Nigerians spent N16.5 trillion in 2023 on buying diesel, petrol, and generators for their own electricity generation, according to the Federal Government. This dwarfs the N1 trillion revenue earned by the formal power sector in the same year.
Adebayo Adelabu, the minister of Power, revealed this information at the ongoing 2024 Nigeria Oil and Gas conference on Tuesday .
He highlighted the huge gap between spending on inefficient personal power generation and the revenue of the national grid.
He said, “If you know how much our people spend buying diesel, petrol, generators, and servicing them in a year; the last study we had in 2023, a total of N16.5tn was spent on this in self (power) generation. Even a number of the industries are off the grid. They now have their captive power between their environments with gas-powered generators.
“So spendings in this sector out of the grid is close to N20tn. And let me blow your mind, the revenue for the entire industry, the grid, I mean the formal power sector was just N1tn for 2023 that goes to the generation companies, transmission company and the distribution companies. Just N1tn formal revenue. But the informal spendings on generators, diesel, petrol, was close to N20tn.”
Adelabu emphasised the economic benefits of connecting to the grid, stating that electricity from the grid is significantly cheaper than generator-powered alternatives.
For instance, homes on Band A of the national grid with near-constant power supply pay N206 per kilowatt-hour (kWh), whereas those relying on petrol generators pay N450/kWh and even more for diesel generators.
“As at the last study, Band A customers are enjoying uninterrupted supply and pay N206. For the companies that have their captive power using gas, they pay about N290/kwh.
“For those that are using petrol generators, it is about N450 per kilowatt-hour. And for those using diesel to power their generators, it is upward of N900. So it is still the cheapest, most efficient and the least cost for our productive activities,” the minister stated.
The minister also addressed the crucial role of natural gas in Nigeria’s power sector. Gas currently supplies about 60% of the nation’s domestic gas and is essential for achieving the country’s ambitious energy plan. This plan aims for 30 gigawatts (GW) of power generation by 2030, with 70% from gas and 30% from renewables, the minister highlighted.
Adelabu appealed to investors at the conference to consider investing in Nigeria’s gas sector, particularly the abundant unexploited non-associated gas reserves.
He highlighted recent government actions to improve the power sector’s attractiveness to investors, such as cost-reflective tariffs and resolving legacy debts.
The minister expressed confidence in the government’s commitment to creating a viable and attractive power sector for investment.
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