Despite the privatisation of Nigeria’s power sector, the Federal Government’s financial intervention in the industry has risen to N1.5tn, Vice-President Yemi Osinbajo has said.
He said this as indication emerged that no power distribution company in Nigeria had paid tax to the Federal Government since the sector was privatised six years ago.
The Vice-President spoke on Tuesday during a power sector event at Kainji Hydro Power Plant in Niger State.
He said, “The Federal Executive Council recently approved the third round of intervention funding for the (power) sector, with a total of about N1.5tn in the last two years.
“However, if the country is to achieve its aim of channelling funding to other critical sectors of the economy, it is pertinent that structural reforms be put in place to enable the power sector to fund itself sustainably.”
The Vice-President, who was represented by the Minister of Power, Sale Mamman, stated that the Federal Government had continued to support the sector through interventions and appropriate policies; even as he stressed that no government venture would thrive without the private sector playing a fundamental role.
He promised participants at the programme that the Federal Government would do its best to establish appropriate policies to address the challenges of the sector.
“These policy reforms must however take into consideration the need for under-privileged Nigerians to gain access to affordable electricity to power their homes and small businesses, as the government seeks to move Nigeria further up the World Bank’s doing business rankings.”
Meanwhile, power generation companies have said their collapse may be imminent as a result of the reduction in the monthly payments of their invoices from about 80 per cent to 15 per cent.
Speaking on Tuesday at a power sector round-table conference that focused on unlocking real liquidity in the industry, organised by Mainstream Energy Solutions Limited, concessionaire to Kainji and Jebba hydropower plants, the Chairman, MESL, Sani Bello, said Gencos could not survive on the 15 per cent invoice payments they were currently receiving.
He said, “I hope the minister will do whatever he can in his capacity to see that our payments are improved. In the last months, between May and June, we only received 15 per cent of our invoices as power generation companies. I do not think we can continue to survive with 15 per cent payments.”
Also in his presentation, the Partner and Chief Economist at the PwC Nigeria, Andrew Nevin, stated that findings by the firm had shown that no power distribution company paid tax to the Federal Government since the sector was privatised.
“No Disco has paid any income tax to the Federal Government since they were privatised,” Nevin stated.
He noted that to increase the revenue of Discos and address the illiquidity in the sector, the power distributors should be allowed to sell about 50 per cent of their energy to industrial users at an increased tariff of N80 per kilowatt-hour.”