08 November 2017, Sweetcrude, Lagos — President Muhammadu Buhari on Tuesday, November 7, 2017 presented an appropriation bill of N8.612 trillion for 2018 to the National Assembly as N555.8 billion is set aside for Power, Works and Housing.
The 2018 Budget Proposals according to President Buhari are for a Budget of Consolidation noting his administration’s principal objective will be to reinforce and build on its recent accomplishments.
A breakdown of the budget for the power sector indicates that the electricity distribution companies were left out.
Industry experts argued that the entire value chain in the power sector should be carried along regardless of whether they are government controlled or private owned entities.
For electricity generation, N9.8 billion is set aside for the Mambilla hydro power project including N8.5 billion as counterpart funding while N12 billion counterpart funding is earmarked for transmission lines and substation.
However, President Buhari explained to the joint session of the National Assembly that the Power Sector Reforms still remain a work in progress.
“Although we have increased generation capacity significantly, we still have challenges with the Transmission and Distribution Networks.
“That said, I am pleased to announce that since 2015, the Transmission Company of Nigeria (TCN) and Niger-Delta Power Holding Company (NDPHC) have added 1,950 MVA of 330-132kV transformer capacity at 10 Transmission stations, as well as 2,930 MVA of 132-33kV transformer capacity to 42 substations nationwide. With these additions, the Transmission Network today can handle up to 7,000 Mega Watts (MW).
Buhari admitted that the key bottleneck now is the Distribution Network where the substations cannot take more than 5,000 MW.
“This is constraining power delivery to consumers,” Buhari said adding “We are working with the privatised Distribution Companies to see how to overcome this challenge. Nigerians should be rest assured that this Administration is doing all it can to alleviate the embarrassing power situation in this country.”
Furthermore, to sustain the continued expansion of generation capacity and enhance evacuation, Buhari said his administration approved a Payment Assurance Guarantee Scheme which enabled the Nigerian Bulk Electricity Trader (NBET) to raise 701 billion Naira.
“This assures the Generation Companies of up to 80% payment on their invoices. This intervention has brought confidence back into the sector and we expect additional investment to flow through, particularly in the gas production sector,” he said stressing that is administration is committed to the development of Green Alternative Energy Sources.
“To date, we have signed Power Purchase Agreements (PPA) with 14 solar companies. We also approved: The completion of the 10 MW Wind Farm in Katsina State, a project that was abandoned since 2012; and the concession of 6 small hydro-electric power plants with a total capacity of 50 MW.
“To enable the successful take-off of these, and future Green Projects, I am pleased to inform this Distinguished Assembly that the Federal Government will be launching the first African Sovereign Green Bond in December 2017.
“The bond will be used to finance renewable energy projects. We are very excited about this development as it will go a long way in solving many of our energy challenges, especially in the hinterland,” he said.
To maintain peace and security in the Niger Delta for economic and social activities to thrive, the 2018 budget retained the provision of 65 billion Naira for the Presidential Amnesty Programme.
In addition, the capital provision for the Ministry of Niger Delta has been increased to 53.89 billion Naira from the 34.20 billion Naira provided in 2017.
“This is to further support the development in the region. We will complete all critical projects, including the East-West Road, which has a provision of about 17.32 billion Naira in 2018,” President Buhari explained.
The key parameters and assumptions for the 2018 Budget are as set out in the 2018-2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP). These include:
a. Benchmark oil price benchmark of US$45 per barrel;
b. Oil production estimate of 2.3 million barrels per day, including condensates;
c. Exchange rate of N305/US$ for 2018;
d. Real GDP growth of 3.5 percent; and
e. Inflation Rate of 12.4 percent.