Electricity consumers in Nigeria are likely heading towards another round of crises even as they struggle to contend with escalated price of petrol.
This time the Government which swiftly removed subsidy on petrol without any alternative to cushion the effect is mulling another round of electricity tariff hike.
This is also as the Nigerian Customs has taken steps to begin Value Added Tax, VAT, collection on diesel. This stakeholders see as going to raise cost of the product which is largely imported.
Though Nigeria’s power sector has continued to grow but largely still below the required level partially because the commercial framework for the sector has remained an issue. Both the grid power sector and other renewable energy options have been calculated to be highly capital intensive as large amounts of investment are required for acquisition and installation of equipment and machinery, construction of power plants and transmission lines, as well as regular maintenance and upgrades of the equipment and machines to ensure that they meet increasing demands.
This is why players and other stakeholders in the sector have sustained advocacy for more incentives which they believe may impact the commercial framework and aid growth.
President Bola Tinubu has already admitted this when he received in audience last Monday the United States Assistant Secretary of State, Amb. Geoffrey Praytt.
During their meeting Tinubu opened up telling the envoy that Nigeria needs the funding support to help her drive and accelerate her energy diversification saying “There are bottlenecks that must be unbottled in terms of how the US bureaucracy responds to our needs. Help must be given when it is needed.
Although, electricity consumers now oblivious of rising cost of energy are stuck between the challenges of cost in procuring solar power in preference to unreliable and rising tariff from grid system.
Consumers fear is also heightened after the Nigerian Electricity Regulatory Commission (NERC) formally welcomed the timely assent to the new Electricity Act 2023 by Tinubu, disclosing that a stakeholders’ workshop will hold this July to iron out the rough edges.
The intended meeting has further aggravated fears and concerns of possible approval of major tariff hike being peddled.
While highlighting the granting of legislative autonomy to the federating states on matters relating to the generation, transmission, and distribution of electricity in their respective jurisdictions, NERC in a public notice, described it as a very significant development.
It stated that the landmark legislations mark a pivotal shift in the structure of the power sector and present the potential of bringing about positive developments needed for powering Nigeria’s economy to greater heights.
While novel to Nigeria, it noted that the model has been successfully implemented in other jurisdictions, including India, Australia, Canada, and the United States of America, where federal and state electricity regulation and markets are clearly delineated.
By available estimate, solar adoption, has largely been hampered by relatively high upfront costs, with only 1.25 per cent of Nigerian households installing those systems, according to a 2022 study conducted by Boston Consulting Group and All On.
However, environmentalists are advocating scaling up of renewable energy investment arguing that if 30 per cent of Nigerian households turned to solar by 2030, 5 million metric tons of carbon dioxide would be avoided, reducing emissions from households by 30 per cent the study added.
“We are already getting a lot of customer inquiries and requests for solar,” said Segun Adaju, president of the Renewable Energy Association of Nigeria. “Many potential customers are already ordering their solar systems.”
“Also, this is a great opportunity to cut emissions by reducing the use of fossil fuels and shifting to solar and electric vehicles,” Adaju said.
Installing an expanded 4-kilowatt solar system, according to report would cost “conservatively” N3 million or $6,452.
That cost is too expensive for most families and small businesses.
The managing director of the Rural Electrification Agency, REA, Engineer Salihijo Ahmad, admitted that it is expensive to access solar power but the agency is providing leadership through official engagement to reduce the cost.
NATIONAL ECONOMY reports that the repositioned REA is actually functioning beyond just an implementing Agency of the Federal Government’s off-grid electrification programmes.
The Agency, in recent years, has strengthened its strategic partnerships with private sector players in terms of the quality of collaborations.
Together with the private sector, the Agency has been exploring Research and Development, R&D, assessing business models, and aligning on sustainable funding channels and opportunities.
“As you are aware, the REA is one Agency that continues to leverage the power of PPP across all its programmes so we have a growing community of private sector players who continue to work in lockstep with the Agency, while fully understanding the mandate and overarching objectives of the internal decisions we make.
“Already, we have a growing portfolio of private-sector players who continue to key into our programmes through the Rural Electrification Fund (REA), the Nigeria Electrification Project (NEP) as well as other programmes and initiatives of the Agency.” said Ahmad.
At the REA, he said the focus area is not urban but rural because people who look to personally invest in solar energy often start with carrying out energy audits of their energy needs vis a vis their facilities in their homes as well as their usage culture, which now informs the type and capacity of technologies to be deployed.
These technologies vary and for the most part, cost varies per brand.
