Nigeria's Power Sector Seeks $10 Billion Annual Investment for Revitalization Amid Tariff Controversy

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The Nigerian government has outlined a bold initiative requiring $10 billion in yearly investments over the next decade to rejuvenate its struggling power sector. This revelation came from the Minister of Power, Adebayo Adelabu, during a one-day investigative hearing in Abuja focused on halting a recent electricity tariff hike proposed by the Nigerian Electricity Regulatory Commission (NERC).


The session, led by Senator Enyinnaya Abaribe of the Senate Committee on Power, also addressed the pressing need for a N2.9 trillion subsidy to support the sector's financial health. Amidst discussions, there was a unanimous call from the senators urging Minister Adelabu and NERC to reconsider the tariff increase for Band A consumers, which has sparked widespread concern.


Minister Adelabu emphasized the critical liquidity challenges facing the sector, noting the operation under a subsidized tariff regime has accumulated substantial liabilities owed to Generation Companies (GenCos) and Gas Companies. He highlighted that without the necessary funding, which includes clearing a staggering $1.3 billion debt owed to gas suppliers, the sector's stability is at risk.


To assure consumer fairness, Adelabu announced that any customer receiving less than 20 hours of power daily would not be subject to the new tariff rates. He also promised the acquisition of eight million meters over the next four years to tackle the severe metering deficit that contributes to estimated billing practices.


Highlighting the infrastructural needs, the Minister pointed out ongoing projects such as the construction of a 700-megawatt power plant at Zungeru and the development of 26 small hydroelectric dams aimed at boosting electricity production.


Meanwhile, the Central Bank of Nigeria (CBN) has engaged with the sector's financial gaps, providing a N55 billion loan to help bridge the metering divide, although repayment has been minimal, indicating ongoing fiscal challenges within the distribution companies (DisCos).


The session also witnessed vocal criticisms from various stakeholders, including the Manufacturers Association of Nigeria and former NERC Chairman, Sam Amadi, who argued that the tariff increase was implemented without sufficient consultation and was inherently discriminatory.


As the debate unfolded, senators expressed their frustration with the continuous inefficiencies despite the sector's unbundling, stressing the impact on ordinary Nigerians who they feel are paying for the systemic shortcomings.


The hearing concluded with a strong sentiment for re-evaluating the tariff strategy to protect consumers and ensure the sector's sustainability. With such a significant financial ask to stabilize and expand Nigeria's power infrastructure, the government's approach to attracting investment and managing subsidies will be crucial in determining the future of electricity supply across the nation.

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