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Renewables Can Provide Nearly 60 Per Cent of Nigeria’s Energy Demand by 2050

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Renewable Energy - Investors King

Nearly 60 per cent of Nigeria’s energy demand in 2050 can be met with renewable energy sources, saving 40 per cent in natural gas and 65 per cent in oil needs at the same time, according to a new report by the International Renewable Energy Agency (IRENA).

With a growing population and a range of socioeconomic challenges, Nigeria requires sustainable energy sources to meet the growing needs for all the sectors of its economy and achieve universal access to modern energy services.

Renewable Energy Roadmap for Nigeria, developed in collaboration with the Energy Commission of Nigeria, demonstrates how renewable energy technologies are key to achieving a sustainable energy mix and meeting the country’s growing needs.

“By using its abundant, untapped renewables”, IRENA’s Director-General Francesco La Camera said, “Nigeria can provide sustainable energy for all its citizens in a cost-effective manner. Nigeria has a unique opportunity to develop a sustainable energy system based on renewables that support socioeconomic recovery and development, while addressing climate challenges and accomplishing energy security.”

Dr. Adeleke Olorunimbe Mamora, Nigeria’s Minister of Science, Technology and Innovation added: “The highly distributed institutional structure of the energy sector in Nigeria means that coordination of policies will be essential to unlocking integrated energy transition planning and ensuring its success. A cross cutting agency or body tasked with doing so would be helpful in building consensus and developing a coherent plan which in turn would allow for the scaling up of renewable energy to meet the needs across the Nigerian energy sector.”

The share of primary energy requirements met with renewable energy can reach 47 per cent by 2030 and 57 per cent by 2050, according to IRENA’s report. Electrification will play a significant role in achieving higher renewable energy shares with electricity in final energy use nearly doubling by 2050.

Investment in renewables will be more cost-effective than the conventional pathway. IRENA’s Energy Transition Scenario has lower investment costs than planned policies, 1.22 trillion USD compared to 1.24 trillion USD respectively. This corresponds to 35 billion USD versus 36 billion USD per year respectively.

Advancing the energy transition requires a shift and scaling-up of investments in the short-term to avoid locked in fossil fuel  infrastructure investments with long lifetimes such as natural gas pipelines. In 2050, significantly less use of natural gas and oil compared to planned policies has profound implications for infrastructure investment in fossil fuels, increasing the risk of stranded assets.

Policies for the accelerated deployment of renewables are needed to unlock the report’s benefits. Policy coordination is essential to unlocking successful integrated energy transition planning in Nigeria.

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Energy

Power Grid Collapse Plunges Nigeria into Darkness Early Monday

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Electricity - Investors King

Nigeria was thrown into darkness once again as the nation’s power grid collapsed early Monday morning.

The collapse occurred at exactly 1:47 am, according to officials in the power sector.

The incident coincides with heightened tensions as the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) commenced an indefinite workers’ strike to demand a new national minimum wage.

The strike, which began Monday, has raised concerns about the potential for further disruptions across various sectors of the economy.

In response to the strike, Lateef Fagbemi, the Attorney-General of the Federation and Minister of Justice, criticized the labor unions’ actions.

In a letter dated June 1, 2024, Fagbemi stated that the strike violated a subsisting National Industrial Court order restraining the unions from proceeding with such actions.

He said the strike could lead to significant disruptions, including the recent power grid failure.

Despite attempts by the National Assembly leaders to mediate and prevent the strike, the meeting held on Sunday night ended without a resolution.

The meeting was chaired by Senate President Godswill Akpabio and Speaker of the House of Representatives Tajudeen Abbas and attended by NLC President Joe Ajaero and TUC President Festus Osifo. The unions remained firm on their decision to proceed with the strike.

Impact on Everyday Life

The blackout has had an immediate and significant impact on millions of Nigerians, disrupting daily life and business activities.

Hospitals, schools, and businesses are struggling to cope without electricity, exacerbating an already challenging situation for many citizens.

Minister of State for Labour Nkeiruka Onyejeocha reiterated the government’s position, stating that it could not afford to pay more than N60,000 as the new minimum wage, which she noted was a 100 percent increase from the current rate.

This offer, however, has been deemed insufficient by labor leaders.

Ulterior Motives and Unfeasible Demands

Bayo Onanuga, special adviser to President Bola Tinubu on Information and Strategy, suggested that the labor unions might have ulterior motives behind their strike, criticizing the wage demands as unrealistic for both federal and state governments.

“The minimum wage offer they presented is simply not feasible given the current economic constraints,” Onanuga stated.

He urged labor leaders to reconsider their stance for the sake of national stability.

Broader Implications

The power grid collapse is not just an isolated technical failure but a reflection of deeper systemic issues within Nigeria’s energy infrastructure.

The recurring outages highlight the urgent need for comprehensive reforms in the power sector to ensure reliable and consistent electricity supply.

As the nation grapples with this latest blackout, the government and labor unions remain at an impasse, with both sides entrenched in their positions.

