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Friday, February 23, 2024

FG allocates N450 billion for power interventions in 2024, raising questions amid past sector challenges

Budget analysis from the Nigerian Bulk Electricity Trading Company reveals substantial allocation for the 'FGN Power Intervention Fund' in the upcoming fiscal year.

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In the elegant yet complex dance of Nigeria’s power sector finances, the Federal Government is poised to inject a significant N450 billion into power interventions for the year 2024, according to a detailed analysis of the budget by the Nigerian Bulk Electricity Trading Company. The lion’s share of this allocation is earmarked for the ‘FGN Power Intervention Fund’ within the company’s capital expenditure.

The Government Owned Enterprise, responsible for facilitating electricity transactions in the country, is set to expend a total of N454.81 billion in 2024. Breaking down the figures, N2.44 billion is allocated for personnel costs, N2.36 billion for recurrent costs, N580 million for general travel and transport, N15 million for utilities, N110 million for materials and supplies, N210.75 million for general maintenance services, N34 million for other services, N60 million for fuel and lubricants, N40 million for financial charges, N576 million for miscellaneous, and N736.51 million for supplementary overhead.

As the calendar turns to the New Year, the majority of the company’s financial focus remains on power intervention funds. Since May 2022, the Federal Government’s injection into electricity distribution companies has soared to a staggering N2.9 trillion, representing the cumulative funding provided to the sector since its privatization in 2013.

Despite these substantial intervention funds, the power sector continues to grapple with persistent challenges, including numerous grid collapses. In October 2023, the House of Representatives declared its intent to investigate all financial interventions by the Federal Government in the power sector over the past decade, covering over $1.25 billion injected into the sector since the 2013 privatization.

House of Representatives member, Ademorin Kuye (APC, Lagos), emphasized concerns about the Nigeria Electricity Regulatory Commission’s performance, questioning its ability to drive the industry forward and eliminate financial challenges. He stated, “The Nigeria Electricity Supply Industry faces threats due to the poor performance and transparency of DISCOs and the NERC’s inability to sanction erring stakeholders.”

In a New Year statement, the Lagos Chamber of Commerce and Industry highlighted the need for private sector investment in the transmission segment of the power sector to enhance its efficiency. The statement read, “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.”

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