Tackling Electricity Transmission Problem



Nnamadi Sambo, Nigeria’s vice-president, says the federal government is to commit a total of N752 billion in the next five years to tackle electricity transmission problem across the country

By Anayo Ezugwu  |  Sep. 8, 2014 @ 01:00 GMT

THE federal government is to commit N752 billion into the expansion of power transmission across the country over the next five years. Namadi Sambo, vice-president, said during the inauguration the National Council on Power in Abuja, that the amount would ensure that the Transmission Company of Nigeria, TCN, was well funded to be able to exceed the country’s power generation capacity and to wheel electricity at any time.

“Besides our commitment to adequate provisions within our national budget in the years ahead, we will continue to expand our national transmission grid to all parts of the country through additional resources leveraged from development financial institutions such as the African Development Bank, Islamic Development Bank, World Bank Group, Japan International Corporation Agency, etc. A total of $4.7bn (N752bn) is already being earmarked for transmission expansion in the next five years. In addition, it is also intended that more innovative approaches would be adopted to fund the TCN through the opening of possible private sector investment windows at the nearest possible time,” he said.

Industry experts have often described Nigeria’s power transmission network as the weakest link in the electricity supply chain and called for massive investments in its infrastructure. The vice president told participants at the NCP conference that the federal government was aware of the clamour for electricity meters by consumers and promised that the situation would be addressed. “It is not surprising; I have been informed that the question of adequate metering has been raised repeatedly in the course of this council and, indeed, in discussions among Nigerians. Government is greatly concerned that the metering level among consumers remains low and the incidence of arbitrary or estimated billing still exists.”

Sambo gave an assurance that the metering gap would be bridged immediately as adequate metering could play a multiplier role by shoring up the market revenues of the distribution companies. This, he said, would ensure greater equity and accuracy in the billing of customers. “It is for this reason that the government is sourcing various funding avenues, including opening an initial N33bn soft term credit line to enable the distribution companies acquire smart meters and make them more available to consumers. As it pertains to the overall funding of the power sector, a number of efforts are being made to leverage resources from various funding agencies to ensure that all participants in the sector have access to funds under soft and long-term conditions,” he said.

Meanwhile, commercial banks in Nigeria have accepted to assist in the payment of N25 billion legacy debts owed gas companies by the defunct Power Holding Company of Nigeria, PHCN. The banks made this known on Thursday, August 14, during a meeting of the Bankers’ Committee in Lagos. The committee said it had realised that lack of adequate gas supply was inhibiting the growth of the power sector. It, therefore, said the decision to help with the payment of the N25 billion debts owed the gas companies was because of its commitment to support the gas to power project in order to improve production in the sector.

Aside from paying the debt, the Bankers’ Committee said another incentive for the gas companies was that the price of the commodity had been reviewed upward. Jubril Aku, group managing director, Ecobank Nigeria, said after the meeting that the minister of petroleum resources met with stakeholders and announced an increase in the price of gas because the government wanted a situation whereby gas would be commercially available.

“The increase in gas price was from $1.50 to $2.50, with a transportation percentage of 0.8, and enough incentive of 3.3 per cent. In taking this decision, it was considered that it was important for gas companies to grow in their production, as only 23 gas companies among the whole lot are currently independent. More so, the gas companies have always been agitating that the outstanding debts should be paid. By the time these debts are paid, most of the problems of gas to power would have been resolved and that will enable the country’s power sector to develop faster,” she said.

In her part, Tokunbo Martins, director of banking supervision, CBN, gave an assurance that the macro-economic condition of the nation’s economy was very sound. She said the nation’s external reserves stood at $40.32 billion and that inflation rate was 8.1 percent. Martins noted that even though the inflation rate went up slightly; monetary conditions were not tightened in line with the CBN vision to bring down the interest rate.

She also said that the long-awaited fund for Micro and Small Medium Enterprises would be launched on August 19, adding that N220 billion had been approved for MSME funding and it would be launched by President Goodluck Jonathan. “Sixty percent of that fund is dedicated to women and female entrepreneurs. Part of the fund will be disbursed on August 19,” Martins said.


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