A Review of the Nigerian Energy Industry

Power Ministry budget still high despite privatisation

Prof Nebo02 January 2014, Abuja – Despite the privatisation of the Power Holding Company of Nigeria (PHCN) assets, the Federal Ministry of Power has budgeted N62,449,100,632 to keep it afloat in 2014. This is just N11,813,279,26 less than the 2013 budget allocation.

A breakdown of this year’s budget estimation shows that the bulk of the budget, about N24,912,292,467, would be allocated to improving the services of the Transmission Company of Nigeria (TCN), although it was higher with N33,849.634 in the previous year.

The privitisation of PHCN has cut down the salaries and allowances of about 48,000 workers out of the ministry’s treasury.

The least amount of N1,142,500.000 was allocated to the Nigerian Bulk Electricity Trading Company Plc (NBET).

Recall that the federal government has a standing contract with Manitoba Hydro International (MHI) of Canada to improve the transmission section of the power industry within four years and then handover to their Nigerian counterpart. Equally, NBET was established for market capitalization to provide a financial backup to the generation companies in the current privatized electricity market.

In the budget obtained from the Budget Office, about N74,262,379.894 was appropriated for the ministry in 2013, the year in which it intensified and completed its privatization exercise under the Minister of Power, Prof. Chinedu Nebo.

The power sector regulator, the Nigerian Electricity Regulatory Commission (NERC) has an allocation of N1,750,000,000 to run its operational and regulatory activities for the year. Its function remains the formulation of effective regulatory policies and monitoring of the privatized electricity market.

The recent of such was its approval of the interim rule which guides the new Distribution companies (Discos) and Generation companies (Gencos) on doing business in the market testing period. It will also advise the Minister of Power to declare the Transitional Electricity Market (TEM) by March when the private-styled power sector would have been stable and improved.

Meanwhile, the Rural Electrification Agency (REA) which remains a critical area has gotten N8,202,679,166 which is N1,746,461,872 less than last year’s allocation.

Experts attributed this to the likely shift in the activities of the ministry to alternative rural electrification project under the new Operation Light Up Rural Nigeria and the privatization of the Discos which is expected to take care of electricity infrastructure expansion.

In the meantime, subscription of newspapers, magazines and periodicals would be gulping about N4,564,348 in the year from the total allocation of N21,854,840,390 to the ministry’s headquarters in Abuja. The amount is said to be less than its allocation of N5,707,430 in the 2013 budget.




– Daily Trust

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