While speaking on the theme, “Strategic Responses of the Energy Sector to COVID-19 Impacts on African Economies,” at the 14th annual conference of the Nigerian Association of Energy Economics (NAEE), the Vice President, Professor Yemi Osinbajo, yesterday disclosed that revenues collected by electricity Distribution Companies (Discos) in the country had increased by 63 per cent.
Osinbajo attributed this to the reforms carried out in the power sector, including the introduction of Service-Based Tariff (SBT). He stated that with increasing funding, the power sector would soon be fully financed by the market, rather than government subsidies.
The Vice President did not mention the new monthly collection, but the Discos posted a record N44.5 billion revenue collection in September 2020, the highest ever recorded by the power distributors, a month after the Central Bank of Nigeria (CBN) directed banks to take over the collection of revenues from the Discos.
He said in collaboration with the private sector, efforts to invest $3 billion in revamping the distribution and transmission networks were on-going.
Although, it remains debatable if the rising revenues accruing to the Discos have reflected in the supply of electricity to Nigerians, the Vice President, who was represented by Special Adviser to the President on Infrastructure, Mr. Ahmad Zakari, stated, “Electricity tariff reforms with the service-based tariff have increased collections from the electricity sector by 63 per cent, increasing revenue assurance for gas producers and stabilising the value chain.
“It is anticipated that all electricity market revenues will be obtained from the market with limited subsidies as reforms in metering and efficiency with the Discos continue to improve.
“There is accelerated investment in transmission and distribution (over $3 billion) infrastructure that will put Nigeria on a path to 10GW+ and beyond through interventions with the CBN, the Siemens partnership, the World Bank, and African Development Bank and others.”
The Vice President disclosed that in furtherance of efforts to extend electricity to the whole country, the current administration had continued to invest in expanding generation to cater for its current and future needs. He stated that the Okpai PH II plant, the Afam III fast power plant, the Zungeru hydro plant, and the Kashimbilla hydro plant would add more than 1000 MW in both gas and renewable segments to the country’s generation capacity.
Osinbajo further revealed that the administration has transformed the Rural Electrification Agency (REA) into a renewable energy-driven organisation with solar power at its heart, with the five million solar connections programme, the Solar Power Naija. This aims to supply power 25 million citizens through private and public private partnerships and is the largest off-grid connections programme in Africa.
He stated that the energy sector was one of the most critical sectors hit by COVID-19 due to the fact that it relies on human input. According to him, the lockdown in major cities and restrictions in movement across the globe caused a halt in the operations of many energy organisations, leading to huge revenue losses for both the public and private sectors.
President of NAEE, Professor Yinka Omorogbe, had earlier explained that an estimated 689 million people, comprising roughly nine per cent of the global population, lived in extreme poverty in 2020, with 70 per cent of them in Africa and 100 million in Nigeria. Omorogbe said Africa was blessed with abundant energy resources, including coal, bitumen, crude oil, natural gas, solar energy, wind, tidal and wave energy, as well as geothermal energy. She regretted that these resources had not been optimally harnessed for the use of the people.
To enhance full disclosure, a circular signed by CBN’s Director of Banking Supervision, Mr. Bello Hassan last year stated that all electricity collections for services provided by Discos should henceforth be domiciled in deposit money banks.