Power
Less than 50% of Nigerians have access to electricity —Power minister
NSUKKA—Less than fifty per cent of Nigerians currently have access to electricity, Minister of Power, Professor Chinedu Nebo, has said.
Prof. Nebo, who disclosed this at the 15th Herbert Macaulay bi-ennial lecture organised by the Engineering Faculty of University of Nigeria, Nsukka, yesterday, said the federal government was, however, working hard to increase access to 75 per cent by 2020.
He said government was also looking at the possibility of exploiting the country’s untapped coal resource, currently estimated to be in excess of three billion tons in reserve, to power electricity in the country.
He explained that coal production declined in Nigeria due mainly to the discovery of oil and the perception that coal was a dirty energy, adding that a large quality of coal deposits was wasting away in such states as Enugu, Benue, Kogi and Gombe.
The minister noted that with the current shortages of gas, the federal government was pursuing coal development as new frontier in the country.
According to him, government has decided to pilot projects of Operation Light Up Rural Nigeria which President Goodluck Jonathan has promised to execute in each of the 36 states and the Federal Capital Territory to solve the electricity shortage Nigeria faced for decades.
Prof. Nebo said that Operation Light Up Rural Nigeria remained a project to give off-grid access to communities far flung from the national grid, nothing that the President had commissioned the pilot projects at Durumi, Sape and Waru in Abuja.
The minister urged civil society organizations to join the advocacy crusade against sabotage to the electricity sector, such as energy theft, vandalization of gas transmission and distribution infrastructure,
He noted also that criminals vandalize transmission and distribution lines, melt and use them as cloth hangers, which results in the under-utilization of generation capacities.
He said: “A significant number of countries across the globe faced the challenges of assuring secure, reliable disaster, lack of fossil fuel and lack of funds to meet the infrastructure need of her citizenry, as
almost all countries in Africa have experienced interruption of energy supply in recent years
“Tension in oil and gas markets, changing rainfall patterns, expanding demand, as well as internal technical, managerial and financial problems have caused crises in the availability of fuel and electricity. The challenges facing the energy industry are complex and will continue to get more difficult daily.”
Prof. Nebo also said that African continent had the largest untapped energy resources, per capita, energy use, noting that the globe average of an estimated 600 million people lacked access to electricity.
“There is a deliberate plan by government to diversify the energy mix through the exploitation of renewable energy resources of solar, wind, small hydro and biomas. 70 percent remaining were through large hydros of Kainji, Jebba and Shiroro hydro power plants,” he said.
In his keynote speech at the lecture delivered by Engr. John Chukwu, the permanent secretary, Federal Capital Territory noted that Nigeria had too many mundane sentiments militating against its development, explaining that there were too many nations within the Nigeria nation.
“Governance failure in Africa continent manifests in under-development, poor attendant to quality of life, high material mortality rate rise in inequality, unemployment and school drop out ratios, these manifests in high rate of insecurity terrorism and other vices in Nigeria,” he explained.
Engr. Chukwu noted that inadequate and unreliable access to modern energy were constraints to industrial activities, agricultural productivity and basic services, adding that increased access to energy fueled economic growth and reduced poverty.
He explained that the transformation agenda were being hampered by terrorism, abduction and other social vices.
In his welcome address, the Vice Chancellor University of Nigeria Nsukka Prof. Benjamin Ozumba, said over the years, Nigeria had struggled to put an end to the challenges of power outages.
Prof. Ozumba noted that the dream had been elusive noted that the inauguration of the power road map by the federal government had raised hopes of a change for the better.
– VANGUARD
According to reports, Nigeria’s population may face more challenging times ahead as electricity tariffs are projected to increase by over 40 percent in the near future.
This rise in tariffs could ultimately result in the elimination of all energy subsidies in the country.
Currently, the electricity sector relies on a monthly subsidy of approximately N50 billion, stemming from a shortfall in revenue.
The tariff hike, scheduled to take effect from July 1, will pose another significant test for President Bola Ahmed Tinubu’s administration and its ongoing market reforms.
The government has already taken steps to remove subsidies on Premium Motor Spirit (PMS) and implemented a floating exchange rate for the national currency.
These decisions have added complexity to the price-setting process of the Nigerian Electricity Regulatory Commission (NERC) and its 2022 Multi-Year Tariff Order (MYTO).
Despite power sector players failing to meet the target of supplying a minimum of 5,000 megawatts, even after signing contracts with the Nigerian Electricity Regulatory Commission (NERC), the current Service Based Tariff (SBT) is based on an exchange rate of N441/$ and an inflation rate of 16.97 percent.
According to NERC’s directives in 2015, the average tariff for distribution companies (DisCos) and different categories of end-users was N25 per kilowatt, as per Order 198/2020, which came into effect on September 1, 2020.
However, in the MYTO for 2022, the average tariff increased to N60 per kilowatt across all customer categories, and in the most recent update, it stands at N64 per kilowatt.
The determination of the 2015 tariff relied on a foreign exchange rate of N198.97/$, which increased to N383.80/$ in 2020 and further to N441.78/$ in 2022. In terms of inflation, the 2015 MYTO utilized an 8.3 percent rate, which rose to 12 percent in 2020 and reached 16.97 percent in 2022.
Currently, the inflation rate stands at 22.41 percent, and experts predict it could reach 30 percent by the end of June, considering the floating of the naira and the removal of subsidies on Premium Motor Spirit (PMS).
