On December 12, 2023, the Federal Government of Nigeria made a noteworthy declaration, acknowledging the inherent deficiencies within the state-controlled Transmission Company of Nigeria (TCN) and singling it out as the most vulnerable element in the energy supply chain. In response to this, the government put forth a vital measure aimed at boosting effectiveness: the division of TCN into two separate entities. This way, the power sector’s generation aspect is overseen by the private sector, while the government maintains a 40 percent share in each of the 11 distribution companies (DisCos) and maintains control over the transmission segment.
Adebayo Adelabu, the Minister of Power, emphasized at an event the urgent need to separate TCN based on the regulations stated in the Electricity Act of 2023 and the changing needs of the industry. He voiced his proposal for a restructuring, emphasizing the need to divide the Transmission Company of Nigeria (TCN) into two separate entities. These entities will be the Independent System Operator (ISO) and the Transmission Service Provider (TSP). He emphasized the importance of restructuring in response to the evolving state of the electricity markets and the increasing demand for decentralization.
Large-scale investments needed to provide nationwide power access.
This restructuring involves converting the existing national grid into a network of regional grids, connected by a newly developed, high-voltage national or super-grid. In light of the repeated failures of the national grid, the government has chosen to embark on this transformative journey. The decision has sparked a re-evaluation of the subsidies, cross-subsidies, and the role played by the Rural Electrification Agency (REA) in the ever-evolving state markets. Adelabu, addressing the Ministerial Retreat on Integrated National Electricity Policy and Strategic Implementation Plan, established a clear link between the availability of electricity and the progression of the Economy.
He emphasized the imperative nature of large-scale investments in ensuring nationwide access to electricity if President Bola Tinubu’s ambitious goal of uplifting the nation’s Gross Domestic Product (GDP) to $1 trillion by 2030 is to be achieved. Adelabu, with a sense of optimism, brought attention to a favorable development: Nigeria presently derives more than 98 percent of its power from renewable sources, a substantial jump from the 70.5 percent witnessed in the previous year. Nonetheless, he cautioned that attaining widespread accessibility and efficient distribution would necessitate collective endeavors encompassing the Federal Government, states, and local councils.
Imbalance in power sector investments shows need for another approach.
Thus, Adelabu proposed an innovative Investment approach that emphasizes cooperation among states, council areas, and Discos as a means of fortifying and expanding the local distribution Infrastructure. The primary objective of this strategy is to cultivate a thriving competitive environment, all while acknowledging the states’ longstanding and fair claims in the ownership of distribution companies. Minister of the Economy, Wale Edun, voiced his discontent with the outcome of the power sectors privatization, offering his unique viewpoint.
Also, Minister of Budget and National Planning, Abubakar Atiku Bagudu, drew attention to a significant imbalance in power sector investments. He highlighted that a mere 14 percent of the annual $100 billion invested in the power sector originates from the Public Sector. This revelation underscores the imperative for a comprehensive analysis and reassessment of investment strategies within the energy industry. It signals the need for a more inclusive and diversified approach to ensure sustainable progress and advancement in the power sector. Bagudu’s insight emphasizes the importance of fostering collaboration between public and private entities to achieve a more robust and resilient energy infrastructure.
Tinubu admin to invest $13.5bn in energy sector.
Meanwhile, under President Tinubu’s leadership, the Nigerian Federal Government aims to invest $13.5 billion in the energy sector within a year, eyeing $55.2 billion in opportunities by 2030. Special Adviser Olu Verheijen underscores the commitment to reforms and growth, particularly in the oil and gas sector. She mentions ongoing efforts to improve the business and investment climate, with recent approvals, including an Import Duty Waiver covering equipment related to Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG), aiming to boost the country’s gas utilization and supply.
