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Low generation, energy loss affecting Power sector – Economist

Prof Uche Nwogwugwu from Nnamdi Azikiwe University, Awka, Anambra State is a Development Economist who has come to the assertion that the crisis in the Nigerian electricity sector is mainly caused by high cost of electricity.

Nwogwugwu said this in an interview in Awka where he said though energy no matter the source was not cheap, the high cost of electricity in Nigeria was mainly due to the inefficiency in the sector, noting that customers should not be made to fund the cost.

The Energy Expert who said about 40 per cent of energy generated was lost in transmission because of aging infrastructure pointed out that supply has not matched demand.

He said general expectation was that upon unbundling of the sector, Nigerians would enjoy better electricity services but expressed worry that rather poor supply and increased cost had characterised the sector.

Energy is not cheap no matter the source, where it is cheap, it may have either been paid for or subsidised just like any other commodity but it is important because it is a critical infrastructure for sustainable economic development.

The history of electricity generation in Nigeria is public domain, from the era of Electricity Company of Nigeria to this stage where it has been unbundled and gave rise to Generation, Transmission and Distribution companies.

But much as the GENCOs have not generated maximally, and TRANSCOs not been able to transmit electricity without energy loss, there is bound to be crisis in Nigeria energy sector.

Electricity supply has not marched demand, a situation where we have about 40 per cent of total generation lost to transmission and energy theft is quite worrisome.

These identified challenges means increase in the cost of electricity becomes the only likely way the industry players can remain in business, which in turn hurts the economy by depleting income and consumption, he said.

Nwogwugwu said what the sector needed now was additional investment to improve efficiency rather than stifling the economy by making people to pay more.

He faulted the players in the sector for having demonstrated that they had the manpower and financial capacity to drive and efficient and cost reflective electricity sector.

It is a systemic problem, at the unbundling stage, the companies were even given loans as a way of making them start up smoothly, meaning that from inception they lacked the capacity to drive the sector.

There is need to clean and upgrade the upgrade electricity infrastructure to reduce losses, these companies were supposed to come with money and expertise.

Already, our industries are starved of energy what it means is that producing optimally but the complaints now are coming from the household consumers.

The impact of increasing electricity cost is that it will negatively affect consumption pattern and the dilemma is that electricity is completely inelastic.

Customers will have no option than to pay because they need electricity but the question is, will the commodity be available, how will the increase affect supply, he said.

Source: Voice of Nigeria