Nigeria has many challenges stifling its economic growth, but the endemic epileptic power supply in the country stands out. It is commonplace to see Nigerians without light for days, months, and surprisingly even years. On a graver and grander scale, about 85 million Nigerians (43% of the population) do not have access to grid electricity, according to the World Bank, making it the country with the largest energy access deficit globally.
With such poor power supply and a wide energy gap, generators have become a saving grace for Nigerians to run many of their daily activities, from things as basic as charging to running their businesses. These generating sets come in different sizes and prices. And the low-cost ones, called I better pass my neighbour, often with low capacity, cost upward of N60,000. Slightly bigger ones could range from 100,000 to an upward cost of 600,000 depending on the capacity and brand.
A few years ago, this must-have energy source was not so exorbitant. But inflation figures and the cost of importation has turned the tide of cost. With an inflation rate of 18.55% in 2016, the low-cost generator was about N15,000. But with Nigeria’s current headline inflation at 21.34% as of December 2022, the present price is not surprising.
Despite the soaring cost, the purchase rate is on an upward trajectory. In 2020 and 2021, for instance, Nigeria spent a whopping $5.26bn to import generators and other electrical machinery and equipment. Even the Nigerian Electricity Regulatory Commission (NERC) generated close to N1 billion from just fees collected from importers of generators within a year. These figures may not lessen any soon.
According to the International Renewable Energy Agency’s (IRENA) recent report, 84% of urban households use backup power supply systems such as fossil diesel/ gasoline generators, while 86% of the companies in Nigeria own or share a generator. This intensive and widespread use culminated in making Nigeria the highest importer of Premium Motor Spirit (PMS) and diesel generators in Africa as of 2022.
This is not Nigeria’s first time earning this infamous title. In 2010, Nigeria maintained the lead among African countries in the import of generating sets which cost about $103.1 million in the first six months of the year.
The government understands the loss attributed to the use of generators, so it prohibited the importation of small electricity generating sets, popularly called: ‘I Better Pass My Neighbour (IBPMN), due to air pollution and associated health problems in 2015. Obviously, the ban was ineffectual, as Nigerians still use the low-cost gen. Subsequent efforts have been made until 2020 to enforce the ban, but it has always proved abortive. You may ask why?
History has shown that Nigeria has a problem with implementing policies. So it is not always surprising when the government creates policies but never implements them. Many have attributed the futility of the ban to people at the helm of affairs. These big guns have licenses to import generators, so they sabotage the ban to protect their interest. This has also been pointed out as why the power sector has continued to struggle despite the billions of dollars pumped into it by different administrations.
Despite the privatization of the sector in 2013, expected to herald a positive transformation, the Nigerian power sector continues to perform abysmally. Ten years after, the “Giant of Africa” is yet to generate up to 6000MW for its over 200 million citizens. Also last year, the National grid collapsed at least seven times, causing blackouts across states. This has resulted in households and small and medium-sized enterprises spending more on kerosene, fuel and diesel to power generators.
Counting the cost
Nigeria’s erratic power supply systems and the relatively expensive generators are unsustainable from an economic and environmental stance.
First, the over-dependence on generators as an alternative energy source makes it difficult for businesses within the economy to run efficiently. For instance, fuel scarcity has lingered in Nigeria for over two months, putting pressure on businesses reliant on it to run their daily activities. Already, Nigerian households and businesses spend a whopping $22 billion annually to fuel generators powering their homes and business.
Because of this high cost of power generation, businesses are constrained to pass the accrued cost over to customers. “In industry, government figures suggest that the cost of self-generating power makes Nigerian products approximately one-third more expensive than imports.” IRENA report reads.
On an environmental level, there is an interconnectedness between the use of generators and climate change. As more people use generators, fossil fuels are consumed, thereby releasing greenhouse gases and other pollutants into the atmosphere. Little wonder Nigeria is home to some of the world’s most polluted cities, and at a time, Onitsha was the city with the world’s worst air. Largely, over-reliance on fossil-powered generators constitutes a critical threat to the nation’s climate change plans. Based on the current trajectory, greenhouse gas emissions are expected to rise from 11.9 million tons to 17.1 million by 2030 from generator usage alone if nothing changes. Nigeria has an ambitious plan to achieve net zero gas emission by 2060, but realities like this may tarry this target.
Looking up to renewables
As Nigeria continues to struggle to meet the energy demands of its citizens, renewables are touted as one of the ways to bridge the energy supply gap and drive sustainable development, especially for disadvantaged groups. Luckily the country is well endowed with renewable energy sources such as solar, hydropower, biomass and wind. But they are underexplored.
Nigeria has set a lofty 30:30:30 vision which aims to achieve 30GW of electricity by 2030, with renewable energy contributing 30 per cent of the energy mix. While Nigeria is still several miles away from achieving this, there have been commendable efforts.
Under the Nigeria Electrification Project, over four million people have been impacted through solar mini-grids and solar stand-alone systems. Additionally, hydro projects, including the Zungeru hydropower project, expected to add 700MW capacity to the grid, are nearing completion.
The race to embrace renewable energy on a large scale in the country is not unchallenging, and finances are needed to propel its adoption. Nigeria’s Energy Transition Plan requires US$1.9 trillion in spending up to 2060, including US$410 billion above business-as-usual spending. That translates into roughly $10 billion annually to bridge the financing gap.