my Radio G-Live Millions in Nigeria Suffer from Severe Electricity Shortages, Straining Businesses and Public Services
Written by GliveRadio Accra on July 1, 2024
Dimly lit and stuffy classrooms come alive every morning as children file in. Rays of sunlight stream through wooden windows, serving as the primary source of light. Pupils squint at their books and occasionally glance at the blackboard as teachers strive to capture their attention.
It’s a harsh reality for many schoolchildren across Nigeria, where numerous buildings lack access to the national electricity grid. At Excellent Moral School in Olodo Okin, Ibadan, school founder Muyideen Raji lamented, “The entire community, including the school, is not connected.”
This lack of electricity severely impacts pupils, Raji emphasized, as it prevents them from learning how to use computers and the Internet, and hinders evening study sessions.
Roughly half of Nigeria’s population, exceeding 200 million people, are connected to a national electricity grid that fails to supply adequate daily power to most users. Many impoverished rural communities, such as Olodo Okin, remain entirely off the grid.
In a country blessed with abundant sunshine, many are turning to solar energy as a solution to bridge the gaps in electricity supply. However, attracting risk-averse investors to finance large-scale solar projects capable of providing Nigeria with reliable energy remains a daunting challenge. As a result, millions in the country continue to adapt to life with limited or no access to electricity.
Studies indicate that Nigeria possesses the potential to generate significantly more electricity than its current needs using solar energy, leveraging its abundant sunshine. However, despite signing contracts in 2016 for 14 grid-scale solar projects in the northern and central regions capable of generating 1,125 megawatts of electricity, these projects have stalled.
Developers aiming to establish solar projects in the country attribute the delays to high borrowing costs, which can reach up to 15 percent. This rate is two to three times higher than those in advanced economies and China, as reported by the International Energy Agency.
That means it’s more costly for solar companies to work in Nigeria or other developing nations than in rich countries. Africa only has one-fifth the solar power capacity of Germany, and just 2% of global clean energy investments go to the continent.
Additionally, Nigeria’s failure to implement cost-reflective tariffs means that electricity consumers do not pay enough to cover production and distribution costs. This situation forces distribution companies to struggle with financial sustainability and relies heavily on government interventions, dissuading lenders from investing in the solar industry.
Currently, power producers report being owed up to 3.7 trillion Naira ($2.7 billion) by the government, complicating their ability to fulfill obligations to lenders and contractors.
One potential solution suggested is securing World Bank guarantees, which could reassure investors and encourage investment in solar projects. However, the government hesitates to commit to agreements that might require substantial payments even if electricity from these projects does not reach consumers due to inadequate transmission and distribution infrastructure.
But without World Bank guarantees “nobody will develop or finance a project with a government subsidy, because it can dry off,” said Edu Okeke, the managing director of Azura Power. Azura Power has a stake in the now-stalled 100 megawatt Nova solar project in Nigeria’s northern Katsina State.
Communities like Excellent Moral School in Ibadan, which lack access to electricity, often find themselves surrounded by more fortunate areas connected to the grid. However, these connected areas experience frequent outages, compelling them to rely on gasoline and diesel-run private generators.
With the long-standing petroleum subsidies now removed, many households, schools, hospitals, and businesses struggle with the high cost of fuel for their backup generators.
“We have stopped using a diesel generator due to costs,” said Abdulhakeem Adedoja, head of Lorat Nursery and Primary School in Ibadan. Although the school is connected to the grid, they sometimes go without power for up to two weeks.
The issue goes beyond the lack of electricity for computer-aided learning, proper lighting, and ventilation in classrooms, which affects both students and teachers. Adedoja noted that students also face challenges completing their school assignments at home.
For energy-intensive small businesses like restaurants, the options are limited to either shutting down operations during power outages or continuing with alternative power sources, which incur substantial costs and constrain their ability to expand.
Ebunola Akinwale, owner of Nature’s Treat Cafe in Ibadan, faces a monthly expense of 2.5 million Naira ($1,700) to power backup generators across her four branches.
“If nothing changes, I might have to close one or two branches,” she lamented, though she is optimistic about transitioning to solar power to reduce pollution from diesel generators. Akinwale is currently negotiating with her bank for a low-cost loan package tailored for young women entrepreneurs to finance the solar alternative.
However, not every business or household can access or afford the upfront capital required for a private solar system. School administrators like Raji and Adedoja find the costs prohibitive.
Moving forward, stalled solar projects in Nigeria highlight financial challenges, hindering progress in alternative electricity generation. Power minister Adebayo Adelabu emphasized in May that addressing the sector’s financial crisis requires pricing that reflects the true costs of service, as the government cannot sustain a 3 trillion Naira ($2.4 billion) subsidy.
The government advocates for full payment by consumers to attract private investment in the electricity sector, though this stance faced resistance in early June when labor unions protested against electricity tariff hikes.
Acknowledging the government’s perspective, Akinwale emphasized that regularly supplied grid electricity, even without subsidies, remains “cheaper and cleaner” than diesel for generators.
To encourage private solar adoption, Akinwale suggested the government offer incentives such as tax relief and flexible payment plans. “Sunlight is abundantly available,” she noted optimistically.
Former regulatory chief Sam Amadi questions whether consumers in Nigeria, where the minimum wage is 30,000 Naira ($20) per month, can afford to pay for energy without subsidies. He advocates for a policy that promotes affordability of smaller-scale solar projects in communities, businesses, and homes.
Meanwhile, Amadi highlights the severe consequences of frequent blackouts, citing tragic incidents such as patients dying in hospitals due to power outages during operations.
“Every day, we witness the real-world impact of inadequate electricity,” he emphasized.
