TheCable

The federal government says plans are underway to restructure the Transmission Company of Nigeria (TCN) to align with the Electricity Act 2023 and the industry demands.

Adebayo Adelabu, minister of power, disclosed this on Tuesday at the ministerial retreat on integrated national electricity policy and strategic implementation plan in Abuja.

The retreat was themed, ‘Navigating and aligning on the path to enhanced electricity reliability’.

Adelabu said for the country to increase its gross domestic product (GDP) to $1 trillion by 2030 as projected by President Bola Tinubu, it must massively increase investments in electricity.

He also said FG must work with state and local governments to increase the coverage and distribution of electricity across the country.

“It is time to restructure the TCN into two entities: the Independent System Operator (ISO) and the Transmission Service Provider (TSP),” Adelabu said.

“This restructuring must synchronise with the evolving landscape of state electricity markets, addressing calls for the decentralisation of the national grid into regional grids interconnected by a new higher voltage national or super-grid.

“Essentially, we must ask whether the government should directly provide electricity nationwide or rather facilitate its provision by drawing comparisons with China’s centralised model and the US’s diverse access models.

“Understanding how to handle subsidies, cross-subsidies, and aligning the rural electrification agency’s role with emerging state markets are vital questions that demand stakeholder scrutiny for effective resolution.”

The minister further said certain observable aspects within the sector require attention. 

These, he said, include the poor track record in contracting, contract management, and adherence to contractual obligations, in some cases, even by design.

“With impartial examination, it is evident that these identified factors erode confidence in the viability of the sector and pose fundamental challenges of inadequate capitalisation and limited access to funds,” he said.

Adelabu said it pertains to diverse players along the energy value chain, from gas supply to electricity distribution.

‘GAS PRICING LIMITING ELECTRICITY GENERATION’

The minister further said a major issue in the power sector was the pricing of gas utilised by generation companies (GenCos) in dollars describing it as a huge volatile variable that affects the pricing of electricity for end-users.

“A preferable option was to ensure that gas utilised by the GenCos is traded in naira so as to manage the foreign currency-related inflationary trends that challenge the application of the multi-year tariff order (MYTO) methodology,” he said.

“We must find ways and means to pursue domestic gas policies and incentivise stakeholders for the supply of gas for inland use in electricity supply.

“Other industrial activities and conversion to compressed natural gas (CNG) and liquefied petroleum gas (LPG) for transportation and domestic uses respectively.”

Adelabu, however, said one of the major deliverables from the policy-making process is a viable method for establishing a sustainable capital investment programme around gas processing and transportation infrastructure.

‘POWER IS A MAJOR PRIORITY’

Speaking also at the retreat, Wale Edun, minister of finance and coordinating minister of economy, said the power was one of the president’s priority areas.

According to Edun, 40 percent of the country’s population does not have access to electricity and clearly to the president and other stakeholders that is unacceptable.

“10 years ago there was a privatisation exercise, but it has underwhelmed and underperformed and the results have been disappointing so it is important that those stakeholders are part of the conversation and solutions,” Edun said.

“In addition to all other options that we have for providing electricity, we now have an array of options with renewable energy, green energy.”

Edun said the current administration is working on ensuring that they come up with a solution to providing power and growing the economy rapidly and inclusively.