Connect with us

Business

That N10bn Solar Energy Proposal

Published

on

300MW Solar energy
  • That N10bn Solar Energy Proposal

The Federal Government’s N10bn proposal for the electrification of 37 federal universities and seven university teaching hospitals across the country came under intense criticism at the meeting of the Senate Committee on Power, Steel Development and Metallurgy on Thursday, December 14, 2017. And rightly so.

At the budget hearing, the Managing Director, Rural Electrification Agency, stated that N10bn had been earmarked for the project, “Rural Electrification Access Programme in Federal Universities.” While the news media indicated that the Senator Enyinnaya Abaribe-led committee was deeply concerned at the insensitive preference of streetlight for universities, amidst several other priority needs begging for government’s attention, the Ministry of Power, Works and Housing has since come out with a clarification stating that the budgeted N10bn is for a “Rural Electrification Access Programme in Federal Universities” that is expected to “rejuvenate the education system.”

I will suggest that the concern by the Chairman of the Senate Committee on Power and his colleagues holds great validity, for the following reasons –

First, A review of “Part IX – Rural Electrification” of the Electric Power Sector Reform Act, 2005 leaves no ambiguity as to its focus on providing electricity to rural dwellers. Indeed, a review of any definition of the word, “rural”, would indicate a consistency of such areas as being located outside of towns and cities. Thus, the question arises, since when did universities and hospitals, typically located in the heart of cosmopolitan and urban centres, qualify to be considered under the Rural Electrification Agency’s mandate?

Second, with an estimated 55 per cent of urban areas currently electrified versus 35 per cent electrification of rural areas, should the N10bn not be put into the Rural Electrification Fund that is specified under Section 88.12 of the EPSRA to facilitate investment in the electrification of these areas that are typically not commercially viable, due to demographic sparseness and lack of affordability? If we are to address the issues that typically bedevil our rural areas – lack of job creation, poor quality of life, fire, health and environmental challenges from the use of wood burning and kerosene lighting up rural homes, etc., surely, funding the electrification of rural Nigeria holds greater value for the use of this money. The use of the N10bn will go a long way to meeting the following objectives of the Rural Electrification Fund – a) Achieving equitable regional access to electricity; b) Expanding the grid and developing off-grid electrification; c) Providing subsidies for consumption that will stimulate innovative approaches to rural electrification, etc.

Third, implementation of the delivery of solar-powered energy to the universities and hospitals, comparatively, is not cheap. On the average, wholesale price of solar energy is N39.9/kWh versus N16.9/kWh for on-grid electricity. This fact is even more important when we take into consideration the fact that some of these institutions receive close to 24 hours of electricity supply, as premium customers, in most of the electricity distribution franchise areas where they are located. In plain terms, why should the Nigerian taxpayers be saddled with purchasing a product for over two times the cost of what is readily available to these institutions?

If anything, this N10bn solar power proposal by the power ministry seems to be another in the increasingly inexorable march by the Federal Government back into state-ownership of generation assets (on the back of the General Electric fast power project that is being funded by the Federal Government), contrary to the privatisation objectives of the National Electric Power Policy, 2001 and EPSRA. The policy and the law resulted from a recognition that the government, due to decades of inefficiency, wastage of taxpayer funds and corruption, in operating the state-owned electric utility company, Nigerian Electricity Power Authority, has no business operating in a sector that should be private sector-driven. Unfortunately, here we go again.

Fourth, one is not sure how the expenditure of the proposed N10bn equates to the rejuvenation of the educational system, as stated by the MPWH. I agree that such rejuvenation is critically needed in a nation that has seen a dramatic decline in the quality of the education that its citizens used to enjoy. I would suggest, however, that greater impact for such rejuvenation could be best achieved by investing in paying teachers better salaries, providing academic supplies, re-establishing higher standards of academic excellence, rehabilitating physical infrastructure, etc. – these are the mandate of the Ministry of Education. Additionally, if the objective of the N10bn initiative is to “rejuvenate the education system,” does the MPWH also plan to subsidise private institutions, for equity and for the achievement of comprehensive results?

