric & Utilities Limited, noted that players in the industry need to work collaboratively and be creative about exploring solutions to the industry issues, particularly between exploring off-grid collaboration.

Providing insights into the continent’s power and utilities situation, James Mackay, Energy and Infrastructure Strategy Lead, PwC South Africa, pointed out that Africa contributes only about three percent to global C02 emission, yet the continent is saddled with energy transition and energy poverty.

Mackay noted that Africa’s fossil fuel is worth $15.2 trillion of proven reserves and it is estimated that $6.7 trillion of that would be left in the ground because there will not be a market to buy it due to the energy transition. Further, that the private sector in Africa must play a critical role in financing and guiding renewable energy initiatives in the continent.

This year’s roundtable had notable speakers from across the power and utilities value chain from Nigeria, Ghana, and South Africa with contributions revolving around the need for holistic reforms, accountability, energy transition, infrastructure deficit, metering gap, and energy theft.

Others include systemic challenges such as slow judicial system, and payment of investors’ funds.

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