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Energy

How Nigeria’s power outages may boost off-grid renewable energy growth

The need for reliable power supply has risen with the coming of COVID-19 and the need to work remotely.

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Abuja, Ikeja Discos top list in collection efficiency in Q1 2020- NERC, Estates in Lekki increase electricity tariff to N105/kWh, Eko Electric, Ikeja and 5 others to face NERC sanction for non-compliance, CBN reveals framework for financing National Mass Metering Programme (NMMP), Nigeria ranks eight African country with well-developed electricity regulatory frameworks, as Uganda tops.

The news headlines over the past few weeks have revealed the Nigerian power sector’s struggle to deliver power to consumers. For a country supplying significantly less than the required base amount of 1000MW per 1 million population on its best day, being unable to supply up to its typical 4, 000MW certainly puts considerable strain on consumers dependent on the state utility, especially households.

The recent challenges, although not new, have been the inability of distribution companies (DISCOs) to take power wheeled to them, thereby leading to idling generation capacity by the Generation Companies (GENCOs) on one end and insufficient power available to the consumers at the other. Interestingly, according to the NERC Guidelines on implementation of Economic Merit Order Dispatch and Other Related Matters, even without taking the power, the DISCOs are required to pay for capacity charge to NBET- a cost that will no doubt be passed on to consumers for power they are not taking.

READ: FG set to create at least 5 million jobs for youths in the power sector – Minister of Power 

Only earlier in the month, the Odukpani (NIPP), Geregu I, Afam IV&V, Geregu II (NIPP), and Rivers IPP were affected by this load rejection, with up to as high as  1952.5MW generation capacity unused. The Shiroro and Jebba hydropower plants also suffered this fate. It is even more unfortunate that this unused capacity equates to the amount of power on the average required to power at least 2 million homes.

About two weeks ago, the Abuja Electricity Distribution Company (AEDC) and the Transmission Company of Nigeria (TCN) traded blames as to who was responsible for the blackouts in Karu, FCT and Lafia in Nasarawa State. This blackout also affected customers in Nyanya, Mararaba and Keffi, amongst others. Last week also saw a significant drop in electricity generation to 3, 657MW, going below the 4, 000MW mark. Around the same time, while Nigerians complained bitterly of blackouts in various areas, the DISCOs still rejected a total of 5,452.96 megawatts of electricity in that week alone.

READ: Nigeria to fix irregular power supply in 40 years- Senate

Significant infrastructure issues continue to affect delivery of power supply to customers, yet the irony is that customers are now paying what has been termed “service reflective tariffs.” The National Secretary, Nigeria Electricity Consumer Advocacy Network, Uket Obonga, speaking on the infrastructure issues, quipped, “Between Abuja and Kaduna, the DISCO in Kaduna cannot take its allocated load because the transmission infrastructure there that links Abuja and Kaduna cannot transmit the load.”

These fluctuations in utility power supply continue to pave the way for solar power, particularly for households, companies and small industries. With the high cost of petrol and diesel and the unreliability of utility power, it is becoming cost-effective for consumers to consider renewable energy options.  According to one World Bank research, self-generation in Nigeria is extremely prevalent- up to nearly 14GW of power.

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READ: Daystar plans to raise $100m for West African solar projects

This significant self-generation potential creates a massive opportunity for renewable energy developers. The need for reliable power supply has risen with the coming of COVID-19 and the need to work remotely. Many workers, who previously depended on workplace power supply to charge their gadgets and work, now have to provide their own power supply- often through generators- while having to pay outrageous bills for utility power that is barely delivered. As a result, many households are looking to renewable energy as a viable alternative.

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In one market survey by AP news, Sandra, Besong, a government clerk in Nasarawa State had indicated that powering a small generator for two or three hours a day cost her up to 7,000 naira a month, compared to 4,500 for solar, which provided her double the time. At first, the typical conversation around solar was that it was too expensive, but with reducing costs globally and opportunity for local production of solar panels and other equipment, solar alternatives are becoming very attractive – this is added to the fact that there are no noise or air pollution concerns as with petrol and diesel generators.

READ: Estates in Lekki increase electricity tariff to N105/kWh

The Nigerian government recently established an Economic Sustainability Committee to deliver power to 25 million Nigerians who lack access to the national grid. In line with that, the government recently launched the “Energy for All” program, with the aim of providing 5 million households with solar power over the next 12 months.

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The $369 million project will channel funds into the solar energy space and effectively reduce costs of solar, making it even more attractive. This would be boosted further by the inclusion of local assembly and manufacturing of solar equipment in the country under the initiative. With this initiative, more investors will be looking to play in the renewable energy space- also considering the VAT exclusions for certain solar equipment under Nigeria’s fiscal laws.

