He said the power sector is currently bankrupt to the point of even threatening the health of financial institutions and the wider national economy.
To restructure the sector for effective services, Makoju advised a reduction in the distribution zones.
Speaking at a two-day Power Sector Stakeholders Interactive Dialogue convened by the National Assembly in Abuja, Makoju who was special adviser to three different Presidents of Nigeria on Power canvassed for a fundamental structural change as against the current path of tariff increases and government bailouts.
He said: “I want to stress that, I do not wish to be alarmist; but if we continue on the current path of tariff increases and government bailouts without fundamental structural changes, we will soon be dealing with a disaster. What assets are on ground will depreciate, financial positions will deepen, and eventually we will all come back to these same conclusions but after much more harm has been done.”
While revealing that the failure of the Power Sector under government management was not technical and commercial management of the business but the absence of sustained and adequate funding of the sector, he said despite the privatization exercise six years ago, the problem of the sector remains the same.
According to him, “Most of the private sector investors in the power privatization had no specialist knowledge or understanding of the power sector, which has eroded the technical and managerial competence in the industry. And the funding problems have persisted and even become exacerbated as they now even threaten the stability and health of the nation’s banking system as well as the entire electricity sector. “
While noting that the distribution end of the value chain is the most inefficient and has suffered the greatest neglect, he described it as one whichunderpins the financial viability and sustainability of the entire sector. “To get the sector moving forward we need to improve its liquidity position, and this can only be accomplished through satisfied, paying customers.” he asserted.
Still on the issue of adequate funding for the sector, Makoju said the Association of Nigerian Electricity Distributors (ANED) reports that as at December 2016, the funding gap in the power sector is over N1 trillion and as such, he advised that funding must be looked at from the perspective of new equity and debt financing arrangements and structures, and internally generated revenue maximization.
As a lasting solution, he also canvassed new capable players working in a reconfigured power sector while also considering residual government shares for bringing in long term funding.
While urging the FG to declare a state of emergency in the power sector, he routes for the engagement of industry experts and policymakers to draw up a comprehensive power sector master plan building on past provisions and arrangements to deliver an electricity industry fit for current and future needs.
Makoju said: “The present configuration is not working and will not work even with more money pumped in. The structure of the sector needs to be reconfigured for efficiency, with fewer distribution zones for instance. These can be managed and coordinated by a reputable international operator like EDF, Globeleq, Actis, Reliance, etc. in partnership with financially credible Nigerian entities”Makoju also canvassed for the restructuring of the TCN management for better service delivery.
Given the extended lead times required for new gas, transmission and distribution improvement investments in the Power sector, and the quantum of legacy issues now encumbering the sector, Makoju opined that it may take anywhere from five years to 10 years to fully stabilize electricity delivery across the country.
Nevertheless, he said positive results can be recorded within the first five years’ period if earnest action is taken now.
Speaking at the Power Sector Stakeholders Interactive Dialogue, Senate President Abubakar Bukola Saraki said the problems with the power sector are Man-Made but are surmountable. He regretted that despite the huge amount of money sunk into the sector it has failed to bring about the desired result. He said the dialogue was convened because the legislative arm of government, which represents the Nigerian people are worried about the teething challenges facing power chain of generation, transmission and distribution. He said Nigerians of this generation must not repeat the mistakes of the past, adding that both regulators and players must be ready to make sincere sacrifices.
Speaker of the House of Representatives Yakubu Dogara also concurred with Senator Saraki that successive investments in the sector have not translated into efficiency and delivery of power to the people. He also asked questions relating to the proceeds of power sector privatization, saying the legislative arm will continue to work with all stakeholders to deliver power to the Nigerian people.
Minister of Power, Works and Housing Babatunde Fashola said the Muhammadu Buhari government is doing all things possible to address power problem. He however urged the legislative arm to support such efforts through vibrant legislations and continuing engagement with critical stakeholders.
Also speaking Acting President Yemi Osinbajo said his office has been coordinating all activities in the sector and it is not unmindful of the deep crisis it is facing.
He assured Nigerians the government is prioritizing the sector, saying it is key to economic development.
Chairman of Egbin Power Plc Kola Adesina and Board Director Ikeja Electric urged the National Assembly to accord priority to power during budgeting. He also regretted that public sector debt in the sector has increased astronomically over the years.