The Minister of Power, Mr. Adebayo Adelabu, has initiated an investigation into the controversial five-year extension of licenses for electricity distribution companies (DISCOs) after their initial ten-year licenses, which were set to expire in 2023.
Mr. Adelabu made this announcement during a one-day interaction session with journalists in Abuja.
The extension of the licenses, originally granted for a ten-year period from 2013 to 2023, has raised concerns and prompted the ministry to scrutinize the process.
Mr. Adelabu stated, “When I came in, the licenses I saw were for 10 years, from 2013 to 2023. But along the line, I spoke to the Nigerian Electricity Regulatory Commission (NERC) Chairman, and he said the licenses have been extended for another five years. We are trying to review the correctness of that. We have ordered an investigation into the extension of the licenses if they are actually in order.”
While the federal government might find it challenging to revisit existing contracts with electricity distribution companies, the ministry is exploring an alternative solution by considering the establishment of mini-discos at the state level. This approach aims to provide more effective coverage for consumer electricity needs.
Additionally, Mr. Adelabu urged state governments to play a more proactive role by collaborating with distribution companies (DISCOs) and making investments in the power sector within their respective states.
The Minister emphasized that the government does not intend to raise electricity tariffs. He cited the impact of fluctuating exchange rates on the cost of gas for power generation, which constitutes a significant portion of the electricity supply in Nigeria.
“It is not politically expedient and reasonable to implement a tariff that is doubling the existing tariff because part of the reason for an escalated tariff is because the cost of gas today is still done in dollars and today 75 to 80% of our power generation comes from gas power when there is an upward movement in exchange rate it affects the tariff,” Mr. Adelabu stated.
Regarding the privatization of the power sector, the Minister expressed his belief that commercialization might be a more effective approach. He argued that power generation and distribution are capital-intensive endeavors, and many private entities may lack the necessary resources.
