Nigeria’s 2017 budget has been presented to the National Assembly by President Muhammadu Buhari. The much-awaited document was finally laid at the National Assembly on Wednesday at a joint session of the House of Representatives and the Senate. The content of the budget has begun to elicit reactions from different stakeholders and the power sector is not left out of the ongoing conversations.
The power sector remains one that cuts through the political to the social all the way to the economic spheres of the Nigerian economy. It is in the light of the foregoing that it becomes pertinent to understand the position of the budget on such an influential sector with a view to deciphering the strategy of the government and to influence individual and corporate planning in this regard for 2017.
The budget totalling N7.289tn with a deficit of N2.269tn has an estimated oil revenue target of N1.985tn. The Niger Delta is the biggest factor that determines the country’s success in achieving the set income target from oil revenue. The role the region has to play in the country’s pursuit of better power supply across the country is critical and closely connected to the success of oil production in the area. When there is stability in the Niger Delta, oil production can hit the lofty target of 2.2 million barrels per day and gas supply to power plants would improve drastically.
According to the President, the N6.06tn budget for 2016 could only manage about 59% implementation owing majorly to the drop in price of oil in the first quarter of 2016 as well as Nigeria’s internal issues in the oil-rich region. Crude oil production was disrupted time and again due to vandalism of oil and gas pipelines by the militants in the Niger Delta. This situation led to record lows in the country’s power generation as many power plants were cut from gas supply.
Earlier, Maikanti Baru, the Group Managing Director, Nigerian National Petroleum Corporation, NNPC, had announced that the Nigerian Petroleum Development Company, NPDC, lost N1.5tn due to attacks on its facilities in 2016. These losses are in the form of truncated pipelines, repair costs, wasted gasses and hydrocarbons and of course, power plants rendered redundant. This has adversely affected the daily power generation throughout 2016 with multiple complete system shutdowns recorded when the hydro-stations either ran low on water or needed routine maintenance.
Dr Aminu Usman, a lecturer in the Department of Economics, Kaduna State University, had also emphasized the need to find a lasting solution to the Niger Delta crisis so as to fully unlock the capacity of the region to boost Nigeria’s economy. He said that the budget’s target of 2.2m barrels per day, which was never achieved in 2016, would remain a castle in the air, if the Niger Delta issues are not dealt with exhaustively.
In an attempt to warm up to the region, the Federal Government more than doubled the budget provision for the amnesty program in the area to N65bn from the previous year’s N25bn. This is a positive gesture to the aggrieved militants in the region and would bode well for stability and the much-needed peace. Other stakeholders say that more need to be done in the area in terms of infrastructural and human capital development, however, with this budget, there is already some sign of rapprochement from the government to the region and stakeholders must come to the table and work out a lasting solution.
The nation generates most of its electricity from gas-fired power plants, while output from hydro-power plants make up about 30 percent of total generation. With an installed capacity of over 12,500MW and an available capacity of 7,139.60MW, the seemingly impossible 6000MW mark could be achieved, sustained and even exceeded in 2017 but this is premised on the government succeeding in dealing with the issues of the Niger Delta. This will help in bringing many idle power plants in the country, back on stream.
For the government, the work must start, yesterday.