Politics

Reps to probe N7trn, $1.228bn financial interventions fund in power sector

On Wednesday, the House of Representatives announced its plans to probe the allocation and usage of the N7 trillion and $1.228 billion financial intervention funds, which have been injected by the Federal Government and various Development Partners into the power sector during successive administrations.

This decision was made following the adoption of a motion sponsored by Hon. Ademorin Kuye (APC-Lagos).

In his opening statement, Hon. Kuye pointed out that the Federal Government had unbundled the Power Holding Company of Nigeria (PHCN) in 2013 and privatized 18 utility firms, resulting in the creation of six generation companies (GenCos) and eleven distribution companies (DisCos).

He further stated, “The House acknowledges that the privatization of Nigeria’s power sector was deemed necessary due to the inability of the defunct Power Holding Company to attract investments. However, it has not met the expectations of Nigerians.

“The House recognizes that despite privatization in November 2013, the Federal Government has expended over N7 trillion in direct interventions in the power sector. This includes the Presidential Power Initiative, a strategic approach aimed at addressing Nigeria’s unreliable and inadequate electricity supply.

“The House also acknowledges that the Central Bank of Nigeria (CBN) has intervened with over N1.3 trillion to prevent the collapse of the Nigerian power sector, owing to liquidity issues, poor performance, suppressed tariffs, and deficiencies in infrastructure at the transmission and distribution ends, as well as weak regulations and oversight.

“The House is aware that the power sector has received various financial interventions from International Donor Agencies, such as the World Bank, the African Development Bank (AFDB), the French Development Agency, and the Japan International Cooperation Agency (JICA), among others.”

Furthermore, Hon. Kuye expressed concern over revenue generation and collection challenges within the power sector, including revenue shortfalls reported by DisCos and the fact that some banks have taken over six out of eleven DisCos due to their poor financial performance and management.

He also highlighted the importance of reducing Aggregate Technical and Commercial Collection (ATC&C) losses, which are essential for the sector’s performance and transparency.

In addition, the motion raised concerns about the effectiveness of the Nigeria Electricity Regulatory Commission (NERC) and the frequent collapses of the National Power Grid, leading to persistent electricity shortages.

The House recognised that a reliable electricity supply would significantly enhance living standards and job creation and stimulate other economic sectors like commerce and industries.

Consequently, the House mandated its Committee on Power to investigate the extent to which the GENCOs and DISCOs have violated the terms of privatization. To achieve this, the House also assigned the joint Committees on Power and Privatization and Commercialisation to investigate all financial interventions in the power sector since privatization, with a focus on fund utilization, and report back within six weeks for further legislative action.

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