The Federal Government will stop paying most of its electricity subsidy payments next year, which are expected to be around N30 billion per month.
Vice President Yemi Osinbajo said the government anticipated the electricity sector to earn money from the power sector market at the 14th Nigerian Association for Energy Economics/IAEE conference in Abuja yesterday.
The theme of the conference is ‘’Strategic responses of the energy sector to COVID-19 impacts on African economies.’’
Prof. Osinbajo, who was represented by Engr. Ahmad Zakari, Special Assistant to the President on Infrastructure, stated that the government would invest over $3 billion in transmission and distribution infrastructure in the coming years.
He explained that President Muhammadu Buhari’s administration’s efforts to restructure the energy sector would ensure that it continues to play an important role in the country’s social and economic development.
He said: “Electricity tariff reforms with a service-based tariff has led to collections from the electricity sector by 63 per cent, increasing revenue assurance for gas producers and stabilizing the value chain.
“It is anticipated that all electricity market revenues will be obtained from the market with limited subsidy from next year as reforms in metering and efficiency with the DISCOs continue to improve.
“Accelerated investment in transmission and distribution, over $3 billion will be out into this sub-segment of the electricity value chain that will put us on the path to delivering 10 gigawatts through the interventions of the Central Bank of Nigeria, Siemens partnership, World Bank and Africa Development Bank, and others.”
He said as the electricity sector continued to be stabilized, more power was needed for the country’s large population.
“That is why this administration continues to invest in a generation to cater for our current and future needs,” he said.
Osinbajo challenged the attendees to come up with answers to the country’s significant energy concerns, including the COVID-19 pandemic and the energy transformation.
Earlier in his remarks, Chief Timipre Sylva, Minister of State for Petroleum Resources, noted that the COVID-19, which caught the globe off guard in 2020, had a significant influence on the oil sector.
Prof. Yinka Omorogbe, President of NAEE, warned that the energy revolution and push toward net zero carbon were genuine, and that Nigeria needed to take steps to catch up with the global trend.
“For some, change represents a move away from the warm and welcoming familiar, towards fearful horizons characterised by uncertainty.
“However, critical consideration of this season will show that it is a period when change cannot be stopped or hijacked and that survivors will be those with the ability to adapt. It is here to stay for the time being.
“Again, unfortunately, Nigeria has not only come to epitomise the paradox of poverty amid plenty in the energy sector but also has the strange revenue-draining paradox of being both a major exporter of crude oil and a major importer of petroleum products which are subsidized at a cost that the nation cannot afford,” Mrs Omorogbe said.
In his remarks, Engr. Bello Gusau, Executive Secretary of the Petroleum Technology Development Fund, PTDF, highlighted that the COVID-19 pandemic had had a significant impact on African economies, particularly those that rely on crude oil exports.
“Specifically, in Nigeria, where the oil sector accounts for half of the government’s revenue and 90 per cent of foreign exchange earnings, GDP growth for oil has not been recovering as expected, a trend that could potentially have negative implications for quick economic recovery in a post-COVID-19 era,” he added.
“For African countries, which have the problem of low levels of access to modern energy services, and which have no option but to grow their energy industries, this presents a very interesting and-to me- exciting challenge.
“Africa abounds in energy resources- coal, bitumen, crude oil, natural gas, solar energy, wind, tidal and wave energy, geothermal energy etc. The continent is blessed. Unfortunately, these resources have so far not been harnessed to unlock their vast potentials for the use of the people.