- Posted by Kieth Oliver
- On October 21, 2015
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Nigeria and other African nations are said to be generally experiencing rapid economic growth of 5 per cent per annum. This is higher than concerted efforts to provide energy for investors and other users. Experts say the situation has created a huge gap between what is required and what the nations can provide. For instance, the nation’s daily electricity demand is estimated at over 14,000 megawatts, mw, while the nation is able to generate a little above 4,000mw.
Consequently, many power users have to rely on their private generators to meet their demand at higher cost. The high cost of generating electricity has culminated in high cost of products and services, which affect the ability of the nation’s products to compete with others at the regional and global markets. But there are indications that more energy would be generated in medium and long term basis as many stakeholders have started to pay more attention to funding. Take the case of Rural Electrification Agency, REA as an example.
Following a request by the Chairman, Nigerian Electricity Regulatory Commission, NERC, Dr Sam Amadi, to the Senate President, Bukola Saraki, a resolution would soon be made to ensure the release of funds for the Rural Electrification Agency, REA. A delegation of the NERC Commissioners received this assurance when they paid Senate President, Bukola Saraki, a courtesy call in his office, at the National Assembly, Abuja. While briefing the Senate President and members of the Senate Committee on Power on the performance of the power industry in the light of the electricity reform, NERC’s Chairman, urged Senator Bukola to use his good office to initiate the resolution that would enhance the release of funds to the REA, because the law demands Senate’s authorisation.
‘’The law demands that at the end of each fiscal year, money not expended by us is put in a special account for the sole use of the agency. The money is there, the Senate has not given the resolution authorising us to transfer the fund to the REA’’ Amadi said.
The Commission’s helmsman assured NERC was committed to its mandate of ensuring fair pricing and affordable tariff for consumers, making sure they are protected, in response to one of the questions by the Senate President on how e Commission is able to tackle what he described as ‘impunity’ of some licensees that have failed to live up to their responsibilities of meeting their license terms and conditions. Saraki urged for sanction to be meted on those found to be violating the terms of their license; this was even as he stated that the relationship between the Commission and its operators was to agree that they will be allowed to recover prudent profit.
He also disclosed that the Commission is holding distribution companies to firm deadline in meeting their metering requirements/demands. He declared that many of the Discos ought to complete metering in two years at least, while the Commission was tackling the issue of overbilling at the same time. This he said, is being resolved through a methodology that ensures Discos are put on checks.
More than that, the African Development Bank and other agencies have concluded plans to invest $250 billion in the next 15 years. The French Ambassador to Nigeria, Mr Denys GAUER, who disclosed this at Nigeria Alternative Energy Expo (NAEE 2015), said the investment plan targets an electrification rate of 80 per cent on the continent. According to Gauer, the plan was initiated by, a French politician and former Minister for Environment and Sustainable Development, Mr Jean-Louis Borloo ,when he created an Endowment Fund “Energy for Africa”. He said the objective of this initiative is to set up an organization, or an agency, dedicated to funding energy infrastructures in Africa.
Gauer indicated that the Green Climate Fund, promised by industrialized countries at the Copenhagen conference in 2009, was endowed to the tune of 10 billion dollars and should finally, in Paris, be put at 100 billion dollars. He maintained that President Obama’s Power Africa plan provides an investment of 7 billion dollars over 5 years. Besides this, there are other initiatives of bilateral and multilateral donors.
The French envoy said there are calls for the creation of an agency for the electrification of Africa, with the ambition of being a single receptacle for all initiatives and international investment for the development of access to electricity. According to him, the duty of such agency among other things would also be to promote the development of access to electricity projects across the continent by meeting the technical, institutional, legal or financial requirements of Africans.
He disclosed that already, discussions are on between President Akinwumi Adesina and the Egyptian minister Khaled Fahmy in New York and Cairo have shown that we have to work to avoid any rivalry between the African Development Bank on the one hand and the African Ministerial Conference on Environment (under Egyptian presidency) on the other hand, about who should manage the initiative. Gauer disclosed that Egypt is now heading the working group in charge of the implementation of this initiative.
Adesina maintained that he plans to dedicate his tenure to solving what he sees as the biggest hindrance to economic growth and development on the continent: the energy deficit. The Nigerian born Adesina, who took over as president of Africa’s lead development lender in September, has said that his flagship project aims to raise $55bn of investment to close the energy deficit in the next decade. He said the bank will take a leadership role, coordinating with existing multinational initiatives and pushing member states to move faster to privatise and liberalise their energy sectors.
He noted, demand for power on the continent is growing and many investors wanting to expand their businesses see the cost of energy as a barrier to entry. But when it comes to solving the continent’s long-running power crisis there have been plenty of tough talk and many lofty promises with little change.
Adesina indicated that the AfDB’s initiative will be a step change from previous efforts. Though the details are not finalised, he says a key priority is to “address systemic issues that have held us back” — namely the energy policy environment in many of the bank’s member states. “The biggest elephant in the room is the fundamental reforms needed in the energy sector,” he said.
He also attributed the problem to the policy environment. As he puts it, “We will be looking at things like how we price energy and the regulatory environment around the utilities”. Adesina maintained that the bank is prepared to push member states to raise efficiency and to introduce regulatory reforms, in order to attract the private sector investment needed to lift the Africa’s grid-based electricity generating capacity.
Meanwhile, President Muhammadu Buhari has assured that government is committed to doing renewable energy projects in the country as it is sustainable and eco-friendly. Buhari who was represented by the Permanent Secretary in the Federal Ministry of Power, Dr. Godknows Igali at the 5th National Alternative Energy Expo (NAEE) in Abuja yesterday said power is critical to socio-economic development as it stimulates economic activities.
“The performance of the power sector therefore is crucial and critical to the survival of the industrial sector and the growth of Small and Medium Enterprises (SMEs) which serves as the bedrock for the development of any society,” he said.
The President maintained that emphasis is being shifted towards environmentally friendly alternative sources of power generation to protect the ecosystem, with global investors looking closely at the energy opportunities in Nigeria.
He said: “With global investors looking closely at the energy opportunities in Nigeria, the Government is committed to establishing a level playing ground, with encouraging policies and incentives.
“We will continue to promote Renewable Energy programmes that will integrate the objectives of all, inclusive green economy and attract financing partners like development banks, international development agencies and other financial options for supporting the transition to a cleaner Energy in Nigeria,” Igali assured.
He said this year’s Expo will see the launch of ‘G2020’ which will help promote energy efficiency culture among Nigerians. He added that the programme is to generate 20megawatts (mw) of Green Energy by 2020 with plans to supply clean electricity to residences, schools, health centres and police stations across rural areas.
These and other efforts are expected to complement the initiatives of others, especially the Manufacturers Association of Nigeria, MAN, to ensure more power is avaiable for industries. MAN’s President, Dr. Frank Jacob maintained that electricity challenge to industries would be surmounted if a legal framework can be provided to help manufacturers reduce cost of production.