As Nigerians anticipate a consistent power supply, the financial burden of subsidizing the electricity sector is expected to soar to N2.4 trillion by the end of 2024. Minister of Power, Adebayo Adelabu, expressed concerns over the challenges posed by aging infrastructure.
Adelabu also highlighted that the recent surge in vandalism is costing the Transmission Company of Nigeria (TCN) approximately N10 billion, while the Nigerian Bulk Electricity Trading has disbursed N8 trillion over the past nine years.
These figures were shared during the annual power and utilities roundtable hosted by PWC, themed “Reigniting Hope in Nigeria’s Electric Power Sector.”
At the event, Minister Adelabu emphasized that the theme aligns with the current administration’s mission to rebuild trust, foster innovation, promote inclusive growth, and achieve tangible outcomes in the power sector.
He noted that the administration, under President Bola Tinubu’s Renewed Hope Agenda, understands that energy is more than just a commodity.
Represented by his Chief Technical Adviser, Adedayo Olowoniyi, Adelabu lamented the difficulties posed by outdated infrastructure and other sectoral challenges that complicate the management of the electricity value chain.
He stated, “One of the challenges we face in Nigeria is securing stakeholder buy-in. This makes managing the electricity value chain particularly difficult, as many participants may resist adhering to market regulations. It is crucial that we all comply with the rules set by the regulator and work towards creating an environment that fosters market discipline.”
Adelabu expressed optimism about the government’s progress in steering the sector towards growth, mentioning, “In the past year, we have made strides in addressing various issues within Nigeria’s power sector and setting it on a growth trajectory. To ensure the energy sector’s sustainability, the Federal Government has adopted a multi-faceted approach, including the enactment of the Electricity Act of 2023.”
He also addressed the impact of vandalism on the already fragile infrastructure, revealing that TCN has spent around N10 billion repairing damaged towers nationwide.
“Our achievements have not come without challenges. We have experienced frequent grid disturbances recently due to several factors, including aging infrastructure, resource constraints, capacity inadequacies across the value chain, and ongoing vandalism of the transmission network.
“When you have a transmission infrastructure that is weak and deteriorating, coupled with significant vandalism, the outcomes are predictable. Many may not fully grasp the extent of the vandalism occurring.
“In the past six months, TCN has likely spent close to N10 billion on repairing vandalized towers. Instead of using these funds to complete existing projects or pursue expansions, they are being diverted to fix lines that are damaged daily.”
During his presentation, Dr. Yusuf Alli, Commissioner for Planning, Research, and Strategy at the Nigerian Electricity Regulatory Commission, stated that the total electricity subsidy for 2024 is expected to reach N2.4 trillion.
He explained, “At the start of this year, the monthly subsidy was around N250 billion. Following the tariff increase for band A in April, this amount was reduced by over N100 billion. However, due to some regression in the macroeconomic environment, our best estimate for 2024 is a cumulative subsidy of N2.4 trillion.
“This means the federal government and the Ministry of Finance will need to secure funds to compensate the generating companies, which are currently not receiving their full payments due to shortfalls.”
Mr. Johnson Akinnawo, Acting MD/CEO of Nigeria Bulk Electricity Trading Plc (NBET), revealed that they have disbursed N8 trillion since 2015.
He affirmed their commitment to continue acting as an off-taker and to promote bilateral trading as they renew their role for another three years.
“Since 2015, we have successfully settled market transactions totaling N8 trillion. This indicates that we will remain active in the market for another three years, fulfilling the role assigned to us by the government.
“We expect to continue being a reliable off-taker, supporting government policies and implementing directives.”
