In a proactive move aimed at finding enduring solutions to challenges associated with gas supply to power Generating Companies (GenCos) in Nigeria and enhancing overall efficiency in the power sector value chain, Minister of Power, Adebayo Adelabu, in collaboration with the Ministry of Petroleum Resources (Gas), has established a ministerial committee. This committee, comprising representatives from both ministries, gas suppliers, the Nigeria Electricity Regulatory Commission (NERC), and stakeholders in the electricity value chain, is tasked with resolving the existing crisis.
In a separate meeting with foreign development partners operating in the country, Minister Adelabu commended their developmental role in the power sector and urged them to continue their support. He provided an overview of the Federal government’s transformation master plan under the power ministry, emphasizing its focus on improving power supply across Nigeria.
Adelabu highlighted that, after a comprehensive diagnosis of issues affecting the power sector, the main problems were identified as liquidity and funding. He emphasized the need for a commercial model in the sector, allowing cost recovery through tariffs and providing operators with a reasonable markup. However, he noted that the sector is not allowed to charge a cost-reflective tariff, leading to liquidity challenges.
Addressing the pivotal role of states in the power sector, Adelabu suggested the unbundling of Distribution Companies (DisCos) along state lines. He advocated for states to establish their power-generating companies, structures for transmission, and distribution responsibilities. He emphasized the importance of resolving the liquidity issue for sustained sector development.
The minister outlined strategies for incremental improvement in power supply, including the Rural Electrification Agency (REA) serving underserved rural communities and increasing the volume of renewable energy. He mentioned plans for small hydro power plants along existing dams, hybridizing with solar, and considering windmills for power generation along the coastal areas.
In response, development partners, including the European Union, USAID, UNIDO, World Bank, FCDO, JICA, AfDB, AFD, Embassy of Norway, and GIZ, commended the minister for the comprehensive diagnosis and pledged continued support. They acknowledged the clear direction provided on resolving power sector challenges.
In a meeting with the Minister of State, Ministry of Petroleum Resources (Gas), Ekperipe Ekpo, both officials acknowledged the need for innovative thinking in addressing gas supply challenges to GenCos. Adelabu proposed denominated payment in naira for domestic gas supply and emphasized the importance of contractual arrangements between GenCos and gas suppliers to ensure optimal operation.
Minister Ekpo highlighted the impact of gas pipeline vandalization in the Niger Delta on gas supply and expressed a commitment to finding solutions. Both ministers agreed on the necessity of legislative action for naira-denominated payments and expressed concerns about pipeline vandalization in the Niger Delta. They underscored the importance of collaboration to resolve these challenges.
