Nigerians spend approximately N30 trillion each year on self-generated, off-grid electricity due to inadequate public power supply, according to Minister of Power Adebayo Adelabu.
According to THE NATION, Adelabu highlighted this staggering expenditure while addressing the 2024 Nigerian Oil and Gas (NOG) Conference in Abuja on the topic “Navigating Nigeria’s Pathway to Achieving Energy Security Sustainability on the Journey to Net Zero.”
The minister underscored the need for reforms and significant investments in the national grid system to ensure stable electricity supply and reduce the reliance on costly self-generated power.
He illustrated that the nation could save more than three-quarters of this annual spending by increasing investments in the national grid, which would boost public power supply revenue to N6 trillion and guarantee stable power.
In stark contrast to the enormous amount spent on self-generated electricity, the entire annual revenue of the Nigerian Electricity Supply Industry (NESI) in 2023 was approximately N1 trillion.
This discrepancy underscores the inefficiencies and challenges plaguing the nation's power sector.
Adelabu noted that in 2023 alone, a total of N16.5 trillion was spent on diesel, petrol, and the servicing of power generators.
He stated, “If you know how much people spend buying diesel, buying petrol, buying generators, servicing them in a year... The last study we had in 2023, a total of N16.5 trillion was spent on diesel in power generation. Even a number of the industries are off the grid. So spending in the sector off the grid is close to N30 trillion. The revenue for the entire industry, the grid, and the entire power sector was just N1 trillion for 2023; all that went to generation companies, transmission company, and the distribution.”
Adelabu stressed that diverting even a quarter of the off-grid expenditure to the official power sector could result in an incremental revenue of N5 trillion, thereby increasing the sector’s total revenue to N6 trillion.
This, he argued, would significantly contribute to achieving an uninterrupted 24/7 power supply across the country.
Adelabu also highlighted the restored confidence in the sector, noting that manufacturers who had previously disconnected from the national grid have been reconnected, recognizing that the 'Band A' tariff is cheaper than private electricity generation.
He cited that 'Band A' customers are now enjoying uninterrupted power supply, with the tariff at N206/kwh, compared to electricity generation costs of N290/mwh with gas, N450/mwh with petrol, and N900/mwh with diesel.
In addition, Mr. Adewale Fayemi of Total Energies urged the Federal Government to establish a commercial framework to ensure that investments in the renewable energy sector are recouped.
Fayemi, represented by Total Energies Explorer General Manager, Mr. Omotayo Hassan, emphasized the importance of a robust commercial strategy to attract and secure investment in renewables.
“We need to come up with a strong commercial framework that gives investors confidence that allows them to recoup the capital they put into the market with a reasonable amount of return. That is lacking today,” Fayemi stated.
He noted that 14 solar projects negotiated for the country have stalled due to the absence of such a strategy, which has hindered the addition of 1 gigawatt of renewable power to the national grid.
Total Energies has committed significant resources, approximately $4 billion, to renewables, demonstrating the potential for substantial growth in this sector if appropriate measures are taken to support investment.