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Reading: Nigeria's Power Sector Faces NGN600bn Subsidy, Calls for TCN Restructuring
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Nigeria

Nigeria's Power Sector Faces NGN600bn Subsidy, Calls for TCN Restructuring

The Nigerian government is potentially facing a NGN600 billion bill for electricity subsidies, as revealed by Sanusi Garba, the Chairman/CEO...

Chima Joseph Ugo
Chima Joseph Ugo - Editor-in-chief December 13, 2023
Updated December 13, 2023 at 1:07 PM
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Nigeria's Power Sector Faces NGN600bn Subsidy, Calls for TCN Restructuring
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Nigeria's Power Sector Faces NGN600bn Subsidy, Calls for TCN Restructuring
The Nigerian government is potentially facing a NGN600 billion bill for electricity subsidies, as revealed by Sanusi Garba, the Chairman/CEO of the Nigerian Electricity Regulatory Commission (NERC). 

This revelation was made public during a ministerial retreat focused on the Integrated National Electricity Policy and Strategic Implementation Plan in Abuja.

Garba further elaborated that the Service-Based Tariff (SBT) has played a crucial role in decreasing tariff subsidies. However, the accumulated financial weight of these subsidies from 2015 to 2022 amounts to a staggering NGN2.8tn. 

He pointed out that the sector's viability and attractiveness to investors are being jeopardised by inadequate end-user tariffs, subpar DisCo collections, and revenue shortfalls.

In his contribution, the Minister of Power, Adebayo Adelabu, advocated for the establishment of a new entity derived from the Transmission Company of Nigeria (TCN). This move, he believes, would enhance the TCN's capacity to transmit power from power-generating companies to electricity distribution companies.

Adelabu expressed concern over the TCN's reliance on outdated and deteriorating infrastructure, which he believes is hindering its ability to transmit the necessary power. He criticised the TCN's performance in the electricity supply industry and suggested that the solution to this inefficiency lies in dividing the TCN into two separate entities.

He further proposed that this restructuring should align with the changing landscape of State Electricity Markets. This would address the growing demand for the national grid to be decentralised into regional grids, interconnected by a new, higher voltage national or super grid.

Adelabu also highlighted that the country now generates over 98 per cent of its electricity through renewable sources, a significant increase from the 70.5 per cent recorded last year. He stated that in 2022, thermal plants generated 70.5 per cent of the nation's grid electricity, with hydro contributing 27.3 per cent, and solar and other power plants making up the remaining 2.2 per cent. He concluded by noting that the encouraging news is that over 98 per cent of the feedstock powering electricity generation in the country is transition or clean fuels.

Tags: Nigeria

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