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If there is going to be any paradigm shift in the Nigerian power sector, we have got to have more private players across board in the sector.

As the power sector grows, there is more need for private investment more than ever before in the sector. I know you are thinking; “but we have wholly privatized the distribution of power in Nigeria but don’t still have light for our businesses”. Yes, I agree. But that is why we need more private bucks on deck. The problem with currently not having steady supply has a lot to do with many things but chief amongst them is the fact that we don’t generate enough power for the distribution company to distribute. Currently, the available capacity (electricity output) of generation companies is below 5000MW and also below the installed capacity of the power generation plants in Nigeria. This is also infinitesimal if you consider the fact that Nigeria is densely populated and houses several industries. Nigeria would need more than 10 times of that, if we really want to see steady power supply in the country. A country like South Africa generates more than ten times of that. This is why projects like the $930m Azura Edo power project must be lauded. If its 450MW plant comes on stream, the sector would be better than where it is today.

Also there are issues with transmission of power (i.e. taking the power generated to the distribution companies for distribution to private consumers). The government is still in control of transmission but the day to day management of the transmission system is carried out under a management contract. The government would require huge amounts of investments in the transmission system to take us to where we really want to be. Something in the region of $2.5bn annually for a decade. A chunk of these investments would still need to come from the private sector, whether foreign or local. I know these are talks among government corridors to privatize the transmission system to attract the kind of investment that is needed. Whether that is a welcomed approach would depend on your side of the divide, but I think it is.

Since the Electric Power Sector Reforms Act was passed in 2005, there has been increased regulation of the power sector, but apart from these regulations, we need huge amounts of private market-driven investment in the power sector to drive forward the growth. This is what I think will mostly drive the power sector in the coming years.

Y. D. Amakiri practices law in Nigeria and advises on the power sector.

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Nigerian Law Today

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