Nigeria says 'Power to the people!'

Posted by Bayo Okoya - Delta Analytics Lagos


Like many working in the oil and gas sector in Nigeria, I am crossing my fingers that much-needed new legislation will be passed in the days ahead. Not only would it provide a confidence boost for the global investment community, but it would sure-up the domestic market and at last allow it to grow. If this miracle occurs and we do pass the PIB, it will be time to turn our attention to the next big issue and channel momentum to it.

It's a shocking figure, but only one in four Nigerian households have access to the established power grid and even those linked up only benefit for a few hours a day. It is widely recognised that insufficient generation and wobbling infrastructure mean that regular blackouts and even load shedding are a familiar and all-too-frequent feature of life for many Nigerians.

We are an innovative people, though, and many have sought alternative arrangements for power provision in homes and businesses in personal fuel options. The few Nigerians who can afford them spend an estimated $0.40/kWh on generators, meaning one of the main expenses of the average household. But even generators only solve half the problem, as burning fuel in homes isn't just expensive, it's unhealthy. The fumes that fuel-powered domestic generators give off can be dangerous, particularly to children.

So last week's news from the Nigerian National Petroleum Corporation (NNPC) that they are working to diversify into the power sector is welcome indeed. In order to do so, the NNPC has recognised the need to bridge the “huge energy gap in the Nigerian market” and, encouragingly, has proactively acknowledged its role in addressing it.

Like many of the best-intentioned plans though, I am not convinced at how serious the NNPC is about delivering this. The announcement was more of a list of intentions, rather than an industrial diversification strategy, with no indications as to a timeline or size of planned investment for helping improve the power situation in Nigeria. So perhaps there is a role that the private sector can play it helping deliver this transition? Local firms, after all, have been proving their worth of late.

We can all agree that the poor condition of the power grid is the result of years of neglecting investments in infrastructure combined with a poor maintenance record for the existing facilities. What's more, the lucrative and abundant nature of oil has rendered the appeal of electricity virtually negligible at both a stage and corporate level. There has been no appetite for diversifying our power network, and now we are paying the price.

Some experts argue that reliable grid power could boost Nigeria's GDP by as much as 14 percent, but we haven't taken into account the cost of updating our transmission network. This is perhaps where I believe the private sector can play a role. I am arguing that the those in business should work with the Federal Government to see if agreements can be reached to provide the state with the expertise and resources it needs to help Nigeria fulfil its energy potential.

I have often advocated for greater diversification in the Nigerian economy, rather than a sole focus on the petroleum industry. The NNPC seems to be thinking ahead of private enterprise in this instance, by understanding that a holistic approach which looks at oil, gas and the energy generation and transmission is the only way to meet Nigeria's energy needs. As oil and gas sector begins to reform at a regulatory and legislative level, perhaps it is time for oil companies to think holistically as well. I encourage Nigerian oil and gas companies to continue to work closely with the NNPC and work together to build and deliver a brighter energy future for the people of Nigeria.

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