Nigeria needs $5 billion annually over the next 10 years in order to achieve stable power supply in line with the Vision 20:2020.
Barth Nnaji, special adviser to the president on power and chairman of the presidential task force on power, said the bulk of this fund would have to come from the private sector. While applauding the recent effort by government to privatise the power sector, Mr. Nnaji said, in an interview at the weekend, in Lagos, that the move will stimulate private sector interest in the sector.
“We require foreign investment in this sector, but foreign investors are skeptical as they have the entire world to invest in. But Nigeria is now saying, we are going to make the various indices for investment such that they attract what an investor would be looking for internationally,” he said.
The N300 billion intervention fund initiated by the Central Bank for power and aviation sectors, was to encourage private participation in the sector.
“It is good, but it is not enough and it shows the will of government. But there is a lot more the government is doing in terms of policy approach,” he added.
He said Nigeria was ready to get things right this time by carrying out the reforms, as contained in the Electricity Power Sector Reform Act of 2005.
“A lot is different this time around. First, this government has produced a holistic plan on how to drive the reform process to completion. So, government now has a plan for electricity and includes everything from generation of the power, transmission of power, to distribution of power, to the regulatory issues surrounding all these,” he said.
Power reform roadmap
President Goodluck Jonathan launched the power reform roadmap last week as part of efforts to revive the sector, which has performed below expectations over the years. As part of the strategy, the government has reconstituted the National Electricity Regulatory Commission (NERC) to regulate private sector operators in the sector.
“The Nigerian Electricity Regulatory Commission will, therefore, be undertaking a major review of the tariff regime, which will be completed before the end of the first quarter of 2011, with a view to replacing the national uniform tariff with a new genuinely cost-reflective ceiling on end-user tariffs,” said Mr. Jonathan at the launch in Lagos.
Mr. Nnaji, a professor of robotics engineering and a former science and technology minister, said one of the challenges of the sector was the inefficiency that has made it difficult to achieve optimum output. While installed power plants have capacity in the region of 5,000 megawatts, only about 3,500 megawatts is available on the national grid.
“Sometimes, you have available generation but you are not able to evacuate it due to the network platform. What we would like to have as government is for the actual capacity to match installed capacity,” Mr. Nnaji said.
All these, he said, will be corrected with the involvement of the private sector. He, however, refused to give a definite timeline on when Nigerians would begin to enjoy stable power supply. “I will not give you data, but you will begin to see improvement. We will continue to see improvement. It is better to see improvement than promise and get disappointed,” he said.
He added that competent management of the sector will eventually translate to improvement in power supply.