BusinessDay

Power shortage: More homes, firms turn to inverters, gas

The anger and frustration on 45-year-old Joseph Martins’ face were unmistakable – the power outage in Nigeria in recent days has almost ruined his 10-year-old bakery business.

He was visibly agitated not only by the long power outage in his Ikorodu community, a border town north of the country’s economic nerve center, Lagos but also by the soaring price of diesel that is eating into his bottom line.

“It can be like this for the next two months, yet the electricity distribution company would bring a humongous bill for us to settle at the end of the month,” Martins moaned.

He had purchased various generators of various sizes, but they had only lasted a short time. He had almost given up until a ray of hope arrived on his doorstep when a dealer introduced him to solar power products. “I switched to solar 10 days ago because the economics of a diesel generator no longer make any business sense,” Martins added.

Like Martins, Folarin Gbadamosi, who runs a barbing shop in Almourf area, a community at the outskirts of Nigeria’s commercial capital, also decried the high power bill that does not reflect the electricity consumption in his area.

He described the poor supply of electricity and the cost of diesel as a nightmare for his business. “I bought a solar system that can power my business through a Pay As You Go (PAYG) model, which is currently serving my business very well,” Gbadamosi said.

BusinessDay findings revealed that more homes and businesses have been forced to turn to or consider switching to alternative sources of electricity as supply from the national grid worsened in recent days.

Many households and businesses across the country were plunged into darkness for days after the national grid collapsed on March 14. The next day, the grid encountered another failure. Generation capacity dropped from around 4,000 megawatts (MW) to 2,000MW, with about 14 power plants shutting down.

Total power generation in the country stood at 3,775MW as of 6am on Wednesday from 3,522.8MW on Monday, according to the Nigeria Electricity System Operator. It stood at 4,470.1MW at the start of this month.

“In the last three months, we have seen a more than 300 percent increase in the demands for our products and services,” said Femi Adeyemo, chief executive officer of Arnergy, a distributed utility that provides renewable energy to residential and industrial customers in Nigeria.

“Unlike previous years, estate agencies, firms and households are currently demanding for our services not just because it’s reliable but also because of the flexible payment structures that make it affordable,” he added.

Gabriel Chukwudi, a business development executive at Auxano Solar Nig. Ltd, said his firm had recorded a 30 percent increase in the demand for solar products in the last three months.

“Grid collapse, increased maintenance costs for generators and shortage of petroleum products are some of the reasons some of our customers gave for looking in our direction,” he told BusinessDay.

From a January average of N288 per litre, the price of diesel has more than doubled to N700 in Nigeria, causing widespread anxiety for businesses that rely on the product to power generators that make up for unstable public power supply.

“From 2020, we commenced the process of evolving all of our manufacturing plants to be powered in part by renewable solar energy. Today, we can boast of the fact that 50 percent of our manufacturing plants are now powered in part by solar energy, delivering up to 3,640-Kilowatt peak power output to the facilities,” Matthieu Seguin, managing director at Nigerian Bottling Company Limited, told BusinessDay.

“We have embarked on fleet conversion/replacement to CNG trucks. Already, we have introduced 10 of these trucks to our fleet, which are already delivering cumulative CO2 emission savings of 17 tons every month,” he added.

Beyond solar, findings showed some factories in Nigeria are switching to compressed natural gas (CNG) to reduce the cost of energy by adopting clean fuel amid a global effort to curb greenhouse gas emissions and slow global warming.

“Our factory runs strictly on CNG. This is because we know it is cheap, cleaner and healthier for the environment than diesel,” said Ayodapo Keshinro, general manager, sales and technical at Pacegate Limited.

Pacegate manufactures 210 litres steel drums in the tighthead, open head and internally lacquered drums. The plant, located in Ilupeju, Lagos, is described as Africa’s largest fully automated steel drum facility. The factory can produce 5,000 steel drums daily in line with the United Nations and International Society Organisation standards, according to the company.

Nestlé Nigeria Plc introduced CNG as a fuel source for its Flowergate Factory in 2013, enabling the big nutrition, health, and wellness company in the West African economic powerhouse to reduce electricity costs by 30 percent.

Read also: CBN solar intervention to domesticate renewable energy technology in Nigeria

Flowergate Factory receives its regular CNG using specially designed vehicles, to serve as a backup against regular disruptions in the national power supply.

“The conversion kits for CNG are imported, and should the government work out favourable terms and conditions such as free import duties and tax incentives, the cost per kit will fall and more car owners will participate; there is demand, no doubt,” Ola Alokolaro, partner, energy and infrastructure at Advocaat Law Practice, said.

On Thursday, a standard cubic meter of CNG (equivalent of a litre of diesel) is less than N200 while a litre of diesel is over N600.
“Gas is readily available and capable of driving down cost of production; manufacturers need do is to approach a reliable operator in the gas realm on how to access the product in any of the identified means of transportation,” Taofeek Lawal, head, corporate communications of NIPCO, a parent company for NIPCO Gas Limited, told BusinessDay.

“Lots of manufacturers along gas corridors in the country are benefitting from the avenues as more pipelines are being laid across the country,” he added.
BusinessDay gathered that Powergas Limited is in talks with ECO Bus Maker to provide autogas filling stations in Nigerian cities where CNG-powered vehicles can be refuelled and will be put to good use.

Nonetheless, investors want the government to match intent with actions. “The government can grant a tax waiver for the importation of equipment and machinery, create a proper pricing system for CNG, formulate policy towards the use of CNG,” Lawal said.

Nigeria is struggling to produce enough electricity to power its growing urban and rural population. With fluctuations in power generation capacity over time, power output in the country has been hovering around 4,000-4,500MW in recent years.

Singapore, a Southeast Asian nation, which Nigeria is more than 1,280 times bigger in size and 33 times bigger than in population, produces more than three times (12,000MW) as much electricity as Nigeria.

Lagos, Africa’s largest city and Nigeria’s smallest state by size, is two times bigger than Singapore by size. Ghana, a neighbouring country, consumes over twice as much as Nigeria; Tunisia over 10 times, and South Africa almost 30 times as much.

“More than 80 percent of the power that supplies the state at any point in time is from off-grid generation,” Olalere Odusote, commissioner for energy and mineral resources, Lagos State, said at a recent industry event.

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