Eniola Adenuga is a businessman with interests in power, real estate and e-commerce technology. In this interview, he speaks to PREMIUM TIMES on how Nigeria can address its energy crisis, boost economic growth and encourage productivity.
PT: The frequency of grid collapse and its effect on the real sector of the economy has been quite troubling, especially in recent weeks. What’s your take about these ugly developments?
Adenuga: It is worrisome, to put it mildly. Nigeria’s national electricity grid has collapsed more than 200 times in the last nine years. The economic implications due to blackouts caused by poor infrastructure and determination to fix Nigeria’s power problem, is alarming. It is said that in sub-Saharan Africa, every one per cent increase in power outages (in terms of hours) has been associated with a 2.86% decrease in gross domestic product (GDP). This translates to a loss of about US$28 billion in GDP. Generally, businesses are stifled, socio-economic development is impacted and the cost of living just keeps going up. We are at a critical point now, where it is imperative for us to fix power once and for all in Nigeria. The rest of the world has moved on to tackle more advanced problems and preparing for the possibilities of the future, while we are still stuck grappling with a problem that many have moved on from decades ago.
PT: Why exactly do you think Nigeria has failed to address its power crisis over the years?
Adenuga: I really can’t say that it is one thing that is responsible. Nigeria currently has an installed capacity of 12,522 MW of power, but it is only able to generate around 4,000 MW, which is nowhere sufficient to meet the needs of a country as big as Nigeria. The GenCos will say it’s because of the debt they are owed by the government. The government will tell you that lack of supply of gas is the reason power supply is limited. While the operators and the government agencies continue to point fingers, power supply has remained abysmally low. However, from my little experience as an investor in the power sector so far, the sheer lack of vision and support available to well-meaning private individuals does not inspire much positive outcome for a sector that the government has repeatedly shown to be either incapable or uninterested in addressing appropriately. For example, a power project I am familiar with, which is a solar power generation plant, is currently being stalled by undue government agency bureaucracy and lack of vision. We have lost three years of ample time we could have used to boost power generation in the country because of an ineffective government agency and restrictive policies.
PT: The privatisation efforts put in place in recent years have achieved little in repositioning the power sector. What do you think are the underlying issues?
Adenuga: It is surely not for lack of interest or passion from private entrepreneurs and corporations. For privatization efforts to yield substantive results, there is much that the government needs to do to create an enabling environment for privatization endeavours to thrive and flourish. To shed some light on this, in July 2016, the Nigerian Bulk Electricity Trader (NBET) signed a Front-Runner Solar Power Purchase Agreements (PPAs) worth US$1.75 billion with 14 companies to build 1.125 Megawatts (MW) capacity of renewable power in Nigeria at the cost of $2.5billion. However, in 2018, the government reportedly cancelled the Power Purchase Agreements (PPAs) signed with these solar project developers.
Recall also that in 2020, the World Bank announced a plan to invest $750 million in Nigeria’s power sector. This was to ensure that at least 4,500 megawatts-hour/hour of electricity is supplied to the distribution grid from 2022. It was however gathered that only about $94.6 million out of the $750 million intervention fund had been disbursed so far.
These promising projects have been impacted by the deep-seated and multi-faceted problems facing the value chain of Nigeria’s electricity sector.
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If the relevant agencies and bodies do not work closely with the investors, or apply forward-thinking approaches to fixing power, there is little or nothing that privatization can do, everyone’s hands are pretty tied and waiting on the government to do the right thing.
PT: What then is the place of renewables in pursuit of solutions to the Nigerian power sector crisis?
Adenuga: A 2019 report by the director-general of the Energy Commission of Nigeria estimated that if one per cent of Nigeria’s land area were to be covered with a solar technology of five percent efficiency, about 333,480 megawatts of electricity could be generated, which is believed to be more than enough for the country. It is definitely the angle we should be going for as a country. All over the world, nations are taking steps to reduce their reliance on fossil fuels for power generation. They are more sustainable and beneficial to the environment. In Nigeria however, it is a case of us still learning to crawl before we can fly. My investment in the power sector is a solar energy solution, and more solutions like these need to be supported and promoted by the government and their sectoral agencies.
PT: How can government and private investors come in, especially in the area of renewable energy solutions?
Adenuga: The private investors are readily available, both homegrown and foreign investments.
PT: So what’s the problem, really?
Adenuga: It is the harmony between the private investors and the government that yet needs to be worked on. There are a lot of brilliant ideas out there looking to tackle the power issues in Nigeria by leveraging renewable energy solutions, but a lot of them are faced with situations and an environment that is not enabling enough for them to thrive, while some never even see the light of day. For starters, the electricity market would need to be reviewed to allow for more energy trading. How this can play out is that an autonomous energy producer will be able to sell excess power to a residential estate, for example, at a price the buyer and seller agree on.
The current structure is such that, anyone generating over 1MW of electricity needs a power generation licence to legally trade energy. A more realistic benchmark would be about 10MW, so that licensing doesn’t become a bureaucratic stumbling block, just like I experienced with acquiring my own license.
PT: Any other policy suggestions on the way forward?
Adenuga: In general, effective energy policies and regulatory frameworks would be needed to allow for more private investments into the industry. So, whether it is tax breaks, reduced bureaucracy or favourable policies, the government’s end is surely where the bulk of the necessary adjustments need to be done.
This interview was first published on Premium Times