The British government recently offered a rather invaluable but unsolicited advice to Nigeria. It called on the federal government to remove import duty on solar energy equipment to enable Nigerians access it and free themselves from the merciless grip of public power monopoly.
Government does not need tutorials from Britain on how to ease access to solar energy as a source of electricity. It has seen from the scandalous experiment on power privatization that the central command structure of the nation’s power sector is a colossal failure and that no one knows the way out of the blind alley.
Solar energy is the only way out of the power supply crunch that has crippled Nigeria’s economy and inadvertently colluded with massive corruption and insecurity to make it the world headquarters of poverty.
Solar power can ease the bind and open the economy for huge investments that would create jobs and take millions of idle criminal hands off the streets.
The only thing keeping solar power from the reach of Nigerians is the atrociously high cost of equipment which import tariff contributes immensely to.
Britain’s unsolicited advice on solar energy tariff came just after the recent grim verdict of the World Bank on Nigeria’s collapsing power sector.
The World Bank report depicted Nigeria as the country with the highest number of people without access to electricity in the world. Like it did to India on poverty in 2018, Nigeria ingloriously replaced DR Congo, Africa’s home of internecine insurgency, as the country with the world’s highest number of people without access to electricity.
The World Bank report depicted Nigeria’s power sector as seemingly rudderless and incapable of changing its retrogressive trajectory. It showed that Nigeria accounts for 10 per cent of the people in the world without access to electricity.
Electricity generation, transmission and distribution is something of rocket science to the rulers of Nigeria. No one knows how to overcome the jinx. The power privatization of November 2013 is a colossal failure.
The power distribution companies (DisCos) are so financially distressed that they are at the root of the industry’s catastrophic debt contagion. In 2020, the power generation companies (GenCos) supplied power worth more than N700 billion to the DisCos.
The DisCos sold everything to consumers and collected well over N500 billion but remitted just above N200 billion to the GenCos. The indebtedness of the DisCos is responsible for the heavy debt of GenCos to gas suppliers.
While the GenCos have toiled to raise their installed capacity to 12, 000 megawatts (mw), and could wheel 8, 000mw to the national grid at any given time, the Transmission Company of Nigeria (TCN), can only laboriously transmit just about 5, 000mw to the DisCos for distribution to consumers.
If TCN that is fully owned by the federal government is so poorly equipped to handle the transmission of power, the DisCos which are private firms are even in more advanced stage of financial asphyxiation.
The DisCos are so broke that they cannot rehabilitate the archaic distribution equipment they inherited from PHCN. Consequently, they repeatedly reject the miserable power wheeled to them by the GenCos because of the parlous state of their distribution equipment.
The DisCos are apparently the weakest link in Nigeria’s crumbling power chain. Since a chain is as strong as its weakest link, it therefore follows that Nigeria’s power sector is as strong as the DisCos.
The massive investment of the GenCos that have raised installed capacity to 12, 000mw is a colossal waste because the DisCos with their archaic distribution equipment dictate the pace of development in the industry.
The World Bank report of last month emphasised that epileptic power supply is largely responsible for the lethargic growth of Nigeria’s economy and its consequent infamous role as the world’s headquarters of poverty.
Nigeria toils to supply a scant 4, 000mw to a population of 207 million when South Africa generates 40, 000mw for just above 50 million people. The difference is so glaring. Nigeria’s per capita electricity consumption is one of the lowest in the world. That is an apparent reflection of the pace of economic growth.
The report showed that Nigerian businesses lose $29 billion (about N12 trillion) annually to power failures. That is a modest assessment of the damage done to the economy by Nigeria’s eternal darkness.
The World Bank did not bother to calculate what Nigeria spends annually in importing petrol and diesel to power an estimated 64 million private power generators that account for 60 per cent of Nigeria’s power supply.
Nigeria National Petroleum Corporation (NNPC) claims that daily power consumption has risen to 72 million liters. NNPC blames the huge surge on smuggling of refined petroleum products to Nigeria’s diminutive neighbours to the west.
While NNPC is known for deviously exaggerating petrol consumption, the state oil monopoly has probably forgotten that at times like this when public power supply remains largely on stand-by, the estimated 64 million private generators take a huge toll on the nation’s petrol supply. They probably account for a reasonable chunk of the surge in daily consumption.
Nigeria’s economy would boom the day someone could supply power for 20 hours a day. Millions of Nigerians would create jobs for themselves if public power supply improves.
The federal government can ease the burden of the GenCos and cash-strapped DisCos by taking steps to reduce the cost of solar equipment to enable Nigerians develop their non-grid power source.
Surging inflation is persistently pushing the cost of solar equipment out of the reach of the country’s diminishing middle class. The medium size solar battery that sold for N35, 000 last year, now sells for anything from N55, 000.
The price of solar panels and inverters have doubled as well because of the massive depreciation of the naira. The cost of installing solar panels, 3.5kv inverter and four units of 100watt batteries for a three-bedroom bungalow now stands menacingly at N1 million. That explains why very few people bother to switch to solar despite the huge convenience of generating power without noise and the cost of fuel.
Thousands in the middle class would switch to solar if the cost of installing a 3.5kv equipment drops to N500, 000. The federal government can achieve that feat by adhering to the unsolicited advice from the British government.
Ironically speculations making the rounds suggest that government might be protecting the investment of its cronies in the generation and distribution arms of the defunct PHCN with massive tariff on solar equipment.
Government can debunk those speculations by heeding the advice of the British government and waiving import duty on solar equipment.
