The Managing Director/CEO, Century Power Generation Limited and Nestoil Executive Director, Dr Chukwueloka Umeh has said that the total deregulation of the power sector will motivate investors to put money into all areas of the broken value-chain which will ensure that consumers enjoy quality power supply.

Dr Umeh who was speaking at a virtual media roundtable on the Power sector in Nigeria said called for total deregulation of the power sector which must include the adoption of cost-reflective tariff regime. He said this is the only way Power Distribution Companies can attract the needed investment that will improve present infrastructure. He argued that cost-reflective tariffs also have a positive ripple effect on the Power Generating companies. 

The Century Power boss said the Government’s role in the power sector should be limited to setting the regulations that would attract investment into the sector and not regulations stifling it. He added that poor infrastructure is affecting the operating capacity of the DisCos which was why a large percentage of 200 million Nigerians are not included in the current national grid network, adding that out of the 9 million registered customers across the 11 DisCo networks in the country, only about half of them have meters.

Dr Umeh commended Government’s initiative in allowing private firms to provide meters for consumers as this has allowed the Discos to focus primarily on their core business. He, however, added that total deregulation which would attract more players into the sector as evident in the telecom. The implementation of a new tariff by the electricity distribution companies (DISCOs) was recently put on hold, a situation he said elongated epileptic power supply in the country.

The Federal Government has been advised to stop further interference in the activities of the power sector if the industry must move forward.

Chief Executive Officer (CEO) of Century Power Generation Limited and Nestoil Executive Director, Dr Chukwueloka Umeh, stated this during a webinar media interaction with the theme ‘The Dilemma of Electricity Regulation in Nigeria’ in Lagos at the weekend.

The firm is currently developing a 1500MW gas-fired plant in Okija, Anambra State being developed in phases, including the first phase of the 495MW open cycle plant.

Umeh regretted that the inability of the Federal Government to allow free-market operation of willing buyers and willing sellers interface remained a major disincentive for the industry.

He said a situation whereby the government is still interested in fixing the price for gas producers and determines tariff for Discos will not encourage the required investment required to grow the power sector.

The power expert explained that once gas and electricity tariff is not right, investments in additional power plants cannot happen because lenders would not be willing to provide the finance required to kick start the project. ‘‘For instance, if you are to build a new gas processing plant to fire a 495MW power plant, you will need to invest at least about $250 million to make it work. This is just for the gas processing facility, besides the pipelines needed to transport gas to the power generating plants. This entire infrastructure according to him, requires investment which can only come from revenue collected from consumers.

Regrettably, he said Discos are battling huge collection losses occasioned by energy theft which in some cases is about 60 per cent, an indication that they are only able to collect about 40 per cent of the cost of electricity distributed.