Inside Abuja

Addressing electricity gaps with solar intervention

The Central Bank of Nigeria (CBN) has embarked on disbursement of N140 billion intervention fund aimed at domesticating renewable energy technology in the country. REGINA OTOKPA reports

 

Epileptic power supply and low voltage is fast becoming a norm in most parts of Abuja, especially in places such as Kubwa, Wuye, Lugbe, Utako, Karu and other satellite towns of the Federal Capital Territory.

 

When the Abuja Electricity Distribution Company (AEDC) announced there would be power interruption in some parts of FCT for eight hours on Saturday, they said it was to enable the Transmission Company of Nigeria (TCN) carry out maintenance on its Apo substation. Some residents wasted no time in taking to their Twitter handles to express their dissatisfaction over the persistent power cuts.

 

A twitter user living at Lugbe with the handle @ezrabs1 had noted, “Please restore our light at CRD FHA Lugbe, we have been out of power for the past three days. This is just pure wickedness.” Another resident at Jikwoyo with the handle @NomsoEkejiuba lamented,

“While the outage affects everyone, I believe some areas are the sacrificial lambs. Jikwoyi feels the heat more than these places mentioned. Since Monday I’ve only seen light once and it was midnight.”

 

The AEDC in its response to the hundreds of complaints from residents on a daily basis across different parts of the FCT, keeps apologising for the prolonged power supply attributed to a drop in the load allocation due to “the current low supply of electricity to inadequate generation by the generating companies,” with assurances stable electricity supply would soon be possible.

 

According to the Central Bank of Nigeria (CBN), Nigeria has the largest energy access deficit in the world, as 85 million Nigerians representing 43 per cent of the country’s population, do not have access to grid electricity. Little wonder the 2020 World Bank Ease of Doing Business report, ranked Nigeria 171 out of 190 countries on access to electricity.

 

Sadly, this lack of reliable power results to an annual economic loss estimated at $26.2 billion (N10.1 trillion), which is equivalent to about 2 per cent of the country’s Gross Domestic Product (GDP), following the strain on citizens and businesses especially small and medium scale enterprises.

 

Despite the bleak situation there is hope as Nigeria has started the disbursement of a N140 billion intervention facility by the CBN to domesticate renewable energy technology and leapfrog mini-grid solutions to reduce the gap in access to electricity in the country.

 

The CBN would make funds available to the private companies in the solar power subsector involved in the manufacture, assembling, installation, servicing of the solar systems, at rates ranging between 5 to 10 per cent.

 

INSIDE ABUJA checks revealed that the intervention aimed at providing five million solar home systems in under-served and off-grid communities across the country, is also expected to complement the Economic Sustainability Plan (ESP).

 

Besides creating about 250,000 jobs and an additional N7bn increase in tax revenues per annum and $10million in yearly import substitution, government had targeted reduction of greenhouse gas emission by 20 per cent by 2030 through the plan.

Speaking to INSIDE ABUJA, the Executive Director, Rural Electrification Fund, Sanusi Ohiare noted that government was working assiduously and was making remarkable progress through the N140 billion CBN fund. He stressed that the aim was primarily to encourage local developers in the renewable energy industry.

 

“Getting loans in naira denominated fund has been an issue because getting fund outside the country comes with foreign exchange problems.

“We have already disbursed to a few developers and we are hoping that going forward we can scale up the disbursement so that we can manufacture renewable energy components and provide electricity through mini-grids and solar.”

 

However, the development has generated mixed reaction from stakeholders with majority believing that the N140 billion facility remains a leeway to the projected national energy plan, given the high rate of rural to urban migration, challenges threatening food security and ineffective healthcare services.

 

Some stakeholders are also insisting that the move could domesticate technical capacity by increasing local content in the mini-grid solar value chain thereby reducing importation of renewable energy components.

 

Also, there are indications that the facility could reduce the challenges of dollar denominated loans for companies operating mainly in naira, and could provide energy access to farmers and farmland thereby reducing the challenges of food insecurity.

 

According to Executive Director, International Network for Africa Development (ISNAD-Africa), Adedoyin Adeleke, the N140 billion intervention was the way to go if access to electricity in rural areas must be improved upon.

 

Adeleke, who insisted that the rural communities were in more need of energisation instead of mere provision of electricity to ensure economic diversification, noted that energy technology must be diversified to address the challenges faced by women.

 

He said there is a nexus between energy access and development, which must be understood and applied by the authorities. “The intervention is relevant because there is high development deficit across the country but worst in the rural areas which houses about half of Nigeria’s population.

 

“If the rural communities are still behind, the achievement of universal electricity will remain challenging. Because of the challenges of the rural areas we cannot rely on single approach alone.

 

Rural communities are more like a burden to electricity companies. It is difficult to run infrastructure to all communities. Most of them are not commercially viable,”

 

Adeleke stated. On his part, Special Adviser to the president on Infrastructure, Ahmad Rufai Zakari projected a further ramp up of the off grid this year with the Rural Electrification Agency (REA) fast tracking the plan.

 

“NSIA just announced a N10 billion intervention under Solar Power Naija and we see Solar off-grid connections moving towards new peaks as financing is crowded in through Solar Power Naija and other REA programmes with critical Development Finance Institutions (I.e World Bank and AFDB). Expect multiple commissioning of large mini-grid projects in Universities, Markets and Rural Areas across the country,” he said.

 

But Habeeb Jaiyeola, an Energy expert at PWC, maintained that though the need for intervention remained sacrosanct, especially in the mini-grid, investment in the renewable sector where government intends to generate 30 per cent of the 30,000 megawatts projection by 2030 remained dismal.

 

Expressing concerns over the challenges of bad loans in the power sector given the structure of the loan facility being provided by the CBN, he called for the alignment of power infrastructures to reflect the long energy outlook in the country and a platform to ensure distribution, generation and transmission companies play key roles.

 

“Intervention from government entities like CBN are all required in developing environments like Nigeria but proper integration is required.

There’s a lot of infrastructural investment into that whole architecture.

“However, this intervention has to be in a way that it is able to pay back so that the fund can contribute to the development of other sectors. Also at the end of the day, all of this infrastructure cannot be in isolation, they need to key into a larger power sector plan.

 

“Forex differential is something that continues to play against you, when the narrative becomes unfavorable over time. So it is very good that the fund is coming locally. This development applies across board and not in the power sector alone,” Jaiyeola said.

 

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