In a bid to solve Nigeria’s electricity supply challenges over the next 20 years, the country will require about $100 billion in funding, a new report by Financial Derivatives Company (FDC) Limited has revealed.
The report noted that investors are willing to actively participate in the power sector through partnerships, joint ventures, training of personnel and building of transmission and distribution infrastructure if only necessary reforms are put in place.
The FDC further stressed that there is a need for the government to address the numerous issues pervading the sector and affecting output.
According to the report, “the country will require significant investments to achieve reliable power supply in the short to medium term. The estimated amount needed is about $100 billion over the next 20 years. The government also needs to hasten its steps to close the metering gaps as about 50 per cent of the total population is still on estimated billing”.
The report noted that of the estimated $100 billion in investment required to bridge the gap, renewable energy sources are likely to form the bulk of Nigeria’s energy solutions as global warming and climate change restrict investment in traditional energy sources.
It is, however, interesting to note that Nigeria, which has the lowest electricity consumption per capita in Africa, supplies power to the Republic of Benin, Congo and Niger under the West African Power Pool (WAPP) agreement for ECOWAS countries.
According to the report, the country’s power generation is mostly thermal (80 per cent) and hydro (20 per cent) with an installed capacity of about 12,522MW while at least 40,000MW is needed to meet the country’s electricity demand.
“However, monthly, the national grid struggles to provide a little over 4,200MW, which is 66.46 per cent and 89.5 per cent below the installed and potential capacity.
“More so, the government privatized 11 electricity distribution companies and six generating companies while retaining 100 per cent ownership of the Transmission Company of Nigeria (TCN)”, the report noted.
The report listed some challenges facing the electricity sector to include: policy uncertainty, lack of transparency, poor monitoring and implementation, as well as inefficient industry practices.
Meanwhile, the report noted that beyond addressing infrastructural issues, there is a need for strong institutions to checkmate government policies to reduce uncertainty and increase business confidence.
“Also, the government needs to encourage local business that could provide raw materials needed within the sector as this would reduce import costs and support government revenue,” it added.
