Nigeria’s energy access projects are set to receive a boost as the United Kingdom declared its £10m donation to the energy sector.
The United Kingdom, in its statement on Monday, said that the funds will finance energy access projects and aid Nigeria’s COP26 commitments.
The financial aid will make Nigerian investors focus more on low-carbon energy, supporting off-grid and low-carbon energy projects.
Investors King gathered that the funds will further encourage investments in local pension funds, insurance firms and other investment plans.
The UK financial aid will also enhance local funding for eligible off-grid clean energy infrastructures, like the solar mini-grid and home systems, clean cooking infrastructure and SME cold storage infrastructure in Nigeria.
“The UK is providing up to £10m of concessional aid to reduce the risk for pension and insurance funds to invest in energy access projects, and support Nigeria’s COP26 commitments.
“The financing will help Nigerian investors focus on low-carbon energy, supporting off-grid, low-carbon energy projects. The £10m will be blended to de-risk transactions and therefore mobilise domestic institutional investment from local pension funds, insurance firms and other local institutional investors,” the statement read.
Assuring Nigerians of it’s commitment to providing assistance for energy projects, the UK Minister for Africa, Vicky Ford said the UK government will aid a sustainable and resilient growth in the energy sector.
Ford maintained that the transaction between the two countries is essential for the growth of the sector.
He noted that the initiative would ensure energy is circulated to unserved and underserved communities while assisting local investors of the low carbon energy sector with affordable long-term financing to support scaling up of off-grid low carbon energy projects.
The minister added that “the initiative will support the implementation of Nigeria’s Nationally Determined Contributions plan, which Nigeria submitted to the UNFCCC before COP26, its Energy Transition Plan, which was presented by the Nigerian government at COP26, and Nigeria’s plans to increase energy access including the Solar Naija programme.
“The UK is committed to increasing both renewable energy and energy access in Nigeria, driving clean, sustainable and resilient growth. As the world looks to transition to clean growth, we are witnessing an era-defining opportunity for the private sector. This transaction is particularly exciting as it brings together UK government support with the institutional capital which is essential to grow the sector at scale,” he said.
Nigeria’s Struggles in the Energy Sector Highlighted as Ghana Nears Universal Access
Nigeria, the most populous nation in Africa, continues to grapple with challenges in its electricity sector, resulting in a significant lag behind its West African neighbor, Ghana, in achieving universal access to electricity.
Ghana, with its population of 34 million, has made remarkable strides in expanding its power sector, attaining an impressive electrification rate of 88.54% with ambitions to reach 100% by 2024.
Ghana’s success story is characterized by its deliberate policy formulation and swift implementation to bolster its power sector, facilitating increased investment and widespread electricity access for its citizens.
Speaking at the Nigeria Energy Conference and Exhibition 2023 in Lagos, Ghana’s Minister of Energy, Andrew Mercer, underscored his country’s commitment to achieving universal access to electricity by the end of 2024.
Mercer stated, “The president of Ghana emphasized the aggressive target of the government to achieve universal access by the end of 2024 from the current rate of 88.54%. This is consistent with the UN Sustainable Development Goal 7 (SDG7), which aims to ensure access to affordable, reliable, and modern energy for all by 2030.”
In Ghana, the total installed energy capacity stands at 5,454 megawatts (MW) with dependable capacity at 4,843 MW, and peak demand reached 3,561 MW in May 2023.
Meanwhile, Nigeria boasts a significantly higher total installed generation capacity of 13,000 MW but only a fraction, between 3,500 and 4,500 MW, is effectively transmitted and distributed to Nigerian homes and businesses.
Tragically, this disparity means that over 80% of Nigerians still lack access to the electricity grid with only around 11.27 million Nigerians recorded as electricity customers as of Q1 2023, according to the National Bureau of Statistics (NBS).
Ghana’s sustained electricity grid stability has resulted from consistent efforts by the government and stakeholders to enhance the nation’s electricity industry, ultimately improving the quality of life for Ghanaians and supporting economic activities.
Both Ghana and Nigeria have increased their reliance on thermal power generation, reducing the share of hydro power generation in favor of thermal sources. However, while Ghana boasts a record of grid stability and minimal outages, Nigeria has struggled with frequent grid collapses.
In September 2023, Nigeria experienced grid collapses on two occasions, disrupting power supply nationwide.
This disparity in grid reliability highlights the challenges faced by Nigeria’s electricity sector. According to data from the Nigerian Electricity Regulatory Commission (NERC), Nigeria recorded a high number of grid collapses in recent years, with 2018, 2019, 2020, and 2021 witnessing 13, 11, 4, and 4 collapses, respectively.
In 2022, there were seven recorded grid collapses, with the most recent occurring on September 25, 2022, when power generation plummeted from over 3,700 MW to as low as 38 MW.
As Nigeria grapples with these electricity challenges, Ghana’s steady progress in its power sector serves as a reminder of the critical importance of comprehensive policies, infrastructure development, and stability in ensuring universal access to electricity for citizens, a goal that remains elusive for millions of Nigerians.