The outcome of this dispute will likely have far-reaching implications for Nigeria’s economic stability and growth.

In the meantime, millions of Nigerians are left to cope with the immediate fallout of the power grid collapse, hoping for a swift resolution to both the strike and the ongoing energy crisis.

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Oil Prices Stable Amid Federal Reserve’s Talk of Interest Rate Tightening

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Crude oil - Investors King

In a landscape where global oil markets often sway with the slightest economic shifts, stability can be a rare commodity.

However, amidst discussions from the U.S. Federal Reserve regarding potential interest rate adjustments, oil prices have remained surprisingly steady.

Brent crude oil, against which Nigerian oil is priced, gained 10 cents, or 0.1% rise to $82.00 a barrel, while U.S. West Texas Intermediate (WTI) crude oil edged up 7 cents to $77.64 a barrel.

The Federal Reserve’s release of minutes from its recent policy meeting unveiled deliberations on the possibility of raising interest rates to combat persistent inflationary pressures.

The minutes stated, “Various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.”

Such discussions surrounding interest rates can have a profound impact on oil demand. Higher interest rates typically result in increased borrowing costs, potentially constraining funds that could otherwise stimulate economic growth and, consequently, oil consumption—particularly in the United States, the world’s largest oil-consuming nation.

Additionally, the Energy Information Administration’s report indicating a 1.8 million barrel rise in U.S. crude stocks last week, as opposed to an anticipated draw of 2.5 million barrels, added a layer of complexity to the market dynamics.

This unexpected increase in inventory weighed on market sentiment, despite ongoing efforts to balance supply and demand.

Furthermore, global physical crude markets have been grappling with subdued refinery demand and abundant supply, exacerbating the pressure on oil prices.

Analysts from Citi highlighted recent market softness, attributing it to weaker data encompassing rising oil inventories, tepid demand, and refinery margin weakness, compounded by the looming risk of production cuts.

Russia’s announcement that it surpassed its OPEC+ production quota in April due to “technical reasons” added another dimension to the market narrative.

The Russian Energy Ministry revealed plans to present a compensation strategy to the Organization of the Petroleum Exporting Countries (OPEC) Secretariat shortly.

Against this backdrop, anticipation mounts ahead of the OPEC+ meeting scheduled for June 1, where crucial decisions regarding production cut levels will be deliberated.

Despite uncertainties surrounding the meeting’s outcome, industry experts foresee challenges in significantly tightening the market in the near term, potentially leading to a rollover of existing voluntary cuts.

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Electricity Subsidy Surges to N628.61bn in 2023, Discos Earn N1.08tn

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Amidst ongoing debates regarding Nigeria’s power sector and the financial dynamics surrounding it, the latest data from the Nigerian Electricity Regulatory Commission (NERC) has revealed significant figures concerning electricity subsidy and the earnings of power distribution companies (Discos).

According to the data obtained from NERC, the Federal Government’s expenditure on electricity subsidy soared to a staggering N628.61 billion in 2023.

This substantial subsidy expenditure indicates the government’s continued financial support to ensure electricity affordability for consumers across the nation.

Simultaneously, power distribution companies amassed a total revenue of N1.08 trillion during the same period.

This substantial revenue underscores the financial capacity of the Discos despite ongoing challenges within the power sector, including issues related to infrastructure, metering, and service delivery.

Analysis of the figures provided by NERC reveals a consistent increase in electricity subsidies throughout 2023.

In the first, second, third, and fourth quarters of the year, subsidies on power amounted to N36.02 billion, N135.23 billion, N204.6 billion, and N252.76 billion, respectively.

This steady rise in subsidy expenditure reflects the government’s commitment to bridging the gap between the cost-reflective tariff and the allowed tariff.

Conversely, power distribution companies witnessed notable revenue growth over the same period.

Despite concerns raised by consumers regarding service quality and reliability, Discos reported earnings of N247.09 billion, N267.86 billion, N267.61 billion, and N294.95 billion in the first, second, third, and fourth quarters of 2023, respectively.

This substantial revenue generation highlights the financial viability of the Discos within the current regulatory framework.

The surge in revenue by Discos has prompted calls from various stakeholders for improved service delivery and accountability within the power sector.

Consumers have expressed dissatisfaction with the quality of service provided by Discos, emphasizing the need for enhanced operational efficiency and infrastructure investment to address prevailing challenges.

In the absence of cost-reflective tariffs, the Federal Government continues to bear the burden of electricity subsidies to ensure affordability for consumers.

These subsidies primarily target power generation costs payable by Discos to the Nigerian Bulk Electricity Trading company, thereby supporting electricity generation and supply across the country.

Commenting on the subsidy expenditure for the fourth quarter of 2023, NERC highlighted the government’s policy to harmonize exchange rates and maintain end-user customer tariffs at approved rates.

This policy direction contributed to the increase in subsidy obligations, reflecting the government’s efforts to stabilize electricity prices amidst economic uncertainties.

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