Unfortunately, this proposal comes at a time when the power sector is facing critical and strangulating financial challenges to building the capacity for the sustainable electricity supply that will drive the growth of our economy. The liquidity constraint means that the electricity value chain continues to be deprived of the funding needed to inject the efficiency that is desperately needed in the sector. As a matter of fact, the Nigerian Electricity Supply Industry is burdened with a market shortfall that may eventually collapse the sector, without reasonable government intervention.

In view of this, I suggest that the N10bn can be better and efficiently utilised by the government in expanding the national grid, by building up the capacity of the Transmission Company of Nigeria, a wholly government-owned company, to wheel energy sustainably and reliably, given its history of being consistently underfunded and its critical role in the value chain. Alternatively, the money could be applied to subsidising the consumption of the lifeline electricity consumers, who struggle with electricity affordability issues, as seed money for the Consumer Power Assistance Fund, which still has not been set up, as a fundamental requirement of the EPSRA. The REA, going outside of its mandate, endangers the hopes of rural dwellers for electricity that will improve their lives and creates opportunity for wastage of funds that are desperately needed for priority projects in the sector. In this era of “Change” as a mantra or common refrain, we must move away from politicised and ill-thought-out policies to that which holds the greatest good for greatest number of our citizens.

Thus, it is easy to understand why the Senate Committee on Power, like many Nigerians and major stakeholders in the sector, cannot understand why the REA wants to spend a huge amount of money to provide solar power in universities and hospitals when rural communities that require electrification, for which the agency was created, are left in darkness – whether its proposed N10bn initiative is for street lighting or rejuvenating the educational system.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Business

Nigerian Brand, JR Farms Acquires 11% Stake in Rwandan Firm

Published

on

Agric

Nigerian Brand, JR Farms Acquires 11% Stake in Rwandan Firm

JR Firms, an agribusiness firm with headquarters in Nigeria, has announced partnership with Sanit Wing Rwanda through the acquisition of 11 per cent stake in the company.

The CEO of the company, Mr Rotimi Olawale, explained in a statement that the partnership was in furtherance of its goals to ensure food security, create decent jobs and raise the next generation of agrarian leaders in Africa.

The stake was acquired through Green Agribusiness Fund, an initiative of JR Farms designed to invest in youth-led agribusinesses across Africa.

Sanit Wing Rwanda is an agro-processing company that processes avocado oil and cosmetics that are natural, quality, affordable, reliable and viable.

The vision of the company is to become the leading producers of best quality avocado and avocado by-products in Africa by creating value across the avocado value chain.

With focus on bringing together over 20,000 professional Avocado farmers on board and planting of three million avocado trees by 2025 through contract farming, the company currently works with One Acre Fund in supply of avocado to its processing facility.

The products of the company which include avocado oil, skin care (SANTAVO), hair cream and soap are being sold locally and exported to regional market in Kenya.

With the new partnership with JR Farms- the products of the company will enjoy more access to markets focusing on Africa and the European Union by leveraging on partnerships and trade windows available.

Aside funding, the partnership comes with project support in areas of market exposure, capacity building, exposure and other thematic support to grow the business over the next four years.

JR Farms has agribusiness operations in Nigeria, Rwanda, United States and Zambia respectively.

In Nigeria, the company deals in cassava value chain processing cassava to national staple “garri” which is consumed by over 80 million Nigerians on daily basis, while in Rwanda, it works in the coffee value chain with over 4,000 coffee farmers spread across the East Central African country.

Continue Reading

Business

Shut Down Depots Selling Petrol Above Approved Price – Marketers

Published

on

Petrocam

Shut Down Depots Selling Petrol Above Approved Price – Marketers

The Federal Government should close down depots that are selling petrol above the approved price, oil marketers said on Thursday.

National President, Independent Petroleum Marketers Association of Nigeria, Sanusi Fari, said the sale of petrol above government approved price by depot owners would soon lead to a hike in the commodity’s pump price.

Fari told journalists in Abuja that the government through its agencies such as the Department of State Services and the Department of Petroleum Resources should curb the development to avoid crisis in the downstream oil sector.

He said some private depot owners were selling at N165 per litre to independent marketers, way above the government stipulated price of N148 per litre.

