Makoju Seeks Restructuring, Better Funding for Stable Electricity Supply
As Nigeria grapples with epileptic power supply, Adviser to the President of Dangote Group, Mr. Joe Makoju, has called for adequate funding and restructuring of the power sector so as to achieve relative stability in electricity generation and distribution.
He said the power sector is currently cash strapped to the point of even threatening the health of financial institutions and the wider national economy.
To restructure the sector for effective services, Makoju advised a reduction in the distribution zones.
Speaking at a two-day Power Sector Stakeholders Interactive Dialogue convened by the National Assembly in Abuja, Makoju who was special adviser to three different Presidents of Nigeria on Power canvassed for a fundamental structural change as against the current path of tariff increases and government bailouts.
He said: “I want to stress that, I do not wish to be alarmist; but if we continue on the current path of tariff increases and government bailouts without fundamental structural changes, we will soon be dealing with a disaster. What assets are on ground will depreciate, financial positions will deepen, and eventually we will all come back to these same conclusions but after much more harm has been done.”
While revealing that the failure of the Power Sector under government management was not technical and commercial management of the business but the absence of sustained and adequate funding of the sector, he said despite the privatization exercise six years ago, the problem of the sector remains the same.
According to him, “Most of the private sector investors in the power privatization had no specialist knowledge or understanding of the power sector, which has eroded the technical and managerial competence in the industry. And the funding problems have persisted and even become exacerbated as they now even threaten the stability and health of the nation’s banking system as well as the entire electricity sector. “
While noting that the distribution end of the value chain is the most inefficient and has suffered the greatest neglect, he described it as one whichunderpins the financial viability and sustainability of the entire sector. “To get the sector moving forward we need to improve its liquidity position, and this can only be accomplished through satisfied, paying customers.” he asserted.
Still on the issue of adequate funding for the sector, Makoju said the Association of Nigerian Electricity Distributors (ANED) reports that as at December 2016, the funding gap in the power sector is over N1 trillion and as such, he advised that funding must be looked at from the perspective of new equity and debt financing arrangements and structures, and internally generated revenue maximization.
As a lasting solution, he also canvassed new capable players working in a reconfigured power sector while also considering residual government shares for bringing in long term funding.
While urging the FG to declare a state of emergency in the power sector, he routes for the engagement of industry experts and policymakers to draw up a comprehensive power sector master plan building on past provisions and arrangements to deliver an electricity industry fit for current and future needs.
Makoju said: “The present configuration is not working and will not work even with more money pumped in. The structure of the sector needs to be reconfigured for efficiency, with fewer distribution zones for instance. These can be managed and coordinated by a reputable international operator like EDF, Globeleq, Actis, Reliance, etc. in partnership with financially credible Nigerian entities”Makoju also canvassed for the restructuring of the TCN management for better service delivery.