The Federal Government has so far spent a total of N2.7tn on the power sector from 1999 to date.
The Permanent Secretary of the Ministry of Power, Mr. Goodknows Igali, made this disclosure on Tuesday in Abuja.
He explained that of this sum, N1.6tn was appropriated for the Ministry and its agencies, out of which, N948bn was released during the period under review.
Igali said this in his presentation at an investigative hearing on identified unwholesome practices in the power sector, which began in the Senate.
The N2.7tn also covers funds released for the National Independent Power Projects.
Igali said, “The actual release to the power sector was N948bn. When I say money appropriated to the sector, it covers all the value chain (the defunct) NEPA and all its agencies out was about N1.6tn appropriated.”
At this point, the panel chairman, Senator Abubakar Kyari, asked for clarification noting that the figures on the document before him did not add up.
In response, Igali explained that in certain cases, warrants for payments were issued but were not cash backed.
He said, “Historically, when you get a warrant it is as good as you have the money but in some cases you get a warrant and it is not cash backed.
“N155bn was released to the ministry to cushion the effects of the shortfalls in expenditure for the power sector between 2009 and 2013.”
Unsatisfied, the panel chairman said, “Perm Sec, you said the entire power sector received N948bn when NIPP alone received about N1.3trn, why not do the maths? Can you give us the exact figures for the funds released for the entire sector?”
In response, the permanent secretary said, “What is appropriated and went to the parastatals is N948bn and the total amount which went to the NIPP from the Excess Crude account is US$8.2bn if we convert it to naira at N200 to a US dollar – at that time it was about N1.64tn”
Kyari then said, “It is not less than N1trn if you add that to the N948bn in essence, you are saying that government has spent N2.7bn. In essence, what we are saying is (government has spent) about N2.7tn.”
To this Igali said, “Yes.”
According to Igali, investments in the power sector with the return of democratic rule in Nigeria in 1999, electricity generation rose from 3,500 and peaked at 4,600 megawatts.
The permanent secretary also informed the committee that current improvements in power generation and distribution were due to the reduction of cases of gas pipeline vandalisation as well as other acts of sabotage of power equipment.
Igali observed that since power was introduced in Lagos in the 1800s, the sector had remained in government hands until 1999.
The privatisation, he observed, had helped to improve access to power in remote parts of the nation.
He also told the hearing that the unbundling of the power sector which paved the way for private sector participation through the National Independent Power Projects had proved to be a catalyst for the improvements.
According to him, the NIPP is today the greatest contributor of power to the national grid.
On the seemingly intractable labour dispute between disengaged workers of the defunct National Electric Power Authority, Igali said only 2,000 former workers out of about 46,000 have outstanding payment claims.
He maintained that the remaining 2,000 had not been paid because most of them had no valid documents to prove that they were members of staff.
Igali further explained that proceeds of the privatisation were used by the Bureau for Public Enterprises, through the office of the Accountant General of the Federation and Pension Commission to settle labour claims.
The permanent secretary also noted that the greatest challenge facing the sector today was not power generation but distribution.
This, he explained, was because most of the distribution facilities were obsolete and would require huge sums to be changed by Distribution Companies commonly referred to as DISCOS.
Added to this, he said was the problem of the theft of power equipment in various parts of the country.
Igali said, “We even have a situation that in the past three weeks, distribution companies have to use modern technologies and computer based technologies to be able to shut down people who are stealing energy to bring them into the mainstream.
“These are some of the situations distribution companies have to deal with. Some of the distribution companies did not even take energy.”
He urged governors especially in northern Nigeria to tap into opportunities which currently exist in the renewable energy sector especially solar power.
Igali stressed that with the abundant sunshine as well as land mass, setting up solar power will go a long way in reducing the pressure on the national grid.
He reiterated that doing so has the potential to also reduce the chances of vandalisation of power equipment which currently stretch from the coastal parts of the nation in the south to the north.
A member of the committee drew attention to the fact that the 774 local governments who made contributions to the NIPP were left out of the governing board.
In his presentation, the Managing Director of the Niger Delta Power Holding company, Mr. James Olotu, revealed that the NIPP ,being funded from the excess crude account, had cost Nigeria a total of $8.23bn which when converted amounts to N1.640trn (at the rate of N200 to the $USD1).
After their presentations, the committee asked Igali to submit audited accounts of the ministry and its agencies for the periods under review to enable the committee study before the public hearing at a later date.
The panel also queried discrepancies in the cost of some projects as contained in some of the documents presented to it.
It stated that some entries on the level of project execution, total contract sum and amounts paid out were left out. The committee demanded that corrections should be effected to faulty documents before they were presented to the Senate.
The hearing continues on Wednesday with presentations expected from generation and distribution companies as well as other stakeholders.