Fari said, “Our challenge is the inconsistency in the pricing of petrol. Up till a week ago, government was still insisting that the February price for petrol remained unchanged.

“And most of the private depot owners are selling above the government stipulated price. As at today ( February 25, 2021) private depot owners are selling at N165 per litre to independent marketers.”

He added, “In the last six years, only NNPC imports refined products into this country and these tank farms buy their products from NNPC under a controlled price.

“This has affected our businesses seriously because government is insisting that we sell at the rate of N165, which is not going to work.”

The IPMAN president said filling station owners buy the product at N165 per litre from the private depots and incur other expenses such as transportation, rent, etc.

“So government cannot expect us to sell less than what we buy,” he said.

Fari added, “This is why we are calling on government and agencies that are saddled with the responsibility to control petrol pricing to urgently clamp down on depots that are selling above the stipulated price.”

The Nigerian National Petroleum Corporation, the country’s sole importer of patrol, recently stated that it never hiked the cost of petrol to depots.

It also enjoined the depot owners to sell the product at the approved rate and called on the DPR to enforce the stipulated price across the depots.

Continue Reading

Business

Nigeria Will Benefit Less From African Trade Deal – NESG

Published

on

Institute of Chartered Shipbrokers

Nigeria Will Benefit Less From African Trade Deal – NESG

Nigeria and other resource-based countries will benefit less from the African Continental Free Trade Area than economies that are more diversified, the Nigerian Economic Summit Group has said.

The NESG, a private sector-led think-tank, said in its 2021 Macroeconomic Outlook that Nigeria could reap more gains through export diversification away from crude oil.

It said trade in Africa remained dominated by raw materials and less processed products, adding that on average, minerals and agriculture accounted for 44 per cent and 16 per cent of intra-African trade respectively between 2007 and 2017.

The NESG said, “Evidence has shown that African economies that are more diversified and have improved transport infrastructure, would benefit more from the trade pact than others that are resource-based and agricultural dependent.

“Putting this in context, South Africa currently accounts for 40 per cent of intra-African manufacturing imports. On the other hand, resource-based countries, such as, Algeria, Egypt and Nigeria – which collectively account for approximately 50 per cent of Africa’s GDP – contribute only 11 per cent to intra-African trade.”

“Another bone of contention is the issue of ‘rules of origin’, which constitutes a significant risk factor. This implies that protectionism practices by some countries could constitute a setback for the establishment of the ambitious single market for Africa. But there are several reasons to be optimistic,” it added.

The group said the World Bank estimates revealed that the AfCFTA would promote manufacturing exports over natural resources, agricultural and services exports, and that manufacturing exports would account for one-third of the projected total exports of $2.5tn by 2035.

It said, “Nigeria could reap more gains through export diversification away from crude oil, as manufacturing exports currently account for an average of nine per cent of the country’s total exports.

“This suggests that efforts should be directed at strengthening domestic value chains, particularly the agro-allied industrial base.

“To achieve this, there is a need to attract private capital, most especially, FDI, that would allow for knowledge and technological transfers.”

According to the NESG, for Nigeria to maximally benefit from the trade deal, there is an urgent need to also address transport infrastructure bottlenecks and provide improved logistics.

It said, “Finding a lasting solution to the Apapa gridlock by creating similar ports in other regions of the country, so as to ensure speedy clearance of consignments needs to be prioritised.

“Nigeria also needs to set standards for locally-made goods to enhance their attractiveness in the regional market.

“The Nigerian government as a matter of urgency needs to operate an efficient and corruption-free land border system, so as to guide against the importation of low-cost sub-standard products into the country.

“It is only when these and many more reforms are implemented that Nigeria can begin to reap the benefits of the trade deal.”

The group noted that owing to the outbreak of COVID-19, the implementation of the AfCFTA was postponed from July 1, 2020 to January 1, 2021.

It said, “The key goal of the free trade pact is to expand the volume of intra-African trade, which stood at 16 per cent in 2018 .“Till date, 36 countries, including Nigeria, have ratified the agreement. The trade deal is expected to create a single market with a combined GDP of $2.5tn and total population or market size of 1.2 billion.”

Continue Reading

Trending