LCCI calls on FG to Consider Private Sector Investment in Electricity Transmission
The Lagos Chamber of Commerce and Industry (LCCI) has called on the Federal Government to consider bringing private sector investment into electricity transmission.
The power generation and distribution segments were privatized in 2013, with the Federal Government solely in control of electricity transmission, through the Transmission Company of Nigeria (TCN).
In 2023, the national grid collapsed at least four times. Between 2017 and 2022, there were a total of 46 grid collapses in the country.
LCCI noted that bringing private sector investment into the transmission segment, would ensure adequate technical and financial capacity for a well-functioning sector to power economic growth in Nigeria.
The Chamber, however, commended the Federal Government’s commitment to power projects, particularly the Siemens Energy initiative, noting that it is a step in the right direction towards addressing the critical issue of electricity supply in the country.
LCCI was reacting to President Bola Tinubu’s New Year address to the nation
Tinubu in his address had noted that he and German Chancellor, Olaf Scholz, have committed to a new deal to speed up the delivery of the Siemens Energy power project, adding that his administration recognizes the importance of electricity in driving economic growth.
“Just this past December during COP28 in Dubai, the German Chancellor, Olaf Scholz, and I agreed and committed to a new deal to speed up the delivery of the Siemens Energy power project that will ultimately deliver reliable supply of electricity to our homes and businesses under the Presidential Power Initiative which began in 2018,” he said.
“Other power installation projects to strengthen the reliability of our transmission lines and optimise the integrity of our National grid are ongoing across the country.
“My administration recognises that no meaningful economic transformation can happen without steady electricity supply. In 2024, we are moving a step further in our quest to restart local refining of petroleum products with Port Harcourt Refinery, and the Dangote Refinery which shall fully come on stream.”
Reacting, LCCI in a statement signed by its Director-General, Dr. Chinyere Almona stated: “The commitment to power projects, including the Siemens Energy initiative and efforts to enhance the reliability of transmission lines, is a positive step towards addressing the critical issue of electricity supply, which aligns with the business community’s aspirations for a robust and diversified economy.
However, there is an urgent need to address the structure of the power sector. The Government needs to consider bringing private sector investment into the transmission segment of the power sector. This would ensure adequate technical and financial capacity for a well-functioning sector to power economic growth.”
Despite the privatisation of Nigeria’s power sector more than 10 years ago, electricity distribution and supply has been abysmal. Billions of Naira is spent yearly by citizens on fuel and diesel to power generators.
20,000MW electricity generation
Although Nigeria has an installed capacity of about 13,000 megawatts, its actual generation is about 8,000 MW, while distribution to end-users is less than 5,000 MW.
Speaking at the 2023 Nigeria Energy Summit in Lagos, Minister of Power, Adebayo Adelabu, vowed that the Federal Government would achieve 20,000MW in the next three years.
“As a politician, a Minister of Power, I also have a limited amount of time to spend, and I must make impacts. I am determined to make impacts. I have diagnosed the issues to a large extent, and I’ve found out that the solutions are not as difficult as we all believe,” Adelabu said.
“In setting targets for ourselves, we also need to set short-term targets. My own vision is for us to increase the stored capacity of our generation to at least 20,000 megawatts in the next three years. And it doesn’t stop there
“We should be able to evacuate and transport this power at the minimum of 80 per cent of the stored capacity to the end users of the exchange system.”
In a statement on Monday, the Minister said he is focusing on enhancing distribution and transmission infrastructure to minimise technical and commercial losses in the electricity value chain.
As part of measures to improve electricity transmission, Adelabu informed of plans to decentralized transmission segment.
“We will also be implementing the Eastern and Western super grid projects to strengthen the grid and increase electricity supply to demand centres in the country.
”The Transmission Company of Nigeria (TCN) will be reconstituted in the short term, separating transmission services from system and market operations in the first quarter of 2024.
”In the medium- to long-term the transmission grid will be separated into regional grids for effective management,” he was quoted in a statement as saying
Presidential Power Initiative
The Federal Government recently secured consensus on financing electricity pilot projects in the country aimed at realizing the target of the Presidential Power Initiative (PPI).
The Minister of Power, Adelabu who was part of President Bola Tinubu’s delegation to Berlin, Germany for the German-Nigerian Business Forum said that this followed extensive discussions on expediting PPI agreements and overcoming transmission challenges.
“Honored to engage in discussions with German Vice-Chancellor Robert Habeck, alongside key officials and Siemens AG Africa reps. Our goal: Fast-tracking the Presidential Power Initiative (PPI) to fulfill the President’s vision for reliable electricity in Nigeria,” the Minister said in a post via his social media handle.
“Deep-dived into vital talks, focusing on expediting PPI agreements and overcoming transmission challenges. Thrilled to share that we’ve secured consensus on financing pilot projects and strategically reshaped the program to fortify our transmission infrastructure.
“As the Minister of Power, my commitment is unwavering. We’re determined to eliminate obstacles hindering the Siemens-supported PPI. Recognizing its transformative impact, we’re dedicated to surmounting challenges and ensuring success in reshaping Nigeria’s power sector.
“Feeling the urgency, and all partners are on board, ready to contribute to PPI’s success. It’s not just about overcoming hurdles; it’s about seizing opportunities to revolutionize Nigeria’s power landscape. Excited for the journey ahead!”
Recall that the Federal Government and Siemens AG in February 2021 signed a contract for the pre-engineering phase of 25,000 megawatts target by 2025, under the PPI, that aims at boosting power generation in the country.
The parties had in July 2019 signed a Letter of Agreement on the Nigerian Electrification Roadmap, now PPI , with the aim of boosting electricity generation in the country to 25,000 megawatts between 2019 and 2025.
This was followed by an approval of €15.21m (N6,940,081,465.20) offshore and N1.708bn onshore by the Federal Executive Council, on July 29, 2020, as part of Nigeria’s counterpart funding for the power deal.
The $2 billion power deal aimed to achieve 7,000 megawatts, 11,000 megawatts and 25,000 megawatts of electricity generation for the country by 2021, 2023 and 2025 respectively.
Under the structure of the PPI funding, 85 percent of the fund would come from a consortium of banks, guaranteed by the German government through credit insurance firm, Euler Hermes while the Federal Government will pay 15 percent counterpart funding. There is also 2–3 years moratorium and 10–12 years repayment, at concessionary interest rates.
It is believed that the completion of the project will help the country cut down losses attributed to poor electricity supply.
Speaking in 2020, a former Minister of Finance, Budget and National Planning, Zainab Ahmed, had said the nation loses over $1 billion annually due to technical and commercial inefficiencies along the electrification value chain.
She noted that “The PPI will help eliminate these inefficiencies and unlock economic value for the country.”
