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Adewale Sanyolu
Nigeria’s poor state of power supply which seems to have defied all solutions continues to be a source of embarrassment to successive governments and its citizens.
Despite huge budgetary provision to the power sector, the result remains a paltry 4,000 mega watts in transmission, distribution and generation, despite having privatised the last two arm of the power sector value chain.
In 2017 for instance, a human rights advocacy group, Socio-Economic Rights and Accountability Project (SERAP) released a shocking details on how over N11trillion had been pumped into the power sector since 1999 without any tangible result to show for it.
The group, in the 65-page report launched in Lagos, concluded that the funds were squandered under the administrations of former Presidents Olusegun Obasanjo, Umar Yar’Adua and Goodluck Jonathan.
In the said report titled, “From darkness to darkness: How Nigerians are paying the price for corruption in the electricity sector,” SERAP concluded that the perennial poor power supply in the country was proof of corruption in the sector.
The group said, “The Obasanjo’s administration spent $10billion on NIPP with no results in terms of increase in power generation. It noted that $13.278,937,409.94 was expended on the power sector in eight years while unfunded commitments amounted to $12billion
“The Federal Government then budgeted a whopping N16billion for the various reforms under Liyel Imoke (2003- 2007) which also went down the drain as it failed to generate the needed amount of electricity or meet the set goals.”
Giving the failing of the government to meet the energy yearnings of Nigerians some experts have canvassed that renewable energy may be the only viable option left for the country to catch up its lost ground in the sector. They argued that investment in solar and wind power could restore the citizens hope of stable power if the government and power sector investors can put their minds to it.
At a stakeholder’s workshop in Lagos last week, organised by the International Finance Corporation (IFC), Lightening Africa Project and the Standards Organisation of Nigeria (SON), to develop standards for renewable energy components, experts posited that cost of installation remains a major setback for renewable energy penetration in energy.
Investing in renewables
Although Nigerian governments have made efforts towards renewable forms of electricity in the country, not much success has been recorded in that regard.
For instance, in 2006, the Ministry of Environment implemented the Renewable Energy Master Plan (REMP), which was a strategy aimed at increasing the contribution of renewable energy to Nigeria’s total energy production by 2025.
The plan was produced with the support of the United Nations Development Programme (UNDP).
This was followed In 2015, when the current administration drafted the Nigerian Renewable Energy and Energy Efficiency Policy (NREEEP), focused on harnessing alternative energies such as hydro, solar, wind and biomass.
This policy indicated that hydropower is the most important renewable energy source to be developed to harness the country’s full potential. Despite these plans, there has been no significant addition of renewables to the national grid. Total power output remains between 3,500MW-3,800MW, with nonrenewable sources accounting for 80 per cent -85 per cent.
The government’s inability to achieve its objective is largely due to a weak commitment to the proposed plans. In line with the power sector privatization objectives, the government could consider luring private investors into the renewable energy space.
Unfriendly investment climate, high cost as disincentive
According to a publication by Proshare, titled ‘‘The Need For Nigerian Investment In Renewable Energy’’ private investors, as complementary agents in a mixed economy, could overcome the government’s flaws and achieve more significant results if the federal government shows more of a commitment.
A Chinese firm, Shenzhen Kang Ming Sheng Technology Industry Incorporation, has already pledged to invest in Nigeria’s renewable energy and with business-friendly reforms, Nigeria is likely to see more of this.
Two key reforms that would be foundational to incentivizing the private sector in investing in renewable energy are cheaper financing and lower taxes. Lending rates in Nigeria (currently at an average of 17.5 percent) are too high for investors who require capital to start up businesses such as in renewable energy.
Countries including China, the US and India, which are leading the renewable energy revolution, offer substantially lower rates. The average commercial bank lending rate in India, for example, is about 9.45per cent per annum. In the US and China the rates are at an average of 4.3 per annum.
On cost, President of renewable Energy Association of Nigeria (REAN), Mr. Segun Adaju, and other stakeholders at the workshop admitted that, cost still remained a major challenge why the penetration of the service was still low.
He said the issue of high cost was not the fault of service providers but that of high exchange rate, tariff cost and others.
Adaju explained that most renewable energy components are manufactured aboard and the cost comes at a premium, advising that government should make the business environment conducive so that some the components can be produced locally through reduced interest rate and reduction in import tariff.
