Power sector privatization has failed, says President Tinubu

President Tinubu expressed his view on Monday, stating that the privatization of Nigeria’s power sector has not achieved its intended objectives. He highlighted that the national grid, which was privatized a decade ago, is only serving approximately 15% of the country’s electricity demand.

Speaking at the Nigeria Electricity Supply Industry market participants and stakeholders roundtable focused on privatization, President Tinubu called for the recapitalization of power distribution companies.

Represented by Sodiq Wanka, the Special Adviser on Energy and Infrastructure from the Office of the Vice President, President Tinubu emphasized the lack of access to electricity for over 90 million Nigerians and the extensive reliance on expensive self-generation, which provides 40% of the country’s electricity demand.

He further pointed out that the national grid’s capacity had seen minimal growth over the past decade, increasing from just over 3,000MW to around 4,000MW today, falling far short of the 40,000MW target set by the Federal Government before privatization.

President Tinubu attributed the underperformance of the power sector to a range of well-known issues, including commercial, governance, and operational challenges that have plagued the sector.

He mentioned that, as of Q2 2023, only 60% of electricity sent to the grid is paid for, and even the tariffs paid do not fully reflect the costs, especially considering the recent devaluation of the naira.

To address these challenges, President Tinubu suggested that stakeholders in the sector should work together to improve the commercial aspects of the sector and enhance its investment appeal. He also emphasized the need to rebase tariffs to reflect the actual costs and losses in the value chain, allowing for cost recovery.

Furthermore, he called for clear plans to address shortfalls, finance them, and extinguish historical sector debts. A reconciliation process for this purpose is already in progress.

In conclusion, President Tinubu urged stakeholders to focus on finding a way forward, given the current state of the power sector and its challenges.