According to one World Bank report, “With more than 80 million Nigerians living without electricity, the opportunity for off-grid solar investment is great.” The Energy Commission of Nigeria has highlighted too that the household sector accounts for the largest share of energy usage in the country – about 65%. This means that with recurring power outages, and positive moves by the government to boost the renewable energy sector, market forces will sooner than later drive consumers – and investors – in the direction of off-grid renewable energy.

Caleb Adebayo is an LLM Candidate, Energy and Environmental Law at New York University School of Law. His interest lies at the intersection of Energy, Environment and Finance and he is keen on the interplay between Law, Policy and Energy Markets. Prior to taking up his LLM, he worked on the Energy team of a tier 1 Nigerian law firm. A nominee for The Future Awards Prize for Lawyers, he has written widely on the subject of Energy and Environmental Law. He is also a member of the New York City Bar Energy Subcommittee

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Business News

Power Minister explains why power outages have risen

The Minister cited a breakdown of some National Integrated Power Plants supplying electricity to the national grid as being behind the recent power outages.

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The Minister of Power, Engr. Sale Mamman explained why power outages have increased in Nigeria citing a breakdown of some National Integrated Power Plants supplying electricity to the national grid.

The Minister disclosed this in a statement on Thursday morning, assuring Nigerians that the FG is working assiduously to restore the National grid to its previous historical levels and exceed that.

READ: Despite $1.6bn investments, Nigeria’s national grid still worrisome

What the Minister is saying

  • I sincerely regret the recent power outages across the Nation and the difficulties it has brought with it.
  • The problem is caused by the breakdown of some National Integrated Power Plants supplying electricity to the national grid. The plants are namely, Sapele, Afam, Olonrunsogo, Omotosho, Ibom, Egbin, Alaoji and Ihovbor. The Jebba Power Plant was shut down for annual maintenance.

The Minister added that seven power plants are currently experiencing gas constraints including Geregu, Sepele, Omotosho, Gbarain, Omuku, Paras and Alaoji while Shiroro hydroelectric power plant has water management issues.

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Business News

BUA Group, French company announce progress in 200,000 bpd refinery project

This is coming about 6 months after both firms signed an agreement for the supply of process technologies and the design of the facility.

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The BUA Group and Axens, a French-based petroleum technology company, have both signed a progress acknowledgement statement for the proposed BUA multi-billion-dollar integrated 200,000 barrels per day refinery in Akwa Ibom State.

This is coming about 6 months after both firms signed an agreement for the supply of process technologies and the design of the facility.

BUA, while making the disclosure in a statement on Wednesday, April 14, 2021, said that the French President, Emmanuel Macron, commended its Chairman, Abdul Samad Rabiu, for his commitment to developing lasting relationships between French and Nigerian businesses.

READ: What the $1.5 billion Port Harcourt refinery deal means to us – Maire Tecnimont

The statement said that this came as the French Minister for Foreign Trade and Economic Attractiveness, Franck Riester, paid a visit to the BUA Group Headquarters in Lagos where he handed over a personal invitation from Macron to Rabiu to attend the Choose France Summit in June in Paris representing business leaders from Nigeria and Africa.

The French minister also witnessed the signing of a progress acknowledgement statement between BUA Group and Axens of France for the proposed refinery project, according to the statement.

The statement also said that during the visit, it was announced that the BUA chairman had been appointed Chairman of the France Nigeria Investment Club.

READ: FG reacts to reports of revoking 32 refinery licenses

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While thanking the minister and Macron for their unwavering support in bringing BUA and French businesses together, Rabiu said BUA had so far initiated partnerships and had developed personal relationships with a few French businesses, including Axens.

He expressed confidence in the quality of expertise and technical know-how of the French companies BUA had partnered with.

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Rabiu pointed out that the BUA refinery would reduce the huge cost of transporting Nigerian crude offshore, refining it and bringing it back into the country when fully operational.

READ: Abdulsamad Rabiu’s stake in BUA Cement has increased by N1.2 trillion in value since listing in 2020

He said that the choice of Akwa Ibom for the refinery was due to the huge availability of raw materials and its proximity to export petroleum products to regional countries.

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The President of Axens, Jean Sentenac, in his statement, said he was pleased that the project was advancing on schedule and expressed delight for the very good cooperation between all the involved parties, reiterating the commitment of Axens in delivering the BUA Refinery Project on time and with the highest standards.

READ: FG to open LPG distribution channels in all local governments

Bottom line

The completion and take-off of the refinery owned by the BUA Group would come as a huge boost for the Federal Government’s effort to stop the importation of refined petroleum products, ensuring that the country becomes a net exporter of these products.

This will also help to conserve the scarce foreign exchange as the completion and take-off of the Dangote refinery and other similar refinery projects will help ensure self-sufficiency in the country.

The BUA Group, just a few days ago, was listed as one of the companies with an active refinery license from the Department of Petroleum Resources (DPR).

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