Electricity: How Buhari government can learn from Jonathan’s administration

– That the Nigerian power sector is in dire straits is no longer a debate

– What is now the focus of government is how to improve the sector

– Experts say the solution is more investments in the sector

Nigeria’s recent history has friendly, long-term financing for durable and strategic infrastructure development coming its way.

Being the most critical sector of the Nigerian economy at the moment, the power sector has had its own fair share of these investments.

In one fell swoop, the new investors in power generation and distribution injected over N300 billion into the power sector.

This was revealed by the former director general of the Bureau of Public Enterprises (BPE), Benjamin Ezra Dikki, who went on to say the investments were tip of the iceberg.

The Goodluck Jonathan government

Indeed all these were possible because of the move by the Goodluck Jonathan administration to unbundle the power sector. The move was hailed by industry experts especially because the government then mustered the political will to trudge on despite the opposition from labour and electricity workers.

Luckily, the permanent secretary in the ministry of power, Godknows Igali has said the Buhari government would not only sustain the reforms carried out by the Jonathan administration, but will also fine-tune the policy guiding the operations of the sector in order to address the challenges facing the electricity industry.

Igali made this known at the opening of a two-day Powering Africa Conference organised by the World Bank Group in partnership with Energynet Limited in Abuja late last year.

According to him, where necessary, the Buhari government would initiate new measures to improve the performance of the sector and provide electricity for Nigeria.

On his part, Jonathan while commissioning the Olorunsogo II Power Station in Ogun state late last year, said he had lived up to his campaign pledge to Nigerians that he would make the power sector a priority for his administration.

Gains of the reforms

The gains of the reforams were enormous that even thos opposed to the government then hailed its resolve to carry out the process.

PHCN’s unbundling resulted in the creation of 18 successor– 11 distribution companies (DisCOs), six generation companies (GenCos) and one transmission company, each serving different zones in the country.

As a way of attracting private sector investment, the Jonathan administration signed a Memorandum of Understanding (MOU) with General Electric (GE), a world leader in power solutions, in respect of equity participation, which mandated GE to invest up to 15% in power projects in the country, as well as establish a local packaging facility for small aero-derivative turbines.

Another memorandum of Understanding (MoU) with the Exim Bank of the United States, also provided an investment window of up to $1.5bn for willing investors. The financial commitment of the US EXIM bankwas the  first time such huge funding would be committed to by the bank to a specific sector in Africa.

Way forward

Despite the achievements of the previous government, there is more needed to be done. The project has an estimated investment requirements of $4.5bn gas infrastructure by 2017 and another $1.5bn a year for transmission, up to 2020.

It is no surprise as the Nigerian power sector has been underfunded for decades, crippled by non-performance and served as a conduit pipe for corrupt government officials.

The reforms also targets achieving a 10% contribution by renewable energy to the nation’s power generation mix by 2025.

Government must also direct its focus on coal as a source of energy bearing in mind Nigeria’s  vast coal reserves.

Luckily, the minister of solid minerals development, Dr Kayode Fayemi, last month said Nigeria is expected to generate 1,000 mega watts of electricity from coal by year 2020 to supplement other sources of energy currently in use in the country.

”I know there are people who are worried about climate change and the implication of coal on that.

”But even coal can achieve clean coal environmental standard and we believe that about 1000 mega watts of electricity can be generated from coal by the year 2020.

And these are plants that are going to be sited near the areas where the reserves are, across the country,” Fayemi said while speaking at the Economic Summit organised by the New Telegraph newspapers in Lagos.

More opportunities?

While highlighting the enormous investment opportunities in Nigeria, New Africa magazine,stated that incentives available in the Nigeria power sector are many.

”With a population of approximately 170 million people, Nigeria has a power supply of around 3,500MW compared to a suppressed demand that is estimated at 10,000MW.

”Nigeria has an attractive investment regime that allows equipment and machinery for the power sector to enjoy zero duty.

”Additionally, tax holidays of 5-7 years are granted to companies that manufacture transformers, meters, control panels, switchgears, cable and other electrical-related equipment vital to the industry.

”Power plants using gas as a feedstock are assessed under company income tax legislation at a reduced rate of 30%,’‘ the magazine noted.

There are also opportunities for haulage, medium parcel delivery and freighting in the power sector.

Despite the achievements recorded so far, analysts in the power sector are of the view that the Buhari’s government should approach the reforms with the same vigour the last administration used to address issues in the sector.

Indeed, it is only a sustained effort that can make the reform wholly successful. All hopes are on the minister of power, works and housing, Babatunde Fashola to set the ball rolling.

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