OBG talks to Chinedu Nebo, Minister of Power

Interview: Chinedu Nebo

What is the greatest challenge to increasing private involvement in the electricity sector?

CHINEDU NEBO: The problem of power in Nigeria has grown with time. We have a situation where there has been an exponential growth in population without a concomitant improvement in power infrastructure.

Nigeria is now ripe for a revolution in the power sector. It is a globally accepted principle that the private sector manages commercial ventures much better than the government. A couple years ago, the president launched a road map for private sector participation and we have since followed this map to the letter.

The private sector understands only one language: the bottom line. And the bottom line for generation companies or distribution companies is the same as the bottom line for the Nigerian people: a reliable power supply. As these companies generate and distribute more power to more customers, their profitability increases. With this in mind, both generation companies and distribution companies are working to increase capacity.

For example, Manitoba Hydro International will take over many transmission links, which are currently very weak; this will encourage the private sector to further invest in upgrading of these assets, ensuring that the additional electricity generated is then made available to the distribution companies.

What are the current key obstacles to implementing the Nigeria Integrated Power Project (NIPP)?

NEBO: The major obstacle is the capacity to transmit generated power. Many of the NIPP projects already have transmission companies embedded in the projects. However, we are speaking with investors, as well as international funding agencies, to strengthen transmission links. Without this, we are merely generating power at loss to the generation companies.

Privatisation will also help this effort. It will not be long before the NIPP projects are sold to the private sector. By the end of 2013, the government will begin to develop the mechanisms to privatise these projects.

What is being done to improve the security of the power infrastructure?

NEBO: Infrastructure security is a major challenge now in Nigeria, particularly in the north of the country. However, the north is not alone in this struggle – across the country, thieves have stolen hundreds of kilometres of transmission or distribution lines. Security measures have since been put in place, bringing the situation under control substantially. We are currently working to conceive new “smart” solutions or electronic means which can help to monitor lines, making it possible to learn of any disruption on the line even kilometres away. Security is a vital component of delivery of power to our people, and we must do everything to pursue it: this includes collaboration with the Nigeria Civil Defence Corps and involving other security agencies for more effective surveillance and protection of power infrastructure cross the country.

How challenging do you expect the privatisation process to be in terms of winning public support?

NEBO: The government understands that the entire populace has to buy in to the privatisation venture, so that it is not just something shoved down their throats. The people understand the scandalously high costs of buying power for just one household. When I am home, I spend a minimum of N8000 ($50) to buy a day’s supply of diesel; in a month, I spend N240000 ($1520); in a year, N2.88m ($18,144). No amount of energy coming from the mains will approach 20% of that cost. We see a similar situation for businesses – companies today can spend 35-40% of their total costs on diesel. On mains, that cost would not approach 20% of that. The government feels it should not subsidise electricity for the people, but should only ensure that the infrastructure is in place. The Nigerian Electricity Regulatory Commission instituted cost-reflective tariffs so that investors in the system will make money. If we want industrialisation, we need power. If we want power, we need these investors. The populace needs to know that.