Wednesday, November 04, 2020 / 09:35 AM / by FBNQuest
Research / Header Image Credit: Nigeria Sun
Power shortages remain a prominent infrastructure gap in Nigeria.
Substantial expansion in quantity, quality and access to infrastructure
services, especially electricity, is fundamental to rapid and sustained
economic growth, as well as poverty reduction.
According to the federal ministry of power,
Nigeria's installed grid power generation capacity has grown from 8,000MW to
13,000MW. However, the distribution capacity is 5,000MW. For businesses located
in Nigeria, self-generation places pressure on operating expenses. Household
wallets are also significantly affected by the same expense.
Nigerians spend an estimated
US$14bn a year on purchasing and fuelling small-scale generators.
on the electricity generation statistics released by the Association of Power Generation Companies (APGC), the power sector
recorded a generation capacity loss of N243bn from January to October this
year. The loss is primarily due to gas supply and grid infrastructure challenges.
According to the Transmission
Company of Nigeria, the power sector recorded national peak generation of
5,520MW on 30 October.
Prior to the Covid-19 pandemic
the power sector had many issues: the virus has only made them more glaring.
The impact of the pandemic is most felt by electricity distribution companies
in terms of the inability of customers to pay their bills.
Due to the closure or
scale-down in operations, there is reduced energy consumption by commercial and
industrial customers, who cross-subsidize the power industry with their higher
tariff. However, there is increased energy demand for residential consumption.
We understand that the FGN
plans to inject N198bn into various capital projects in the power sector across
Nigeria in 2021. This was disclosed in the 2021 appropriation bill.
The breakdown shows that the
Nigerian Electricity Regulatory Commission plans to invest N294m on capital
projects, and the Nigerian Electricity Management Services Agency an additional
Meanwhile, the allocation for
the total overheads of the entire ministry and its agencies is N1.16bn.
There are growing opportunities
with off-grid, particularly within the rural economy via electrification.
Solar can provide relatively affordable energy for rural communities.
Additionally, it complements the rapid development of small-scale industries.
Industry sources suggest that
standalone solar home systems and mini-grids could provide modern energy access
to over 88 million Nigerians by 2030. This would ease pressure on generator set
expenses for businesses and households.
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