The Federal Government says it needs $10 billion investment annually to revive the power sector for the next 10 years.
The Minister of Power, Adebayo Adelabu, said this at the investigative hearing on halting the electricity tariff increase by the Nigerian Electricity Regulatory Commission (NERC) organised by the Senate Committee on Power in Abuja on Monday, April 29, 2024.
Adelabu said: “For this sector to be revived, government need to spend nothing less than $10 billion annually in the next 10 years.
“This is because of the Infrastructure requirement for the stability of the sector, but government cannot afford that.
“And so we must make this sector attractive to investors and to lenders.
“So for us to attract investors and investment, we must make the sector attractive; and the only way it can be made attractive is that there must be commercial pricing.
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“If the value is still at N66 and government is not paying subsidy, the investors will not come.
“But now that we have increased tariff for Band A, there are interest been shown by investors.”
The minister said the major challenge in the sector was absence of liquidity, saying the sector had been operating on a subsidised tariff regime, given the absence of a cost reflective tariff.
He noted that the subsidy had not been funded over the years as huge liabilities were being owed the Generating Companies (GenCos) and the gas companies.
Adelabu said the inability of the government to pay the outstanding N2.9 trillion subsidy was due to limited resources, hence the need to evolve measures to sustain the sector.
He appealed to the lawmakers to support the process of paying the debt owed operators across the value chain of generation, transmission, and distribution.
“The increase is based on supply, saying that any customer that do not received 20 hours power supply will not be made to pay the new tariff,” the minister added.
Adelabu said the government was committed to ensuring sustainable reform in the sector, saying there was a need to clear the outstanding debt owed GenCos and gas companies.
To improve power supply, he said the government was investing in hydroelectric power, adding that the construction of 700 megawatt power in Zungeru had commenced, while Kashimbila hydroelectric power plant of 40 megawatt was awaiting evacuation to improve generation.
The minister said there was also an ongoing investment of 26 small hydropower dams to boost electricity production across the country.
However, members of the committee in their separate remarks decried the experiences of Nigerians on electricity supply over the years, despite the unbundling of the sector.
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