There are several PayGo players coming into the sector to provide these sort of services to cater to the energy needs of Nigerians, he said, adding, “You therefore have tariff in various areas, energy efficiency etc as some of the factors.”
He also clearly admitted that solar energy deployment is not cheap, generally, not just in Nigeria.
However, he said local manufacturing and assembly of renewable energy components must be encouraged.
“We have equally been actively driving conversations on the removal of import tax on solar energy components, which is something the private sector has consistently agitated for.
“Local content is however very important in our quest to improve the affordability of solar infrastructure in Nigeria.
“Generally, however, these technologies are becoming more affordable. This is why homeowners are able to pay for solar home systems and inverter systems for their homes and businesses.”
Ahmad, further explained that there has been a lot of groundwork and solid existing regulatory instruments in the nation’s energy sector and the plan is to continue to double down on implementation.
“For example, the feed-in-tariffs can be rejigged to enable us to pull back more energy into the system. This will ultimately help the government to further catalyze private-sector investments.” he said.
He said that information being mainstreamed in the space puts the number of unserved and underserved Nigerians with little or no access to electricity at over 80 million.
The REA, despite the fears and cost implications is calling for adoption of solar energy, describing it as most viable solution to mitigate the impacts of the recent removal of petrol and tariff adjustment and possible subsidy removal.
During the inspection and impact assessment of REA’s mass electrification projects in some of the south western states, Ahmad highlighted the emergence of solar energy as a sustainable and empowering solution for Nigeria, as the country grapples with the challenges resulting from the removal of fuel subsidies.
By harnessing the abundant solar resources available in Nigeria, the Agency aims to alleviate the burden of escalating fuel costs and ensure uninterrupted power supply to communities nationwide.
Additionally, he emphasized that solar energy adoption will expedite industrial activities, foster agricultural growth, and bolster small and medium enterprises.
The Managing Director, along with his executive management team, visited some of the agency’s projects to inspect their progress and assess their impact on beneficiaries.
The visit was part of the agency’s commitment to ensuring that its projects are implemented in accordance with approved technical standards and that they are having a positive impact on the lives of beneficiaries.
During the visit, the MD met with beneficiaries in Osogbo, Ijebu Ode, and Makoko to hear their feedback on the projects.
They also evaluated the projects’ progress and adherence to REA’s standards.
He said that the solar systems are free to Makoko residents, and that they only ask for payment from beneficiaries in industrial and business areas. He explained that some schools, religious establishments, and small and medium enterprises have benefited from the agency’s project in Makoko, a Lagos community.
Ahmad further expressed, “The implementation of solar energy solutions under the Solar Power Naija (SPN) program plays a significant role in mitigating the effects of fuel subsidy removal.
By embracing renewable energy sources, this program reduces dependency on fossil fuels, resulting in cost savings and environmental advantages.
The transition towards clean energy not only aligns with worldwide sustainability initiatives but also positions Nigeria as an active participant in the global clean energy transition. This move creates opportunities for investment and collaboration in the renewable energy sector.”
“In the community of Makoko, the Solar Power Naija (SPN) program has successfully deployed nine large-capacity solar home systems (SHS) to energize schools and clinics, along with an additional 18 smaller-capacity SHS for residential use.
These installations have brought about a significant positive impact on the local economy by facilitating improved educational facilities, enhanced healthcare services, and increased household productivity.”
Furthermore, he emphasized, “Today, our primary focus lies on the social aspect of our initiatives. We are determined to continue deploying our decentralised solar home systems, particularly 150-watt systems, to critical areas such as schools and hospitals, with the intention of benefiting communities throughout Nigeria.”
According to him, the deployment has already taken place. Nearly six months ago, we successfully deployed over 30 units in various locations such as schools, hospitals, and homes.
” Our current visit is for the purpose of conducting an inspection “We came so that we can access what we have done so far.
“Our primary objective for accessing the situation is to determine the most effective deployment strategy for this system. We are actively engaged in this evaluation process. Our visit today is aimed at assessing the outcomes of the initial deployment. I am delighted with the feedback received thus far.
The concept revolves around the anticipation of increased support from the federal government, particularly due to the removal of subsidies. As a government representative operating under the Ministry of Power’s supervision, our objective is to allocate additional funds to facilitate the implementation of more of these systems in the upcoming months. This will enable us to scale up power generation. Although the exact number of installations is still being evaluated, we will consider the number of schools and healthcare centres that require them. Even if we initiate some installations in the next phases, we have the potential to deploy even more systems in subsequent phases” he explained.
