Electricity: FG To Grant Licences For Establishment Of Smaller DisCos


The Federal Government has disclosed plans to grant licences for the establishment of Smaller Distribution Companies (DisCos) to address the electricity needs of the underserved regions of the country.

Minister of Power, Chief Adebayo Adelabu disclosed this in his Opening Remarks at the 7th Nigeria International Energy Summit (NIES) on Friday, March 1, 2024.

He said: “we are also saying that there will be licencing of smaller DisCos for small communities, where the existing DisCos are not really making impacts.

“We may not have to revoke your licences but your catchment areas can be distributed when you are not performing”, he reiterated.

Chief Adelabu stressed that a number of remote communities are not so attractive to the existing distribution companies, so to reach these served and underserved communities, the focus must also be on renewable energy sources and distributed power models.

He disclosed that the distribution is the weakest link in the power sector, because they are the closest to the consumers, so they have to be up and doing.

“We have already come up with a strategy that Discos must be restructured along state lines. So that every state government, every state ministry of energy, every state electricity board, and every state board of rural electrification will know who they are dealing with.

“Generation and transmission, are wholesale segments of the value chain. We can handle them from the federal government at the Ministry of Power and its agencies. But when it comes to distribution, the subnational government must be involved. That is the retail end of the value chain.

“We have seen what happened in Abia State. That is one of our core strategies of encouraging distributed power so that every state is not only involved in distribution but can establish its own power plant.

“Just 141MW of power by Geometric which the capacity can be upgraded to 188MW can serve the whole of Abia State.

“Before now, Abia was getting only 50MW supply from Calabar power plant to APL, now they have 141MW. So the excess will not only be used by Umuahia and other cities in Abia but can also contribute to the grid. If every state has 100MW in Nigeria, we are talking about 3,600MW, the energy poverty will disappear.

“These DisCos must be recapitalised. They need to bring funds into the sector. The only money they brought into this sector, was the money they paid for the acquisition of the DisCos. They have not brought money to invest, and power investment is a huge investment.

“To establish 330kw Substation today in Nigeria cost about $50million. To install a 100km of 33kv or 11kv line costs tens of millions of dollars. So if the DisCos are really serious and they want to rise up to their biddings, they must reinvest money either through equity or debt capital”, he said.

He noted that in identifying opportunities for public and private sector investments, in the power sector, the stakeholders must also discuss innovative financing models and partnerships, adding collaboration between governments, businesses, and international organisations was key to unlocking the full potential of the sector.

He condemned the act of sabotage in the sector- deliberate destruction of power installations across the country and appealed for collaboration amongst critical stakeholders to stem the tide

“We have had more than ten (10) instances in the last two months, so why won’t you have grid collapse? It happened in Yobe, Gombe, Bauchi, Nasarawa, and even in Abuja here it happened last week, which has affected the power supply in Abuja.

“These are assets built with our national fund which must jealously protect. Beyond sabotage, some bring them down for resale. You go to the electricity market and you see transformers, cables, and polls stolen from communities. It will be tough for us to achieve the kind of momentum that we desire in the power sector if this act of sabotage and theft continues in the power sector”, he lamented.

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