By Babajide Komolafe
The International Monetary Fund, IMF, has advocated $49 billion investment in Nigeria’s power sector to ensure adequate power supply for the country by 2030.
The IMF stated this in a report on Nigeria titled, “Additional Spending towards Sustainable Development Goals”.
The IMF said that while Nigeria has made some progress in terms of access to electricity, with the share of population with electricity access increased from 40 percent in 2015 to 54 percent in 2020, the country’s electricity consumption still amounts to about half of what would be expected at its current level of Gross Domestic Product (GDP) per capita.
“The electricity supply chain—generation, transmission, and distribution—faces substantial challenges due to years of underinvestment. Only 7,500MW of the 13,500MW on-grid installed generation capacity is functional.
“Transmission is the system’s bottleneck, dispatching 50 percent below its nominal capacity—less than 4,000MW is end-to-end operational through the grid. Of this, about 10 percent of on-grid electricity demand is unmet,” the IMF said.
Highlighting the need for huge investment in the power sector to address the above challenges, increase access and keep up with population growth, the IMF said: “Between 2018 and 2030, the population is projected to increase from 196 to 263 million.
“In this period, GDP per capita in U.S. dollars is projected to increase marginally. Electricity consumption per capita is estimated to grow from 348 kWh in 2019 to 635 kWh by 2030 driven by increased access (Figure 9).
“To expand installed capacity by 22.4GW, at a unit cost of $2,184 per kW (including generation, transmission, and distribution costs), Nigeria will have to invest an aggregate of $49 billion in 2020–30, which on an annual basis is equivalent to one percent of GDP, including replacement costs”.
The IMF however advised that in the short term, efforts to rehabilitate and upgrade generation and transmission capacity should be a priority.