Electricity generation companies currently owe Deposit Money Banks a total of N356bn, while the power sector lost over N500bn revenue in 2016 alone.
Also, 50 per cent of the total quantum of electricity being generated across the country is lost as a result of poor distribution network in the system, and power consumers owe operators in the sector about N500bn.
The power generation companies operating in the country have an installed capacity of 12,000 megawatts but generate about 4,000MW, as latest findings showed that the 18-month regulatory lacuna in the sector between 2015 and 2017 created a liquidity gap of over N1tn.
These are contained in a research conducted by Seplat Petroleum Development Company and presented by its managing director, Mr. Austin Avuru, during the Emmanuel Egbogah Legacy Lecture Series organised by Emerald Energy Institute, University of Port Harcourt in Rivers State on Thursday.
Seplat helps to contribute about 1,100MW of electricity to the national grid in terms of the volume of gas it supplies to the domestic power market.
Avuru said, “If you look at our power sector, especially in relation to gas, there is infrastructure deficit. The distribution network is just about 20 per cent of what it should be. Transmission accounts for about 10 per cent loss on the grid, while distribution is about 50 per cent loss on the grid.
“We have four gigawatts generation versus an installed generation capacity of 12GW. We have huge gas resources stranded in the Niger Delta. The generating companies today are indebted to banks to the tune of N356bn. Over half a trillion naira revenue was lost by the power sector in 2016.
“As I said earlier, 50 per cent of the power generated is lost in distribution. Consumers owe almost half a trillion naira. Between 2015 and 2017 alone, we created a liquidity gap that is almost $3bn, coming largely from a tariff that is inadequate and losses that are as high as 50 per cent.”
On the liquidity gap in the sector, Avuru stated that findings showed that the failure to constitute the board of the Nigerian Electricity Regulatory Commission for a period of 18 months also contributed the financial mess being witnessed in the industry at present.
He added, “Between 2015 and 2017, 18 months of regulatory lacuna disorganised the power sector reform programme, created operational indiscipline, truncated the MYTO and created a huge liquidity gap of over N1tn. The mess is now difficult to reverse.
“Ineffectiveness of NERC is fostered by a vacuum in the position of chairman since December 2015. If ethical, financial and operational standards are allowed to degenerate, the industry will collapse under indigenous operators.”
The Director, Emerald Energy Institute, Prof. Wumi Iledare, regretted the rot in the country’s power and oil sectors, and urged the government to strengthen the various institutions in the respective industries for them to deliver optimally.
“We have laws had policies to drive sustainable industries in Nigeria, but unless the institutions in these sectors are adequately strengthened, these policies will eventually become vague,” he said.