Private sector entry into Nigeria’s electricity supply industry, would bring about significant increase in revenue of over N1.5 trillion yearly, BusinessDay findings have shown.
The findings further show that the increased revenues expected to be generated in the transitional electricity market by the new investors would be driven by improved output and efficient service
Analysts say the envisaged electricity revenues have the potential to dwarf revenues and profitability of the earlier deregulated telecommunications industry, making the power sector a goldmine for investors.
Eyo Ekpo, commissioner for marketing, competition and rates, Nigerian Electricity Regulatory Commission (NERC), said the country’s electricity market at the moment is doing N500 billion per annum, which translates to about N40 billion to N45 billion monthly.
The nation’s electricity market would grow from its current value of N620 billion to over N1 trillion in 2016, NERC had recently stated.
“What the electricity distribution companies are doing is to reduce loss level from 50 percent to about 10 to 15 percent in the next five years. As more energy comes on stream, they will continue to reduce the losses. Now, none of the Discos is efficiently collecting money to pay the people generating power.
“The potential of the emerging power sector is limitless. Nobody can tell you what the potential earning power of the market will be. Now, we are supplying about 4,000 megawatts (MW) in a market that needs 20 times that. That’s clearly below global benchmark,” Ekpo said.
The country is currently finalising the privatisation of its state-owned power assets, which comprise 11 distribution companies (Discos), six generating companies (Gencos), and a transmission company.
Nigeria, Africa’s second largest economy, with a population of 170 million, is estimated to require about 40,000 MW of electricity over the next decade, but currently has less than 5,000 MW of available capacity.