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BUSINESS NEWS: 40% Nigerian households use generators, spend bn on fuel – Report

BUSINESS NEWS: 40% Nigerian households use generators, spend $14bn on fuel – Report

Publish date: 2022-07-03 00:44:06 | Author: Okechukwu Nnodim | Source: punchng.com

Over 40 per cent of households in Nigeria own and use generators to meet their electricity requirements, figures contained in a power sector report jointly put together by a research firm and a financial institution, showed.

It also stated that the affected households spent about $14bn annually to fuel their generators, as the power supply from the national grid continued to falter.

The June 2022 report by Stears and Sterling, titled, “Nigeria’s State of Power: Electrifying the Nation’s Economy,” obtained by our correspondent on Friday in Abuja, stated that the cost expended on diesel and petrol for electricity generation by Nigerians was having severe economic impact on households and businesses.

It read in part, “Nigerian households, on average, have electricity in their homes for 15 to 18 hours each day. Of that, 44 per cent (or 6.8 hours) is self-supplied by generators. And this differs by geography. In a state like Taraba, only 19 per cent of households report having electricity.

“Over 40 per cent of Nigerian households own generators, and bear the associated costs. First, the cost of purchasing generators – an estimated $500m between 2015 and 2019, higher than the proposed capital expenditure in Nigeria’s 2022 budget.

“There is also the cost of powering these generators. Sources and estimates vary widely, but the African Development Bank estimated that Nigerians spend $14bn fuelling petrol or diesel powered generators.”

It added, “While PMS (Premium Motor Spirit) or petrol prices have been kept artificially low for the consumers through subsidies, variations in AGO (Automotive Gas Oil) or diesel prices can have a severe impact on households and businesses as Nigerians are currently experiencing.”

The report stated though the National Bureau of Statistics diesel price watch for February 2022 showed a less than 10 per cent rise in the price of fuel from the beginning of the year, diesel was widely sold at prices 200 to 300 per cent up from the end of last year.

This, it said, had made it incredibly difficult for households or businesses to plan and manage themselves.

The analysts noted in their report that while petrol prices appeared more stable, prices were kept artificially low by government subsidies which were generally acknowledged to be unsustainable even in the near to medium term.

“These prices make the small petrol generators more attractive to households and MSMEs (micro, small and medium enterprises), they stated.

They added, “However, perennial issues like product scarcity, make using these generators unreliable as well as expensive.”

Power experts at Stears and Sterling observed that Nigeria had one of the lowest electrification rates in the world.

They stated that in the most populous country in Africa, 43 per cent of the population had no access to grid electricity.

“This means that 85 million Nigerians are not connected to – and cannot receive electricity from – the Nigerian transmission grid,” they stated in the report.

The report added, “While Nigeria’s electrification rate is above the Sub-Saharan Africa regional average of 47 per cent, it lags significantly behind its peers across the continent and the global average.

“Nigerians who do have access to power also have to contend with its poor quality, typically exhibited by epileptic supply.

“Households connected to the grid only receive an average of seven hours of electricity per day, forcing them to turn to alternative energy sources – most prevalently diesel generators, an expensive and dirty source of energy.”

The report stressed that the impact of not having reliable energy could not be overstated, adding that “economic losses associated with Nigeria’s energy crisis are estimated at N10tn ($26bn) – the country’s 2022 proposed budgetary revenue and roughly three times what it actually earned in 2020.”

Proffering measures to help address the country’s electricity problems, an energy expert, Prof. Yemi Oke, called for the appointment of individuals with expertise in handling power issues.

He said, “Put those who are radically-proactive to deploy knowledge-based strategies to re-reform, because we need to go through another round of power sector reform, and the NERC (Nigerian Electricity Regulatory Commission), which I honestly think is unconstitutional as presently constituted.

“I’ve written and severally said this years ago. We can’t be talking of a federated grid system or power sector in the 21st century! By virtue of the constitution, every state should, by now, have their equivalent of NERC.

“For example, Ogun State Electricity Regulatory Commission; Lagos; Kano, etc, to license power generation, transmission, and distribution. That’s what our constitution says, but what operates is the reverse.

He added, “You can imagine if the experiential efforts of Bola Tinubu with ENRON had been allowed to thrive and not undermined by ‘federal might’, same way Jakande’s metroline was thwarted! It is well with Nigeria.”

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