UAE Commits $4.5 Billion for African Clean Energy Initiatives at UN Climate Summit
The United Arab Emirates, as the host of this year’s United Nations climate summit, has made a significant pledge of $4.5 billion to support clean-energy projects in African nations.
This substantial commitment is a collaborative effort involving key entities such as Abu Dhabi’s clean-energy producer Masdar, Abu Dhabi Fund for Development, Etihad Credit Insurance, the nation’s export credit agency, and AMEA Power, a Dubai-based renewable-energy company.
The announcement was made by the COP28 Presidency in an official statement.
Africa faces a critical need for nearly a tenfold increase in climate adaptation funding, amounting to $100 billion annually, as emphasized by the Global Center on Adaptation. This financial boost is essential for enhancing infrastructure and protecting agriculture from the adverse impacts of climate change.
Although the continent contributes only about 4% of global greenhouse gas emissions, its nations are disproportionately affected by climate change.
“The initiative will prioritize investments in countries across Africa with clear transition strategies, enhanced regulatory frameworks, and a master plan for developing grid infrastructure,” stated COP28 President-Designate Sultan Al Jaber at the inaugural Africa Climate Summit on Tuesday.
Al Jaber’s commitment to invest in the African continent precedes the UN climate summit that he is overseeing. As the chief executive officer of Abu Dhabi National Oil Co., one of the world’s largest oil and gas producers, his involvement has sparked criticism from climate activists.
Over 400 environmental groups have voiced concerns in a letter to the UN secretary-general, expressing reservations about how Al Jaber’s work may affect the legitimacy and effectiveness of the summit.
The African Development Bank’s Africa50 investment platform will serve as a strategic partner in identifying initial projects, according to the statement.
Here are the funding details:
- The Abu Dhabi Fund for Development will provide $1 billion in financial assistance.
- Etihad Credit Insurance will offer $500 million in credit insurance to mitigate risk and attract private capital.
- Masdar commits $2 billion in equity and will facilitate an additional $8 billion in project finance, aimed at delivering 10 gigawatts of clean energy capacity in Africa by 2030.
- AMEA Power will contribute to funding 5 gigawatts of renewable energy capacity in the continent by 2030, mobilizing $5 billion, with $1 billion in equity investments and $4 billion from project finance.
This generous funding initiative reflects the United Arab Emirates’ dedication to addressing climate change and supporting sustainable development in Africa, marking a significant step toward a greener and more resilient future for the continent.
MAN Raises Alarm Over Potential Displacement of Local Meter Manufacturers in Power Sector
The association explained that the stiff financial requirements and technical specifications listed in the advertised material of the Transmission Company of Nigeria (TCN) are heavily biased against domestic manufacturers
Following the implementation of the NMMP Phase IIT, a World Bank-funded initiative launched to supply 1.2 million smart meters, the Manufacturers Association of Nigeria (MAN) has cautioned the government on excluding local meter manufacturers and assemblers within the downstream power sector from the initiative.
This was disclosed in a statement made available to the media by MAN on Sunday.
The association explained that the stiff financial requirements and technical specifications listed in the advertised material of the Transmission Company of Nigeria (TCN) are heavily biased against domestic manufacturers as local manufacturers would struggle to meet those stated requirements.
This, MAN said is against contradicted the Central Bank of Nigeria’s guidelines for the National Mass Metering Programme.
MAN emphasizes that local manufacturers have made substantial investments in expanding their manufacturing capacities, as per the Federal Government’s backward integration policy and the introduction of the NMMP intervention.
They have also made efforts to train and nurture a highly skilled workforce capable of meeting the power sector’s demands, as envisioned in the Nigeria Electricity Supply Industry.
In the statement MAN warns that this situation could potentially lead to a replication of the distressing scenario witnessed in 2012 when local manufacturers were sidelined during the meter supply, resulting in the delivery of substandard meters by foreign companies awarded the contract, which were subsequently removed from the network.
Speaking on employment opportunity, MAN said “The position of the TCN that installation will provide employment opportunities to Nigerians will completely pale into insignificance when compared with a ratio of 1 to 10 jobs that will be created if local manufacturers are included in the scheme.”
Similarly, MAN argues that the intentional denial of opportunities for local manufacturers fails to acknowledge their impressive performance in the sector, including the successful deployment and installation of a total of 611,231 energy meters across the country between January 2019 and January 31, 2021.
The potential displacement of local meter manufacturers and assemblers in Nigeria’s power sector raises serious concerns about the future of the industry.
MAN calls on the government to reconsider the advertised financial requirements and technical specifications, ensuring that they align with the Central Bank of Nigeria’s guidelines.
By including local manufacturers in the supply of smart energy meters, the power sector can benefit from high-quality products while stimulating economic growth and generating a substantial number of job opportunities for the Nigerian workforce.
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