Monday, October 31, 2016 11.13 AM / Adewale Ajayi / KPMG
Nigeria, adjudged the most populous country in Africa, is faced with increasing pressure on the existing natural resources, which has created a virtual and persistent resource supply deficiency. In addition to the growing population, the poor utilization of technology and inefficient resource management techniques are other factors responsible for the resource deficiency. This issue has given rise to other environmental challenges, such as high levels of air pollution, deforestation / desertification, flooding and erosion.
For example, it is estimated that less than 50% of the total population have access to electricity and potable water. Many rural areas, and a few urban cities, are not connected to the national electricity grid.
As part of efforts to address the supply deficiency and its attendant environmental challenges, the Government has identified the development and deployment of sustainable technologies as a key driver. Increasingly, the Government is developing plans, strategies and framework around this sector.
Globally, the following industries/sub-sectors are considered as part of the sustainable technologies sector:
Despite the significant potentials, the sustainable technologies sector is largely undeveloped in Nigeria. In fact, there is no formal structure/framework in place (as at the time of compiling this guide) for the development of some sub-sectors. The key focus of Government at this time is on the renewable energies subsector, especially with respect to improved power generation.
As noted above, this sub-sector is the key focus of Government as far as the sustainable technologies sector is concerned. In 2003, the Federal Government of Nigeria (FGN) approved the inclusion of renewable energy as part of the Nigerian National Energy Policy4 and in 2006, launched the Country’s Renewable Energy Master Plan, which identifies considerable potential for generating solar, mini and micro hydro power, biomass, biogas and wind energy across the country.
In 2013, the Government launched a project called ‘Light-up Nigeria’, which aims to provide electricity through renewable energy sources to 232 local government areas (representing about 30% of the total local government areas in Nigeria. The FGN has also invested in research and development activities and strategic partnerships with some foreign donor agencies and companies to develop this sector.
Nigeria’s renewable energy sources include solar energy, wind energy, geothermal, biomass, tide and wave energy. However, for electricity generation, the Government’s priority is on the development of hydropower, wind power, and solar (photovoltaic solar power plants and concentrated solar power).
In order to promote investment in the area of renewable energy, The Nigerian Electricity Regulatory Commission (NERC), an independent regulatory agency mandated to regulate and monitor the Nigerian power sector (see appendix 1) has proposed attractive incentives such as a guaranteed market for renewable energies, simplified licensing process, land access and most importantly, a feed-in- tariff that is robust enough to allow for project sponsors/operators to recover their investments over a period of time. Another attractive incentive in effect is the complete import duty waiver for parts required for power generation.
According to International Renewable Energy Agency, Nigeria’s renewable energy targets are:
The above is an excerpt from the Sustainable Technologies Sector Guide
About the Author:
Adewale Ajayi is a Partner, Tax, Regulatory & People Services at KPMG Nigeria. He can be reached vide Tel: +234 803 402 1014 and E-mail: email@example.com
1. Sustainable Technologies Sector Guide – Jun 2014