Minister Adelabu: Commercialize Electricity Supply To Cut Nigerians’ N20tn Annual Generator Costs
The Minister of Power, Chief Adebayo Adelabu, yesterday said that full commercialisation of the electricity supply industry will ensure the growth of the sector, stressing that Nigerians spend up to N20 trillion annually on fuel and the servicing of generators.
Adelabu, who spoke at the ongoing Nigerian Oil and Gas (NOG) Energy Week in Abuja, said that this huge amount is opposed to the about N1 trillion spent on grid electricity annually.
The power sector, he said, will require over five times the revenue that it currently utilises in the domestic gas market to achieve 70 per cent gas-powered electricity generation.
He argued that no matter how expensive grid power looks, it is still cheaper than self-generation, using petrol or diesel generators, according to a study recently carried out.
The minister stated that presidential approval has been granted to resolve the legacy debts to generation companies and gas supply companies, explaining that that settling this 100 per cent will go a long way to incentivise generation and gas companies to continue to render their services.
He stated that while Nigerians spend N1 trillion of their revenue on grid power, however, their overall spending on generators, on diesel, on petrol, was close to N20 trillion annually.
He added: “Even if it’s just a quarter of that is put in the official grid, we are talking about incremental revenue of N5 trillion, that would maybe make it N6 trillion”
He stated that the federal government was working to restore confidence in the grid rather than in self-generation, insisting that grid power remains the cheapest source of electricity.
He stated that while Band ‘A’ customers pay about N206 per kilowatt hour, using gas will take it to N290 per kilowatt hour, while those using petrol generator will pay N450 and the use of diesel could cost up to N950 per kilowatt hour.
“So, it (grid) is still the cheapest, the most efficient, and the least cost for our productive activities. I believe that everybody should come together to ensure that we have a national grid that is attractive to electricity users.
“Our country boasts abundant resources, particularly solar, wind, and hydro energy, providing a remarkable opportunity for sustainable growth,” he said.
He pointed out that the renewable energy market has grown tremendously in the last decade with over $1 billion leveraged by multinational developments such as World Bank and others.
He explained that Nigeria was discussing the advantage of some investors to bring in some utility-scale level of solar energy sources which is about 3,000mw, as demonstrated by the recently completed $550 million Nigeria electrification project.
“In line with the Nigeria Energy Transition Plan vision 30:30, which seeks to achieve 30GW by the year 2030, our energy mix is projected to be 70 per cent (or 21GW) thermal source (most likely gas considering the country’s gas potential) and 30 per cent (or 9GW) renewable source.
“The power sector would require over five times what the industry currently utilises from the domestic gas market to achieve our 70 per cent thermal energy target with gas-powered generation. Additional investments would be needed to increase the country’s gas production to achieve this level of gas supply to the power sector without compromising the export obligations.
“To this end, I call on the investors here today to strongly consider the investment in the further development of gas production in the country, especially our abundant unexploited Non-Associated Gas reserves.
“To briefly spotlight the federal government’s recognition of the need for adequate liquidity in the Nigerian power sector to catalyse the much-needed investments across the value chain, the government recently introduced a cost-reflective tariff for the sector’s most served grid-tied customer segment.
“ In addition, presidential approval was granted to resolve the power sector obligations to defray legacy debts to generation and gas companies. These actions speak to the government’s commitment to allowing efficient gas supply for the Nigerian power sector and ensuring there’s a clear line of sight for investors to recoup their investments in the country,” Adelabu explained.
To achieve Nigeria’s 30 per cent renewable energy target, he urged investors to consider the significant benefits of investing in renewable energy projects in the country.
By channelling investments into the renewable sources, he stated that the country can effectively meet its carbon emission targets while playing a crucial role in combating climate change.
“As demonstrated by our recently completed $550 million Nigeria Electrification Project, investing in renewable energy helps reduce carbon emissions, enhance energy security, and support economic development.
“Additionally, to complement the NEP, the $750 million DARES project would provide electricity to 2.5 million people in Nigeria by deploying solar home systems and mini-grids. These investments will propel Nigeria toward achieving its desired energy mix and transition targets,” he noted.
