21 years after, FG recovers N12.7bn metering funds from local supplier

…As Governors plan to license new DisCos to boost electricity

By Seun Ibiyemi

The Minister of Power, Adebayo Adelabu, has revealed how his ministry recovered the sum of N12.7 billion from a local supplier 21 years after payment by the federal government.

Adelabu made this disclosure in a statement during the weekend at a conference in Lagos.

He said the government paid N32 billion ($200 million) to a local supplier for three million meters in 2003, yet not a single meter has been provided up to now.

He added that despite efforts by subsequent administrations to recover the fund, they were unsuccessful.  However, upon assuming office, he said his ministry has successfully recouped N12.7 billion of the N32 billion disbursed.

According to the Minister, as of the time the fund was disbursed, Nigeria only had a 4 million metering gap, and the fund would have provided meters for about 3 million households.  “In 2003, the federal government was to procure 3 million meters. Our metering gap then was less than 4 million. And there was $200 million made available to procure this. It was given to a Nigerian meter company. It was N32 billion as of that time.

“After 21 years, not a single meter has been procured. We are our own problem. When I came into the office, I said this is not possible. All past administrations have tried to retrieve this fund, but they did not succeed because the supplier was powerful.

“When I got to the office, I told Mr. President that we have to insist that this woman returns the money. The first thing I did was to ensure that she returned N12.57 billion to those who were supposed to meter all military formations.

“The remaining balance is yet to be released by the company. And we are talking about the meter gap,” Adelabu said.

Speaking further, Adelabu said that the mandate given to him by Mr. President is to procure 10 million meters within the next five years to bridge the metering gap in the country.

According to him, President Tinubu has approved the Presidential Metering Initiative (PIM) and has created a Presidential Metering Council with the mandate to procure two million meters this year alone.

Adelabu said this initiative will eliminate the metering gap in the country in the near future.

“Mr. President has approved the presidential metering initiative and has created the presidential metering council for which I am the chairman. Our mandate is to procure 10 million meters within the next five years.

“This year, two million meters are going to be procured, plus 1.5 million meters from the World Bank. We are going to have 3.5 million meters this year,” the Minister added.

Meanwhile, the Nigeria Governors’ Forums said it plans to license new players in the distribution segment of the power sector, aiming to bolster electricity supply across the 36 States.

This is contained in its report on electricity policy and recommendations to the federal government.

The forum recommends granting licences to new power distribution companies (DisCos) in various territories and geopolitical zones across the country. This is to stimulate market competition and enhance efficiency within the sector.

Currently, Nigeria’s electricity distribution landscape comprises eleven DisCos across the thirty-six states and the Federal Capital Territory (FCT). Despite their private ownership and management, these DisCos operate within the auspices of the federal government.

Meanwhile, following the enactment of the Electricity Act 2023, which grants State governors autonomy over power generation, distribution, and regulation within their respective States, the governors are pursuing approval for additional licences to foster increased liquidity in the sector.

Under the recommendation for the development of a multi-tier electricity market, the governors aim to create a state electricity market that will be appropriate for each State.

Moreover, the market design may include energy resources within the States such as gas, hydro, wind, biomass, solar, etc, among other things.

The state governors also suggest licensing new DisCos and creating a new business model that is suitable for each State.

“To cultivate robust competition and facilitate innovation, it is essential for States to expand the constellation of electricity providers and business models accessible within a state electricity market beyond Successor DisCos operating within the State territory.

“Consequently, States will license new players and develop new business models that would introduce more competition in both the wholesale and retail markets within their territories,” the governors said.

Despite the privatisation initiative of the power distribution companies (DisCos) in 2013, Nigeria continues to grapple with persistent challenges in its power sector, primarily characterised by inadequate power supply.

At present, the country relies on only eleven DisCos to cater to its electricity needs nationwide, a situation that has underscored the complexities and deficiencies within the sector.

Over the years, these DisCos have encountered a myriad of obstacles hindering their ability to provide reliable and sustainable electricity services.

Among the most prominent challenges are financial constraints, which have limited their capacity for investment in infrastructure and technology upgrades essential for improving service delivery.

In addition, an unfavourable investment environment has impeded the influx of much-needed capital into the sector, further exacerbating its woes.

Moreover, the prevalence of energy theft and other forms of illegal connections has plagued DisCos, resulting in revenue losses and undermining efforts to enhance operational efficiency.

Coupled with these challenges is the occasional inability of DisCos to deliver consistent and uninterrupted power supply to their customers, a factor that has contributed to widespread dissatisfaction among consumers.

In response to these pressing issues, many industry analysts and stakeholders advocate for the unbundling of DisCos as a crucial step towards revitalising the sector.  Furthermore, the recent enactment of the Electricity Act 2023 represents a significant development in Nigeria’s power sector landscape.

This legislation grants states greater autonomy over power generation, distribution, and regulation within their respective jurisdictions, empowering them to take more active roles in shaping the energy landscape in their regions.