Electricity distribution companies (Discos) in Nigeria have said it will take about $100 billion – approximately N36 trillion, worth of investment in Nigeria’s power sector over a period of 20 years for the country to enjoy stable electricity supply.
Electricity supply in Nigeria has remained erratic with statistics from the office of the Vice President, Yemi Osinbajo, indicating the country is only able to supply an average of 3975 megawatts (MW) of electricity daily to its huge population, while 3153MW is constrained from reaching them.
Speaking through their association – the Association of Nigerian Electricity Distributors (ANED), in a recent statement revealed that this would include over $10 billion – about N3.6 trillion, worth of investment over the next five years in the distribution networks.
They noted that such investments would raise the operational status of the distribution systems to reasonable standards that could guarantee quality of supply and service to consumers. The Discos also stated that about $40 billion – approximately N14.4 trillion, would be further needed to be invested over the next 20 years from the $100 billion for the entire value chain in their networks.
The statement explained the Discos made this disclosure at a seminar on their Performance Improvement Plans (PIPs), which the Nigerian Electricity Regulatory Commission (NERC) requested them to prepare and submit.
Once approved by the NERC, each Discos’ PIP would be used to review its tariff in the sector. It was also gathered this would be implemented in 2020.
Accordingly, the PIP process would review present capital expenditure (CAPEX) of the Discos; inflation rate; gas price; foreign exchange rate; and existing energy generation capacity in the country to ensure cost reflective tariff for them.
Citing a recently published study by the French Development Agency (AFD) and the European Union (EU), ANED said in the statement: “Indeed, NESI (Nigeria Electricity Supply Industry) as a whole need to invest more than USD 100 billion in the next 20 years if Nigeria wants to cover 24/7 hours of power supply to its citizens,.”
It further stated that the interface project between the Discos and Transmission Company of Nigeria (TCN), which was developed by the TCN indicated the Discos would have to invest $4.2 billion in the interface with the transmission network to follow TCN expansion plan.
Furthermore, the AFD; African Development Bank (AfDB); World Bank; and Central Bank of Nigeria (CBN), along with Discos’ private investors had at the seminar discussed collaboration strategies to finance the PIPs of the Discos in the short term.