The biggest challenges facing the energy sector across Nigeria is reliable access to electricity and the shortfall in energy generation. As the electrification of the country continues, investment to fund this ongoing development continues to be high on the agenda.
Statistics show that only 45 per cent of the population in the country has direct access to electricity.
The Nigerian government is aiming to increase this to 75 per cent of the population by 2020. However, it is expected that this investment in infrastructure and the development of more reliable and stable supplies to create many new opportunities in the short and medium-term.
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Close to 90 per cent of government revenue comes from oil; fluctuation in the oil price has reduced available investment for projects. Currency deflation and deregulation is also a challenge to the power sector
However, the good news is that external investment in electricity projects is still high. States are still attracting investment from major consortiums so that infrastructure development projects can continue to be implemented.
A stable and reliable electricity supply is vital to economic development and growth. Forward-looking state governors are proactively developing infrastructure and anticipate continued investment in the short and medium-term.
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According to analysts, “Continued infrastructure development also presents the opportunity for utilities into future- proof networks. By moving away from traditional design models towards more active network management, utilities can take into account the challenges presented by the growth of distributed energy resources”
Industry analysts are of the views that among the challenges of power within Nigeria surround illiquidity in the sector and the non-viability of power generation due to the non-payment of tariffs by end-users of power.
This they observed has led to the inability of generic companies to maximise installed and generating capacity. The foregoing has fed a vicious cycle of underperformance in the industry, as generation companies are unable to make payments to gas suppliers, and end-users bear the inordinate cost and responsibility of private generation of power through generation sets.
They pointed out that apart from the foregoing; vandalisation of gas pipelines which hamper the adequate supply of gas to power plants has plagued the current power climate in Nigeria.
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“Another evident issue relates to foreign exchange issues. The international currency for the purchase of gas is in United States Dollars and the current economic climate in Nigeria has experienced a scarcity of dollars in trade, which has impacted the ability to purchase Gas,” Analysts said.
Experts in the power sector believe that the industry will get to a stage where government participation in the sector is completely on regulation while private investments are attracted owing to the enabling environment.
To them, “The Private-Public Sector can take Power Projects to the next level and beyond provided there is unity amongst stakeholders and the ability of government to provide the political will, provide the business-friendly economic environment conducive for investment including security”.
The Economic Recovery and Growth Plan (ERGP) 2017-2020 recently launched by the government largely depend on improving the energy sector.
KELECHI EWUZIE
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