By Prince OKAFOR

The problem of paucity of resources for investment in the power sector seem to be on the rise as the 11 Distribution Companies (DISCOs) appear to be unattractive to new investors, due to unfavourable pricing environment.

This is coming up even as the Discos are clamouring for a tariff increment to N70kWh, about 218 percent from current rate of N22kWh.

Energy

According to the Chief Executive Officer of Community Energy Social Enterprise Limited, Dr. Patrick Tolani, (a company that works on how to deploy solar energy to communities in Nigeria) “Under the current arrangement, Government was meant to subsidize the supply to rural communities, but government has never honoured that obligation.

Under the current tariff regime the rural consumers are supposed to pay N6kWh.

But Tolani said that with current realities, “it is not logical for any of the Discos to extend their services to the rural communities. The Discos are supposed to develop their Five-Year expansion plans; but none of them is doing anything along that line.”

Tolani who is also a Partner in the Law Firm called Vale Partners in Lagos, specializing in Energy Law, also told Sweetcrude that “The sector is in a serious state of quagmire. Any investor knows that for the sector to be able to attract investment either in the form of equity or debt, the pricing must be in the region of about 18 cents although the Council on Power recommended 10 cents.  If you convert the 10 cents into Naira value, that is about N45kWh.

“While the request does not sound bizarre or out of place; the big question is: can the market absorb such a tariff regime at this stage?  Can the Nigerian consumers accommodate such tariff increment at this time?”

He lamented that, with a population of about 160 million people, the country is still battling with power generation of less than 4,000megawatts (mw) which is about 20 percent of its population, whereas, we should be having nothing less than 20, 000mw just to satisfy the basic energy needs of the populace.

“It is true that, indeed, renewable energy can be the quickest way to tackle our energy crisis; but in all honestly, I believe we need at this stage to look at the whole sector holistically.

“As a matter of urgency, we need more power generation from all the different sources:  gas, hydro, thermal sources, renewable sources and any other source that might be available to the country for now.  My only no-go area is the nuclear sources, which, I am afraid; we might not be able to manage because of its complexity.

“Renewable energy does not need huge transmission and distribution infrastructure which is actually the biggest issue facing the sector today. Our transmission infrastructure is not just obsolete; it is equally inadequate.

“With renewable energy, we can decentralize our energy delivery to communities and individuals. This does not require a lot of investment. We don’t need huge outlay of pipelines or transmission lines that can be compromised by vandals leading disruption in supply and huge maintenance cost.

“It is possible to also decentralize ownership of energy assets across communities. This will help to achieve sustainable outcomes and security of assets.  In my opinion, Independent Power Projects (IPP) would also be helpful in bridging the supply gap. This can involve aggregate community as well as foreign investors into sector,” he noted.

On Mini-Grid utilization

On utilization of mini-grid Tolani stated: “We must admit that the economic reality in the country does not favour the rural communities. Rural communities stand to benefit from mini-grids primarily because they will have access to power to be able to do their farm and other activities. Communities with remote chances of having access to electricity can now enjoy supply every day.

He stressed that, Mini-grid deployments are the only way these communities can gain access to electricity supply in the near future.

He stated: “If it is possible to have access to electricity in rural areas and government can also make good their aspiration to develop farm clusters, I believe that young employed Nigerians would prefer to move to those rural communities where they can have better lives and live with all the amenities that are available in the congested urban centres of the country.  Finally, if properly structured, the mini-grids can also be co-owned by the communities.”