Power Sector Privatisation a disappointment – FG says, vows to restructure Transmission Company

Adebayo Adelabu

The Federal Government has disclosed its plans to revamp and restructure the Transmission Company of Nigeria in line with the Electricity Act 2023 and the industry demands.

The Minister of Power, Mr Adebayo Adelabu, made the disclosure on Tuesday in Abuja at the Ministerial Retreat on the Integrated National Electricity Policy and Strategic Implementation Plan. The retreat had the theme, ‘Navigating and aligning on the path to enhanced electricity reliability’.

Adelabu stated, “It is time to restructure the TCN into two entities: the Independent System Operator (ISO) and the Transmission Service Provider (TSP). This restructuring must synchronise with the evolving landscape of state electricity markets, addressing calls for the decentralisation of the national grid into regional grids interconnected by a new higher voltage national or super grid.

“Essentially, we must ask whether the government should directly provide electricity nationwide or rather facilitate its provision by drawing comparisons with China’s centralised model and the United State’s diverse access models.

“Understanding how to handle subsidies, cross-subsidies, and aligning the Rural Electrification Agency’s role with emerging state markets are vital questions that demand stakeholder scrutiny for effective resolution.”

Adelabu said the Federal Government must work with state and local governments to increase the coverage and distribution of electricity across the country.

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He noted, “Certain observable aspects within our sector require attention. These include the poor track record in contracting, contract management, and adherence to contractual obligations, in some cases, even by design.

“With impartial examination, it is evident that these identified factors erode confidence in the viability of the sector and pose fundamental challenges of inadequate capitalisation and limited access to funds for the diverse players along the energy value chain, from gas supply to electricity distribution.”

The minister said a major issue in the power sector was the pricing of gas utilised by Generation Companies (GenCos) in dollars describing it as a huge volatile variable that affects the pricing of electricity for end users.

He advised, “A preferable option was to ensure that gas utilised by the GenCos is traded in naira so as to manage the foreign currency-related inflationary trends that challenge the application of the Multi-Year Tariff Order (MYTO) methodology.

“We must find ways and means to pursue domestic gas policies and incentivise stakeholders for the supply of gas for inland use in electricity supply; other industrial activities and conversion to compressed natural gas and liquefied petroleum gas for transportation and domestic uses respectively.”

According to him, one of the major deliverables from the policymaking process is a viable method for establishing a sustainable capital investment programme around gas processing and transportation infrastructure.

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“We must be forthright and passionate about our industry while remaining objective in finding the necessary solutions to propel us forward, establishing a credible policy framework for reliable electricity in the country,” he added.

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