Nigeria Moves to Stop Overdependence on Imported Equipment in Power Sector

Minister of Power, Chief Adebayo Adelabu, on Thursday, met with major stakeholders in the electricity supply industry, and stressed that the discussion centred on reducing dependence on imported power equipment in the country.

Briefing journalists after the meeting in Abuja, Adelabu emphasised the need for more local content in the power sector to save foreign exchange and create jobs.

The minister pointed out that as a team, the stakeholders decided to deliberately work on improving in-country production in the power sector by starting work on a legislation that will drive compliance and improve the sector.

Aside the power Distribution Companies (Discos) that attended the event, others included Bureau of Public Enterprises (BPE), Nigerian Electricity Regulatory Commission (NERC), an Transmission Company of Nigeria (TCN), among others.

Adelabu stated, “To achieve this goal, we also put together appropriate policies that will support this, that will enable the ease of compliance by the power sector operators. At the same time, appropriate regulations will also be rolled out to ensure compliance and add areas to the local content bill.

“To achieve this, we are going to set up a committee that will start working on it. We will gather the data, we will do a lot of engagement, investigation across all the three segments in the power sector, from generation to transmission and to distribution.

“Our recent visits to some local manufacturers have confirmed that there are, indeed, a very good number of manufacturers that can give us some impressive proportion of what we use in the power sector. And these people will be encouraged.

“We also need to collaborate with the manufacturers’ association to ensure we achieve this. There is a legislation in the works at the National Assembly on local content that encompasses the power sector.

“This committee will work on accelerating the passage of this bill. If there is need for a public hearing, we will all go there as power sector stakeholders to defend this bill. And I am sure that Mr President will not hesitate to sign this bill into law as soon as it is passed.”

The minister stated that part of the advantages of incorporating local content into the power sector was the issue of job creation for the Nigerian youth, increase in national productivity, as well as to making more revenue available to the government.

On the issue of achieving 6,000 megawatt (mw) of power supply by December 2024, Adelabu stated that impediments had been identified to achieving the target.

He stated, “We also acknowledged the current face-off with the Manufacturers Association of Nigeria (MAN) in terms of resistance to the new tariff regime, which we believe is the way to go. We have to sustain even manufacturing activities in Nigeria. And on that, what we have decided is to engage them further in terms of meeting with them as a team and having a middle ground.”

Adelabu also stressed the need to engage smart meter producers.

He described the issue of Ministries, Departments and Agencies (MDAs) debt as a major burden affecting the liquidity of the Discos.

The minister said, “I can tell you that we have a good case of improvement in the payment of MDAs bills. But the improvement is not satisfactory as far as we are concerned. We believe that continuous debts to Discos is impacting their operations negatively.

“It’s affecting their liquidity, it’s affecting their operations, and even in their returns to pay the energy invoices from the power generating companies.”

He stated that the federal government was also looking at the possibility of centralising some MDAs, so that there will be one single cheque to be paid centrally from the Ministry of Finance to the Ministry of Power, for onward distribution to the relevant Discos.

In his remarks, Director-General of BPE, Ayodeji Gbeleyi, highlighted the misalignment of the fiscal regime in the sector, which encouraged imports over local manufacturing.

Gbeleyi stated, “The Discos, we’ve also asked them, what are the limitations? So, oftentimes we do not prescribe whether you should buy from China or made in Nigeria and stuff like that.

“We’ve also said to them that on our side as government, 40 per cent of the Discos are still owned by government. So, in that regard, between BPE and Ministry of Finance Incorporated (MOFI), we also push an agenda to ensure that the Discos are also in compliance with any local content policy directive from the regulator, or even under the legislation as envisaged.

“So, we’ll try and push that agenda, and they must take active interest in optimising even their supply chain and working capital. Yes, they’ve also said that they have some challenges. In some cases, the manufacturers require them to make payments of funds or advance payment.

“Given their own working capital situation, they may not be able to do that, but those are details, and I think we can look at that realistically. So, we’ve covered some of those angles.”

Emmanuel Addeh

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