‘Seun Ibukun-Oni, Abuja
DAILY COURIER – Creating and attracting the right investment atmosphere for prospective investors to invest on-grid and off-grid to meet the huge energy deficit in Nigeria have been identified by energy experts as the most urgent task before the government in other to bridge the funding conundrum in the sector.
This was the submission of panelists at the 75th Power Dialogue held on Wednesday, October 26, 2022.
The program lead, power UKNigeria Infrastructure Advisory Facility (UKNIAF), Frank Edozie while speaking on the panel opined that the regulators and policymakers must remove the bottle necks that have hindered investors from investing because energy is a place where capital will easily flow to.
Frank cited the massive investment on generators across the country which he puts at about 70GW of installation capacity which implies that capital is actually available if the policies are right.
“Integrated resources plan – this is a model which factors the entire power chain from supply to the mode of generation and delivery to the final. Nigeria is ripe for energy mix such as hydro, solar, wind, biomas and others
“The divide between off-grid and on-grid is artificial. What is important is that power is available not minding the source” he said.
The head, programs management unit, Nigeria Electrification Project, Anita Otubu commended the federal government for its huge investments in interconnected mini-grid.
She stated that 67 mini grids have been completed, with a little under 1 million beneficiaries and the deploying of capital hybrid plants for hospitals and some universities across the country.
She counselled that efforts must be geared toward ensuring viability and sustainability of mini-grid power ongoing by the Nigeria Electrification Project to bridge energy gaps in the rural communities.
She identified some challenges limiting the success of the interconnected mini-grid which include; limited purchasing power of the rural communities who are the major target of the project, lack of trust between some Disco and mini-grid investors. She stated that with better stakeholder engagement which addresses issues of ownership of the project, payment structure and re-orientation of the people would go along way to engender interest in mini-grid investment.
Another panelists, the country representative, Nigeria, Global Energy Alliance for People and Planet (GEAPP), Muhammad Wakil said there is a lot of investment upstream but the major gap is in the distribution because of the low capital injection by the Discos since the privatization exercise.
“The poor handling of power reform gave the distribution into the hands of investors who do not have the kind of capital required to make any significant break from the NEPA and PHCN days. It should have been commercialization before privatization. However, there are several models such as willing buyer and willing seller and interconnected mini-grid to attract investors in the sector.
“To accelerate investment there are two sides to it, the supply and demand sides. On the supply side, their is a relative shortage of investors at domestic level willing to go into the sector. Most domestic financial institutions don’t understand the dynamics of a long term investment like the power sector. They give conditions that are unsustainable which discourage mini-grid investors from borrowing. This must be address. While on the demand side, a lot of the mini-grid can not sell their full capacity because the rural communities have fewer commercial customers so they depend on residential customers” he said.
The Power Dialogue is an initiative of The Electricity Hub and the 75th edition was themed: The Funding Conundrum – Attaining Sustainable Grid Balance.