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Friday, February 23, 2024

Navigating Nigeria’s Power Sector: A Retreat for Reform

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By Abdulrauf Aliyu

In a country teeming with potential, Nigeria’s power sector remains a critical puzzle piece in the nation’s quest for sustainable development. As the words of Robert Gilpin echo through the hallowed halls of a recently concluded power sector retreat, it becomes evident that the sector’s intricacies go beyond the mere supply and demand dynamics. The retreat, organized by the Ministry of Power, stands as a beacon of hope, bringing together stakeholders from every nook and cranny of the electricity industry value chain. However, it also heralds a call to action, urging the Ministry to pivot its focus towards policy formulation and coordination while empowering its agencies to drive implementation.
During the retreat, the Honourable Minister revealed staggering figures—a 600-billion-naira government subsidy for power in 2023. This substantial investment prompts questions about the efficacy of such subsidies and the need for a strategic realignment of priorities. Concurrently, the announcement of the Transmission Company of Nigeria (TCN) splitting into two independent entities—the Transmission Service Provider (TSP) and the Independent Service Operator (ISO)—raises eyebrows, demanding a comprehensive exploration of its necessity and potential impacts.

Gilpin’s assertion, “A market is not politically neutral; its existence creates economic power which one actor can use against another,” underscores the power struggle within the sector. It prompts a reflection on the role of the Nigerian Electricity Regulatory Commission (NERC), tasked with ensuring fair play and competition. As the sector undergoes transformative changes, it is crucial to liberate NERC from political interference, allowing it to execute its statutory obligations independently.

Another crucial aspect under scrutiny is the relevance and future role of Nigerian Bulk Electricity Trading Plc (NBET). The post-retreat landscape demands a thorough evaluation of NBET’s functions and whether it needs to evolve to meet the evolving needs of the market. The imminent passage of the Electricity Power Sector Reform Act 2023 is poised to bring about disruption—a clarion call for these agencies to be ready for the paradigm shift.

States like Ekiti and Lagos are signaling their intention to actively participate in the electricity market. However, the million-naira question remains: do they possess the capabilities and efficiency required for such a venture? The role of the federal Ministry of Power and its agencies in guiding and supporting these states becomes paramount, necessitating a critical assessment of the existing capabilities within the ministry.

Capacity and capability gaps within the Ministry of Power were brought to the forefront during the retreat. To navigate the intricate landscape of the power sector effectively, the ministry must invest in building the expertise of its staff. This undertaking is not only about meeting immediate challenges but also preparing for the long-term vision of a robust and self-sustaining power sector.

In a commendable move, the Honorable Minister recently signed a performance contract with President Bola Ahmed Tinubu, outlining key performance indicators (KPIs) and targets. Now, the onus is on the ministry to cascade these KPIs down to its agencies, ensuring a synchronized effort toward achieving set targets within stipulated time frames. Inter-ministerial and inter-agency collaborations, particularly with the Ministry of Environment, the Ministry of Water Resources, and the Ministry of Petroleum Resources, take on added significance. These collaborations are pivotal, not only for addressing immediate challenges but also for fostering a holistic and sustainable approach to the electricity sector.

As the dust settles on the power sector retreat, the call for a paradigm shift resonates loudly. The sector stands at the crossroads of opportunity and challenge, with the potential to propel Nigeria into an era of unparalleled growth. The Ministry of Power, armed with insights from the retreat, must now take the helm of policy formulation and coordination, empowering its agencies to implement transformative changes. Only through a concerted effort, with a keen eye on collaboration, capacity building, and strategic realignment, can Nigeria’s power sector overcome its challenges and illuminate the path to a brighter, electrified future.

Abdulrauf Aliyu
An economist and Policy Analyst writes from
45 Ashiru Road, U/Dosa New Extension

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