FG pegs power sector investment gap at $10bn

The Federal Government says it will collaborate with the private sector in raising a portion of the $10bn needed to ensure the provision of consistent and reliable electricity across the country.

This initiative is part of the government’s broader strategy to address the country’s chronic power supply challenges and is expected to span a period of five to ten years.

This formed the crux of the deliberation when the Director-General of the Infrastructure Concession Regulatory Commission, Dr Jobson Ewalefoh paid a courtesy visit to the Minister of Power, Adebayo Adelabu, in Abuja.

A statement by the acting Head of Media and Publicity at the ICRC, Ifeanyi Nwoko, on Wednesday said the duo agreed that in view of the funding and technical requirement needed to advance the power sector in Nigeria, it had become imperative to seek private sector input through Public Private Partnership in co-financing and providing expertise that will ensure optimal performance of power infrastructure.

Last week, the power minister ordered the immediate replacement of aged equipment as part of the recommendations to stop the incessant collapse of the national grid.

He added that additional funding will be required from the 2024 Supplementary Budget and the 2025 Appropriation Bill to resolve the financial implications of strategies needed to curb the incessant grid collapse.

But speaking during the meeting, the minister revealed that the country currently needs a minimum funding requirement of about $10bn in the next 10 years to achieve a 24-hour power supply across Nigeria.

He said, “For us to achieve 24-hour power supply across Nigeria in the next five to 10 years, there is a minimum funding requirement of about $10bn in the next 10 years.

“The government cannot afford that when there are funds critical sectors in need of funding. Can the government do it alone? No! This is why we have to look for or marshal private sector funds while still retaining government interest and ownership. That is where ICRC comes in. We need to do this in collaboration with the private sector and the best way is through concessions.”

Reacting to the comment by the minister, the DG said that through its regulatory processes, the ICRC can midwife private sector investment of part of the $10bn in the power sector to provide regular electricity, attract more foreign direct investment to other sectors, and ultimately grow the economy.

The Director General of the PPP regulatory body said that in view of the importance of power to the economic development of Nigeria, optimising the performance of existing infrastructure as well as funding new ones was imperative.

He acknowledged the challenges in the sector were hydra-headed and went beyond funding alone, adding that with such inter-agency collaboration and partnership with the private sector, the limitations can be addressed.

“Revamping the power sector requires planning, it involves investments and it takes time. So, we need to collaborate to solve the issues in this sector.

“The investment required in power is very huge and the government cannot fund it alone, so we have to leverage on the financing capacity of the private sector. That is why the ICRC was set up to regulate this leverage.

“The commission is poised to regulate the processes of attracting investment to the power sector.”

He commended the minister for his vast knowledge of the sector, pointing out that Mr President’s choice of him was commendable.

Ewalefoh said that in a bid to accelerate PPP investment as directed by President Bola Tinubu, the commission had issued a six-point policy direction which has ultimately streamlined the process of PPP service delivery.

The DG stressed that whereas the processes have been streamlined to accelerate project delivery and encourage investors to adopt PPP, the commission was not relenting or compromising on its stringent regulatory function to forestall contingent liabilities or unnecessary delays by companies that lack the requisite capacity.

Jobson added that the commission was now insisting on incorporating conditions precedent into all PPP agreements, stipulating that any preferred bidder who defaults on the terms of the agreement will have their contract automatically nullified.