Nigeria’s Electricity Sector Suffers Market Inefficiency, Says Power Minister

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By Emmanuel Addeh

The Minister of Power, Mr. Sale Mamman, Thursday said that market inefficiency, a situation in which asset’s prices do not accurately reflect their true value, remains one of the major problems of the Nigerian Electricity Supply Industry (NESI).

Speaking during a virtual meeting with the African Development Bank (AfDB), Mamman stated that despite the challenges in the sector, he was repositioning and realigning it for effective service delivery.

He stated that the meeting, which updated the bank with the progress recorded in the power sector, also discussed ways for further engagement to mitigate the current bottlenecks bedevilling the system.

A statement from the minister’s office quoted him as saying that the power sector was in the process of undergoing long term structural market reforms and had gone through the first phase of privatisation in the hope of unlocking investments.

“Unfortunately, this has not delivered the benefits envisaged as the sector is struggling with a number of challenges namely: market inefficiency; infrastructure misalignment; coordination of issues; as well as contract ineffectiveness.

“This led to the articulation of my roadmap that specified five key areas of focus in order to take corrective steps and reposition the sector on to a path of sustained growth,” the minister added.

He highlighted that the central issues responsible for the situation in the sector were infrastructural deficit, lack of coordination, and contract ineffectiveness, adding that government’s efforts have largely focused on the three critical issues.

Speaking on the Siemens power project, he told the bank that the federal government was in the process of implementing the Nigerian Power Sector Roadmap as a high-level presidential intervention that seeks to address the key challenge of infrastructure misalignment within the value chain of the power sector.

He added that the deal aims to systematically increase end-to-end capacity of the bulk power system from generation to last-mile delivery.

“Additionally, we are very much committed and have commenced the implementation of the Transmission Rehabilitation Programme (TREP) funded by your bank. Our objective under the programme is to make the network more robust, flexible, and meet redundancy criteria.

“The TREP as you are aware is divided into two stages, namely, TREP 1 and 2. Under TREP 1, we are already working on constructing 330kv Double Circuit lines in various locations. We hope to expend $210 million on the phase.

“Two hundred million dollars is earmarked for phase 2; however, this is yet to be negotiated with the bank. Under phase 2, we intend to undertake the expansion of transmission networks in the North-east geopolitical zone which has the worst transmission infrastructure and development index in Nigeria,” he said.

Speaking during the meeting, the AfDB Nigeria country representative, Ebrima Faal, commended the Minister of Power for the reorganisation of the power sector, describing the move as highly encouraging.

He said the bank was poised to provide more strategic engagement to address the deficit in the power sector in Nigeria.