No law prevents state govts from generating power SAN

Minister of Power, Works and Housing, Babatunde Fashola, SAN,
has said there is nothing in the power sector regulations or law
that prohibits state governments from generating, transmitting and
distributing their own electricity.

Fashola who stated this at the Punuka Annual Lecture series held
in Lagos, said that contrary to widely held beliefs, state
governments can establish their own power stations, generate,
transmit and distribute electricity in areas not covered by the
national grid within that state and establish their own electricity
to promote and manage their own power stations.

The minister therefore called on state and local governments to
pay attention to communities within their territories with limited
access to grid power to improve energy access for them via off-grid
solutions.

“They are clearly not areas covered by the grid and therefore
constitute a viable area of intervention by a state government to
contract their own power supply without reference to the Federal
Government,” said Fashola.

The former Lagos State governor took a swipe at calls for review
of the 2013 privatisation exercise, saying those calling for review
had to be more specific on what they want as the sector is
essentially in private hands.

“The reality before privatisation is that the Ministry of Power
had over 50,000 staff, owned trucks, employed electricians who went
out to repair faults, the Ministry controlled power stations like
Jebba, Kainji, Shiroro, Egbin to mention a few and the Ministry
employed all of those who worked in Distribution.

“All that is gone, since November 2013. From over 50,000 staff,
the Ministry now has a staff strength of 729 people. There are no
electricians, fitters, repair vehicles or distribution staff in our
ministry anymore and we do not supply, repair or replace
distribution transformers or meters. All of these are now the work
of the DisCos, under contract with BPE and under licence by NERC as
a matter of Law,” Fashola said.

Speaking on the topic: Developing an Effective and stable
regulatory framework for Nigeria’s Electricity Sector, Lessons
Learnt from the United Kingdom, guest speaker at the event,
Jonathan Cohen, stressed the need for a unified and holistic
approach which he said is key in making a long-term electricity
reform.

While he admitted that Nigeria’s power sector has made
remarkable progress in the last 9 – 10 years, he however, said much
more still needed to be done. Regarding the privatisation of the
sector, Cohen stated that privatisation only works when market
signals are robust enough to attract investment and expertise of
new sector entrants at scale; a condition that seems to be missing
in Nigeria’s situation. “Foreign direct investment into Nigeria’s
power sector has not been significant to date,” he said.

The energy expert stated that the privatization of the GENCOs
and DISCOs were largely financed with debt from Nigerian banks,
with most of the equity from Nigerian sponsors, adding that other
factors such as cash shortfalls in the sector, low DISCO payments,
insufficient gas supply to power the existing and expected
generation and a weak electricity transmission grid have continued
to affect the transition of the sector.

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