Ongoing efforts to ensure a stable power supply in Nigeria suffered a major setback as the Minister of Power, Engineer Abubakar Aliyu, on Thursday, disclosed that the drawdown of the N160 billion bilateral loans for power projects has been deferred till 2022.
The Minister disclosed this during the 2021 budget performance of N177 billion appropriated to the Federal Ministry of Power and other parastatals and the sum of N301.258 billion proposed for the 2022 fiscal year for the power sector.
The lawmakers who spoke during the scrutiny of the 2021 budget performance, expressed grave concerns over the low performance of the N176.721 billion appropriated for capital projects, out of which N43.240 billion (representing 24.5 per cent) has so far been released, while N32.518 billion has so far been utilised.
He, however, that the ministry has put in place efficient machinery for smooth implementation of the 2022 budget proposal, adding that the Ministry has initiated a national programme to provide alternative power supply for strategic Federal Government building and Military formations using renewable energy particularly solar photovoltaic (SPV) with the primary objective of increasing access to renewable sustainable and affordable power supply options in line with Sustainable Development Goal No. 7 (SDG) and the Paris Agreement on Climate Change.
According to him, out of the total sum of N75.462 billion proposed for the main Ministry, the sum of N49.628 billion is for a bilateral loan while the balance of N25.834 billion for the main ministry for the 2022 fiscal year.
From the N75.462 billion, the sum of N74.227 billion is for capital expenditure, N249.508 million is for overhead expenditure while N984.248 million is for Personnel expenditure.
While giving an update on the 2021 budget performance of the N177 billion, the sum of N176 billion was for capital. N911,428,557 was for personnel cost out of which N682,420,430 has so far been released.
While responding to various questions on the 24.5 per cent performance of the capital projects, the Minister said: “The reason why this is so is because we are still on procurement process which we hope to conclude this month. Once the procurement process is completed, this performance level would go up appreciably. So we hope to conclude the procurement process and issue a letter of award in the middle of November.
“Total expenditure 36,518,087 161 which is 75 per cent of the releases. We have a balance of 10,721,402,624. This is the performance of the 2021 budget.
“We are in the process of the procurement. So you can see I have outlined all the processes that we have done. The evaluation of the procurement process is ongoing and subsequently, the MTB would be held on the 16th of November to consider and approve the award of the contracts. As soon as it is done, the performance level of that 24 would surely go up appreciably. This is the performance of the 2021 budget, which is still ongoing.
In his response to the soar relationship between the Transmission Company of Nigeria (TCN), Generation Companies (GENCO) and Distribution Companies (DISCO), the Minister who acknowledged the impacts of the disagreement affirmed that the “sector is mostly privatised. Some of the responsibilities are outsourced.
“Our partners at the generation level, distribution level and the government is handling is the transmission. This is the whole value chain of power generation, transmission and distribution. And for it to work effectively, all of them must be up and doing.
“As it is now, we have serious challenges here and there along this value chain. And apart from the three major players, we have an interface, because the generators need fuel either from a natural source, which is the hydro which contributes about 20 per cent of the generation. Then gas needs also gas to fuel their plants. So this is another challenge. And you now gas in the international market, how it is.
“Another interface is between also the generation and transmission, then transmission to distribution. So these are all packaged together to make the Nigerian Electricity Supply Industry (NESI). Now the generation capacity as you are all aware is up to 13,000MW installed capacity. But it has to reach the customer before it becomes useful.
“So what is going on is that the transmission due to lack of attention on it for a very long time, not now, culminated to the situation we are having on the transmission, whereby they have to deal with obsolete equipment, weak, equipment, which needs to be replaced. Some that are replaced need backup in case there is a trouble that can be tackled immediately.
“So various issues on the transmission, and because of our growth in population, we need to expand and give access to the newly developed areas. This is also another challenge that we are dealing with.
“Now you come to the distribution, you also have the same problem. So these two, the distribution and the transmission, are what we have been trying so hard to upgrade to ensure that we raise their operational capacity to a level whereby they will be able to evacuate what we have in the generation. There are various interventions going on.
“The interventions are with a view to increase the transmission capacity and distribution capacity. The transmission may have capacity that is more than the distribution and the distribution may not take it all because of lack of capacity to take all.
“So the government is intervening. The major one is the SIEMEN which we are working closely with the special purpose vehicle for the deliverance of the intervention of the SIEMEN. The EDC were nominated by the Siemen and are being evaluated. Very soon the EPC contract would start.
“The SIEMEN is a phase intervention – 3 phases. The first phase set out to immediately and quickly upgrade the capacity of transmission lines and the distribution capacity to 7,000MW, and then the second phase would be expanded to 11,000 MW and the third phase would be further expanded to 25,000MW. This is what that intervention is doing alongside other interventions.
“On Kashambila, it is a project that has 40MW which is ready for commissioning soon. We are looking to commission it in December if everything goes well. What is preventing us from going there to commission is that what we call catchment areas, the villages that surround that facility needed to connect with electricity.
“We are working seriously to connect these communities. It is ongoing. The communities that we displaced by the construction of that dam were relocated but they live around that area, between now and December we would be done with it and commission the first phase.
“The second phase is ongoing, which is the transmission lines from the Kashambilla area to other places. Once we go for the commission in Dec we would do the groundbreaking of the second phase.
“For the Kudenda, Kaduna, I was taking with AMCON. So we have some issues along that Kudenda. So we plan to sit with `AMCON and the contractors and see how we can un-entangle that challenge.
On the status of Mambilla, it is something that we are all aware of. It is there. It is being told in the press that we have a case on Mambilla.
“Someone has taken us to court to claim that he was the initial contractor for Mambilla and the Chinese, who are supposed to bring money for the construction withheld their money because of that arbitration and it is not in Nigeria. It has been taken to Paris, which we have been working seriously even before now. And now we have reactivated discussions and we are working on that to see how we can pull down that encumbrance.
“Actually I would not want to continue to talk on that since it is something that is being negotiated at a certain level. Once you say much about it, it may affect what is going on since we have not reached any agreement on anything yet. But we are working day and night to see how we can resolve that issue. The contract has been signed since 2017, but the financial contract between Nigeria and Chinese was not signed. So nothing about money exchanging on Mambilla as far as the loan is concerned.
“But we are trying hard to see how we can resolve the legal issues, which the Attorney General is heading that team. This is as far as I can say on the issue of Mambilla.”
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