A Review of the Nigerian Energy Industry

Govt spends N2.74trn on power sector since 1999

Oscarline Onwuemenyi 09 September 2015, Sweetcrude, Abuja – The Permanent Secretary, Ministry of Power, Ambassador Godknows Igali has disclosed that a total of N2.74 trillion has been invested in the country’s power sector from 1999 to date.
Ambassador Godknows Igali.
Ambassador Godknows Igali

Igali, who disclosed this before the Senate Ad hoc Committee probing the power sector from 1999 till date, explained that the investments were made during the era of Chief Olusegun Obasanjo, late President Umaru Yar’Adua and the immediate past president, Goodluck Jonathan.

Igali also noted that for nineteen years before 1999, no single engineer was employed for the power sector, just as no new power plant was put in place from 1991 to 1999.
He expressed regret that there has not been a consistent manner in investment in the power sector from the government since1999.
According to Ambassador Igali, former military Heads of state, who ruled the country from the overthrow of former President Shehu Shagari, up to 1999, when democracy was reinstituted, crippled the power sector.
He pointed out that the successive military regimes not only failed to recruit the relevant engineers for 19 years, but also failed to invest in the power sector during their reigns.
He disclosed that out of the 79 power generation units, only 19 were functioning at that time, adding that no new power plant was constructed from 1991 to 1999.
He recalled that the last plant, Shiroro was built in 1991, long before the emergence of Obasanjo as president in 1999, adding that consequently, the power sector depreciated rapidly due to lack of consistent investment and funding until Obasanjo began the power reforms.
Igali stated that the advent of democracy in 1999 brought about improvement in the power sector, adding that, “When democracy came, the government inherited the sector that had not made capital investment for a long time and not a single engineer was recruited in 19 years.
“Despite the effort at investment by government, we have not been able to invest in a consistent manner in the power sector.
“Investment from government and the private sector must go up gradually but consistently, as fluctuation will not help our economic development. I do know that despite government’s effort at funding the power sector, the nation continues to experience epileptic power supply. However, it takes time to stabilise.”
He equally recalled that when Obasanjo came to power in 1999, electricity generation capacity was a mere 1,750 MW, noting that in view of the volume of investment required, the Ministry had to bring in the private sector which resulted into a reasonable improvement from what it used to be.
Igali further disclosed that despite the sector’s need, budgetary votes were seldom released fully, noting that the country cannot realise the full benefit of any investment in power unless the value chain elements – generation, transmission and distribution were also revamped.
He gave a breakdown of the appropriation and money released from 1999 to 2015 as follows:
*1999 – N11.206 billion appropriated, N6.698billion released;
*2000 – N59.064billion appropriated, N49,785 billion released;
*2001 – N103. 397 billion appropriated, N70.927 billion released;
*2002 – N54.647billion appropriated, N41.196 billion released;
*2003 – N55.583billion appropriated, N5.207billion released;
*2004 – N54.647billion appropriated, N54. 647billion released;
*2005 – N90.283 billion appropriated, N71.889 billion released;
*2006 – N74.308 billion appropriated, N74. 3 billion released;
*2007 – N100 billion appropriated, N99.8 billion released;
*2008 – N156 billion appropriated, N112 billion released;
*2009 – N89. 5 billion appropriated, N87billion released;
*2010 – N172 billion appropriated, N70 billion released;
*2011 – N125 billion appropriated, N61 billion released;
*2012 – N197. 9 billion appropriated, N53. 5billion released;
*2013- N146 billion appropriated, N49 billion released;
*2014 – N69.8 billion appropriated, N48 billion released; and,
*2015 – N5. 240billion appropriated, no money released yet.
However, he said that it was only in 2009 that the power sector witnessed a full appropriation, adding that the annual net funding shortfall ranged from 22 per cent to 67 per cent.
According to Igali, about N155 billion intervention fund was released to the Ministry for the Multi-Year Tariff Order, MYTO, to cushion the effects of the shortfalls in expenditure for the power sector between 2009 and 2013.
The funds were given for a period of five years. A breakdown of the interventions funds are as follows:
*2009 – N30.8 billion;
*2010 -N43.2 billion;
*2011 – N37.0 billion;
*2012 – N11.5 billion; and,
*2013 – N32.6 billion.
Speaking on the defunct National Electric Power Authority, NEPA, the Permanent Secretary, who noted that every aspect of power has been sold, except for the transmission units, said that about 2,000 workers were yet to be paid off.
He noted that many who claimed to be staff of NEPA do not have valid documents, adding that parts of the proceeds from the privatisation exercise were used to settle labour claims of over 46,000 workers by the Bureau of Public Enterprises, BPE.
He said the payments were made through the office of the Accountant General of the Federation and the National Pensions Commission.
Speaking on the high cost of operations in the power sector, Igali who noted that a healthy infrastructure expansion programme required continual investment, said that about “60% – 70% is the typical utility debt to equity profile. Infrastructure projects should be fully funded over a three-year budget cycle.
“Typical Capital Cost (based on a 200:1 Naira/USD exchange rate), Gas processing plant N30 – N40 billion; each Gas pipeline N12 million per inch per km; Generation N200 million per MW; Double circuit 330 kV transmission line: N85million per km; Double circuit 132 kV transmission line N80million per km; Transmission transformer N16 million per MVA; Single circuit 33 kV distribution line N6.5million per km; Single circuit 11 kV distribution line: N6million per km; and Distribution transformer N2.5million – N6 million each.”
Also addressing the Ad hoc Committee, the Managing Director, Niger Delta Power Holding Company, NDPHC, Mr. James Olotu, revealed that contrary to popular belief, the National Integrated Power Projects, NIPPs, which gulped about $8.23 billion or N1.64 trillion were actually being funded from the Excess Crude Account, rather than from ministerial provisions.
The Senate Ad hoc Committee is being chaired by Senator Abubakar Kyari. The public hearing of the committee still ongoing at the Senate.


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