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Nigeria pays 30 Million dollars Every Month For Unused Power

A shocking revelation emerged as the Nigeria Senate received the report of its committee on Power,  Chaired by Senator Gabriel Suswam (Benue North East). The report revealed that Nigeria spends about 30 million dollars every month for power supply it doesn’t use.
The report was sequel to the round table discussion held last December to keep abreast with issues happening in the power sector. The report was delayed due to the COVID-19 pandemic.

The report pointed out that there are lots of issues surrounding the privatization process of the power sector, especially the faulty nature of the agreement signed between the Federal government and Azura and ACU Gas in December  2015 .

The Federal Government had signed agreement with the companies to enable  it secure a $237 million loan to finance its 450MW project in Edo state and get gas supplied to Calabar power plant due to inability of Transmission Company of Nigeria ( TCN) to provide the services.

The report discovered that neither Azura nor ACU has been able to render full services contained in the agreement but sadly,  it has been collecting about $30  on a monthly basis from the federal government  for services not fully rendered.

The report  revealed  a huge lacuna in the agreement where the nation pays for the supply of 450 megawatts of power using the  ‘take or pay’ agreement which posited that whether or not the nation uses 100 megawatts or less it still have to pay for full  cost of supplying of 450 megawatts thereby forcing the nation to pay extra for what it does not consume.

The chairman noted that this lacuna is as a result of the faulty nature of the agreement that was signed.
Another issue that the report revealed is that of the double payment of tariff by both consumers and the Federal government. This tariff was to commence in June, 2020 but was shifted to first quarter of 2021. The chairman of the committee said  the agreement will be revisited to ensure that Nigerians don’t bear the brunt of huge tariff resulting from the faulty agreement.

Another shocking revelation was the fact that,  the gas supply companies are at liberty to draw from the nation’s foreign reverse at will whenever it defaults.

The chairman of the committee explained to  the Senate that since the Privatized Power sector as it is presently,  is insolvent , government should use its 40% share to get it solvent by way of providing meters for the DISCOs to distribute to electricity consumers .

By so doing, it will help government overcome monthly subsidies cum interventions , it has been putting into the sector within the last seven years , totaling N1.5trillion now .

Also, the Senate President while reacting said, “All gas supply agreements must be seen because it is now obvious that the power sector needs a very radical surgery as it is impossible to have power with this current arrangements with the Gencos and Discos”.

After exhaustive debate by virtually all senators present, the Senate adopted recommendations made by the Suswam led Committee.
One of which is total review of the Power Privatization carried out in November 2013 .

The Senate also seek for review of  Electric Power Sector Reform Act 2005 in paving way for a new and more dynamic electricity Act that will consolidate all electricity related laws, consolidate the roles of the regulators and policy makers , bridge existing gaps in the legal and regulatory frameworks and cater  to post – Privatization operational issues in the Nigerian power sector to boost investor confidence and positively impact on the overall outlook of the Nigerian power sector .

It also adopted recommendation on  Cost reflective Tariffs which should only be implemented when majority of electricity consumers , have been metered .

As a way of bridging the gap in remittances to the Nigerian Electricity Regulatory Commission (NERC), the Senate urged Ministries, Departments and Agencies of Government (MDAs) to make provision for payment of all outstanding debts and liabilities owed to DISCOs, as well as accommodate budgetary provision for anticipated consumption for the 2021 budget.

The Senate also called on the Federal Government to consider recruiting 320 additional manpower for the Nigeria Electricity Management Services Agency (NEMSA) to carry out technical inspection, testing and certification of all categories of Electrical installation across parts of the country, as well as provide nationwide metering inspection services.

Meanwhile the Senate is proceeding on a 7 weeks recess to resume in September, 2020.

Top on its agenda when it returns will be the passage of the 2021 budget, to meet up with the new deadline of December. The passage of the  Petroleum Industry Bill and the electoral reform .

The Senate President urged all arms of government to work in harmony in spite of what happened between the executive arm and lawmakers.

He noted that nobody is above the scrutiny of the legislature because their functions is enshrined in the constitution.