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from the grid to a federal government agency.

Improvement in Power Generation and Infrastructure

Nigeria’s average generation and transmission were 4,000 Mega Watts (MW) (although the generation occasionally hit the 5,000MW mark), with an average of 3,000MW being distributed to end user consumers across the country. This performance was mainly impacted by infrastructure deficits in the electricity value chain. This electricity capacity is grossly inadequate to cater for the power needs of Nigeria’s growing population. The FG in its budget breakdown for 2021 sought to address some of the issues faced in the power sector by allocating ₦206.746billion (inclusive of ₦160.83 billion for multilateral and bilateral funded projects) to the Ministry of Power (MOP) for capital expenditure in the year 2021. A significant portion of the Mop’s allocation will be spent on counterpart funding needed to complete the construction of the hydro power projects and other renewable energy solutions, expansion of the transmission lines and rehabilitation of the existing infrastructure. The FG has also earmarked ₦160.83billion for the expansion and rehabilitation of the country’s transmission network. Other notable projects include the ₦1.5billion allocated for the distribution expansion programme projects to utilize the stranded power from the grid and approval of the counter-part funding for the Siemens collaboration which is expected to increase the distribution capacity to 7000MW by the end of 2021.

In 2019, the Federal Government of Nigeria signed a deal with the German government popularly referred to as the Nigerian Electrification Roadmap. The Nigerian Electrification Roadmap involves a five-fold increase in national generating output, the revamping of the power distribution and transmission systems in a massive construction project that promotes local skills and sustainable technology. The first step of the project which includes: the upgrade and expansion of transmission and distribution structure, the improvement of access to affordable, efficient and reliable electricity and the support of industrial development and economic growth is expected to be completed this year.

Furthermore, the key players in the power sector have associated the frequent collapse of the national grid to the frequent load rejection by Discos. In the recently issued Guidelines for Economic Merit Order Dispatch of Generation Capacity and related matters, 2020, Discos will henceforth be liable for the rejected load. The objective of the Guideline is to implement a methodology that holds a Disco financially responsible for failing to distribute its contracted load allocation due to constraints in its networks. If enforced strictly, this will go a long way in holding Discos accountable in terms of load distribution and thereby reducing stranded energy capacity and serving as to ‘force’ adequate power supply to end consumers.

Improved Liquidity

The Central Bank of Nigeria established the Solar Connection Intervention Facility to complement the Government’s effort of producing affordable electricity to rural dwellers through the provision of long-term low interest credit facilities to the Nigeria Electrification Project. The Nigerian Electrification Project is a federal government initiative that is private sector driven and seeks to provide electricity access to households, micro-small and medium enterprises in off-grid communities across the country through renewables power resources. The Nigerian Electrification Project is being implemented by the Rural Electrification Agency in collaboration with the World Bank, the African Development Bank and other partners. This initiative will in the long run promote the deployment of solar power solutions and mini grids around the country. The main objective is to sustain liquidity in the power sector. This has enabled most DisCos to carry out projected capital expenditure through issuance of Letters of Credit for a number of projects.

Change in the Role of the Nigerian Bulk Electricity Trading Company Plc (NBET)

With the several controversies rocking NBET, it is expected that there will be a change in its role in the power sector. One of such controversies is its transfer from the Ministry of Power to the Ministry of Finance contrary to the provisions of the Electric Power Sector Reform Act. However, notwithstanding the purported controversial change of supervision of the NBET, it is the opinion of this writer that this move may improve NBET’S liquidity in view of the current role being played by NBET as market intermediary between the Gencos and the Discos. This may therefore foster investor confidence in ongrid generations projects which had hitherto been abandoned as a result of NBET financial illiquidity.

Concluding Remarks

It is pertinent to state that the Federal Government should address the issues around infrastructure deficits in the transmission, distribution subsectors and overall sector governance and develop and enforce regulatory framework address the key challenges facing sector. It is also hoped that the Government’s planned interventions in 2021 will attract significant private sector capital that will help to address the financial, technical and infrastructural challenges of the sector. The Federal Government should put in place more power sector specific fiscal incentives to encourage these private investments.

Based on the foregoing, there should be reasonable confidence that the year 2021 would witness significant developments in the Nigerian electric power sector.