As effort by the Federal Government to improve on power supply across the country intensifies, indication has emerged that plans are underway to further invest massively in infrastructure.
The investment, according to the Special Assistant to the President on Infrastructure, Ahmed Rufai Zakari, is expected to incentivise private investors, and particularly drive the power distribution companies to achieve optimisation. He spoke at the 12th PwC Nigeria Annual Roundtable Conference with the theme: “Sustainable Power Supply in Nigeria: What next?”
The event provided an opportunity for stakeholders to highlight the positives of ongoing projects in the upstream section of the value chain, from cost reflective tariffs to investment in transmission and distribution networks. They also identified a major bottleneck, which will necessitate unlocking the cash flows across the power value chain; and potentially exploring off-grid solutions where industry players can be responsible for the entire value chain.
Zakari said the government’s intervention programmes in the sector were divided into phases, noting that the government was through with the first phase, which borders on holistic review of policies in the sector. He said the government was moving into the phase that has to do with provision of infrastructural facilities in the sector, assuring that there would not be problem providing stable power, once infrastructure is on ground.
He cited Siemens Presidential Power Initiative and credit facilities provided to operators, as some of the ways, in which government provides interventions in the sector. He said: “Before now, government had completed phase one of its intervention programmes, which borders on regulatory and policy matters,” adding that the phase had to do with increasing tariff in a sustainable way.
The development, he said, had assisted in eliminating gap between cost reflective tarrifs and allowable tarrifs. He said: “It is expected that the measure would help in incentivising investors, in order to enable them achieve optimal performance.”
Also speaking, Partner and Energy, Utilities and Resources Leader, PwC Nigeria, Pedro Omontuemhen, noted that the sector’s very capitalintensive nature meant that much is still required to meet the country’s power needs. He noted that from power production to transition and distribution, a lot of funding was required. “The energy poverty in Nigeria can partly be attributed to a lack of adequate funding of the sector.
For Nigeria to have stable electric power, the sector needs to be funded adequately,” he added. In a related development, the Chief Executive Officer, General Electric and Utilities Limited, Mr Adedoyin Adele- Fadipe, said stakeholders needed to work in collaboration and become more creative to achieve results.
On his part, Special Assistant (Energy) to the Governor, CBN, Ebipere Clark, emphasised the need to attract investments into the industry so that the industry pays for itself. Currently, irrespective of amounts being generated or distributed, cash is only being obtained for about 1.69GW to serve an industry distributing 4GW and capacity of generating 12.5GW.
Providing insights into the continent’s power and utilities situation, James Mackay, Energy and Infrastructure Strategy Lead, PwC South Africa, pointed out that Africa contributes only about three per cent to global C02 emission, yet the continent is saddled with energy transition and energy poverty. Mackay noted that Africa’s fossil fuel is worth $15.2 trillion of proven reserves and it is estimated that $6.7 trillion of that would be left in the ground because there will not be a market to buy it due to the energy transition. Further, that the private sector in Africa must play a critical role in financing and guiding renewable energy initiatives in the continent. Some of the key takeaways from the forum included the need to create an environment that gives the private sector the confidence to invest in the power sector; the need to increase efforts to achieve 100 per cent metering, and the fact that regulatory and policy alignment had helped the government to bridge the gap between cost and service reflective tariffs versus allowable tariffs. Others are the fact that globally, funding for future projects is around the energy transition and the need to address energy poverty before shifting focus to energy transition in Africa; a reorientation of the mindset of the populace, a shift from power being considered a public good that the government provides to a service which requires payment, and judicial reforms with respect to dispute resolution in the power sector are critical.
This year’s roundtable had notable speakers from across the power and utilities value chain from Nigeria, Ghana, and South Africa with contributions revolving around the need for holistic reforms, accountability, energy transition, infrastructure deficit, metering gap, and energy theft. Others include systemic challenges such as slow judicial system, and payment of investors’ funds.