The tariff determination process takes into account various factors, including the significant metering gap of over seven million, gas prices, losses within the system, and the actual generation capacity. These elements play a role in determining the final tariff.
As anticipated, NERC had projected that the tariff for July 2023 would eliminate subsidies and introduce increases to the previously frozen tariff bands D and E.
These adjustments were intended to raise the bands from N54.59/kilowatt to N62.16 for band D and from N48.37/kilowatt to N61.16 on average. Moreover, the average increase across all bands was expected to reach N67/kilowatt.
However, due to the ongoing floating of the naira and the significant inflationary pressures, it is now projected that the new average tariff will need to be approximately N88/kilowatt for the power sector to recover its costs.
According to energy lawyer Madaki Ameh, the continuous and frequent increases in power tariffs are akin to a form of blackmail against electricity consumers.
Amen said “Indexing the cost of electricity on the dollar is a huge mistake because most of the inputs for electricity supply are local. The DisCos are also holding Nigerians to ransom by failing to increase the supply base, thereby spreading the tariffs across a broader spectrum of consumers to reduce the unit cost of electricity.”
He insisted that as long as there remain many unmetered consumers and many others not connected to the grid at all, the few consumers on the grid would continue to be subjected to unjust tariffs, which are not reflective of the quality of service delivered.
Ameh hoped that the signing into law of the new Electricity Act would mark “the beginning of light at the end of the long tunnel of inefficient and epileptic power supply in Nigeria.”
Segun Ajibola, the former President of the Chartered Institute of Bankers of Nigeria (CIBN) and a professor of Economics at Babcock University, highlighted that there remains a gap between the cost of electricity and the value it provides in exchange.
“Nigerians are still struggling to keep pace with the cost of energy for business and household use. If the electricity tariff goes up as envisaged, the question remains if there will be value for the quantum of electricity so paid for.
“The truth remains that if electricity supply is constant, of the right quantity and quality, the envisaged upward review in the tariff will be gladly absorbed by the populace,” he said.
Lanre Elatuyi, an Electricity Market Analyst, expressed that the recently implemented tariff rate would have significant implications. He emphasized that the devaluation of the Nigerian currency poses a major challenge for companies with dollar-denominated loans to repay.
He said “They will need more naira today to buy a dollar. They need to manage their exposure to foreign exchange risk. Even operators of hydro plants pay their concession fees in dollars. So, wholesale electricity price will be adjusted upward and this will get to the end users’ tariffs too.”
Senator Shehu Sani, a prominent Nigerian lawmaker has accused President Muhammadu Buhari’s government and state governors of secretly selling five power generating plants without disclosing the utilization of the funds received.
He disclosed this in his Twitter handle on Monday.
Senator Sani, known for his outspoken nature and activism expresses his concerns over the alleged undisclosed sale of the power plants.
He claimed that the government, in collaboration with state governors, had carried out the transactions without informing the Nigerian public about the purpose of the funds acquired from the sale.
The post reads “Buhari’s Government in collaboration with the State Governors quietly sold the five power generating plants without telling the country what the money was used for.
The Vice President of Nigeria, Prof. Yemi Osinbajo, has inaugurated the Afam 3 Fast Power 240-megawatt turbine project in Rivers State.
The project, which is a subsidiary of the Transcorp Group located in Oyigbo, on the outskirts of Port Harcourt in the state, was unveiled during a ceremony that took place on Tuesday.
The event, which was attended by several dignitaries, including the Chairman of Transcorp Group, Tony Elumelu, and other top officials, saw the Vice President arriving at the venue in a chopper at exactly 11:35 am.
Upon his arrival, he was escorted into the premises where he officially inaugurated the project.
During his speech at the event, he disclosed that the acquisition of the project was approved by the National Council on Privatisation (NCP) and the acquisition cost was ₦105.3 trillion.
Osinbajo further emphasized that the successful completion of the project is a significant breakthrough in Nigeria’s power sector.
In his address, Osinbajo said, “In 2020, electricity subsidies reached N584 billion, but service-based tariffs have led to a doubling of collection in the Nigeria Electricity Supply Industry from N40 billion in 2020 to N80 billion in the first quarter of 2023.
“If this trajectory continues, the Nigeria Electricity Supply Industry will be able to pay for itself. Our administration has also created programs for off-grid for electrification. Rural Electrification Agency now has the capacity to provide electricity supply on a first-class basis.
“We are on track to electrify all Nigerians in the next decade. However, we will not make progress if our gas supply does not improve. The gas supply challenges are hampering improvements.”
He further lauded General Electric, the National Council on Privatization (NCP), and the host communities for their contribution to the completion of the Afam 3 Fast Power 240-megawatt turbine project in Rivers State.
Osinbajo highlighted that the successful completion of the project will significantly increase the country’s power supply capacity, leading to a better quality of life for Nigerians.
In November 2020, the federal government and the Transcorp Power Consortium signed a share sale and purchase agreement in relation to Afam Power Plc and Afam 3 Fast Power Limited.
The National Council on Privatization approved the privatization of the Afam Power Plant back in August 2017, which triggered a competitive bidding process involving 12 prospective investors.
After careful consideration, Transcorp Power Consortium emerged as the preferred bidder with a combined offer of N105 billion.
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