PriceWaterhouseCoopers (PwC) Nigeria has rallied stakeholders in the energy sector to chart a course for sustainable power supply in the country at its 12th Annual Power Roundtable with the theme, “Sustainable power supply in Nigeria – what next?”
At the forum, PwC said for the hope of sustainable power to be achieved in Nigeria, there is a need to create an environment that gives the private sector the confidence to invest in the power sector; increased efforts to achieve 100 per cent metering; and a reorientation of the mindset of the populace – a shift from power being considered a public good that the government provides to a service which requires payment, among others.
Pedro Omontuemhen, Partner and Energy, Utilities and Resources Leader, PwC Nigeria, noted that the sector’s very capital-intensive nature means that much is still required to meet the country’s power needs.
Omontuemhen said that from power production to transition and distribution, a lot of funding is required. “The energy poverty in Nigeria can partly be attributed to a lack of adequate funding of the sector. For Nigeria to have stable electric power, the sector needs to be funded adequately,” he said.
Ahmad Rufai Zakari, the Senior Adviser to the President on Infrastructure, said that the government has started a holistic review of policy in the power sector. He said this began with a regulatory and policy alignment that included raising tariffs in a sustainable way, which has helped to eliminate the gap between cost-reflective tariffs and allowable tariffs.
“It is expected that this will incentivise private investors, and particularly drive the Discos to achieve optimisation,” he said.
Zakari noted that the next phase of government intervention is centred around providing the infrastructure that will enable a stable electric power supply. He said the Siemens Presidential Power initiative and credit facilities by the Central Bank of Nigeria (CBN) targeted at the power sector are some of the ways the government is financing this infrastructure.
Ebipere Clark, Special Assistant (Energy) to the governor, CBN, emphasised the need to attract investments into the industry so that the industry pays for itself. He said that currently, irrespective of amounts being generated or distributed, cash is only being obtained for about 1.69GW to serve an industry distributing 4GW and capacity of generating 12.5GW.
Similarly, Adedoyin Adele-Fadipe, CEO of Central Electric and Utilities Limited, noted that players in the industry need to work collaboratively and be creative about exploring solutions to the industry issues, particularly between exploring off-grid collaboration.
Providing insights into the continent’s power and utilities situation, James Mackay, Energy and Infrastructure Strategy Lead, PwC South Africa, pointed out that Africa contributes only about three per cent to global C02 emission, yet the continent is saddled with energy transition and energy poverty.
Mackay noted that Africa’s fossil fuel is worth $15.2 trillion of proven reserves and it is estimated that $6.7 trillion of that would be left in the ground because there will not be a market to buy it due to the energy transition.
He said further that the private sector in Africa must play a critical role in financing and guiding renewable energy initiatives in the continent.
Other takeaways from the forum include that; regulatory and policy alignment has helped the government to bridge the gap between cost and service reflective tariffs versus allowable tariffs; globally, funding for future projects is around the energy transition. However, there is a need to address energy poverty before shifting focus to energy transition in Africa.
The forum also said that judicial reforms with respect to dispute resolution in the power sector are critical as stakeholders highlighted the positives of ongoing projects in the upstream section of the value chain, from cost-reflective tariffs to investment in transmission and distribution networks.
Stakeholders also identified a major bottleneck, which will necessitate unlocking the cash flows across the power value chain; and potentially exploring off-grid solutions where industry players can be responsible for the entire value chain.
This year’s roundtable had notable speakers from across the power and utilities value chain from Nigeria, Ghana, and South Africa with contributions revolving around the need for holistic reforms, accountability, energy transition, infrastructure deficit, metering gap, and energy theft. Others include systemic challenges such as a slow judicial system and payment of investors’ funds.
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