A NEW report by the International Renewable Energy Agency (IRENA) reveals that Nigeria is the leading importer of premium motor spirit (PMS) and diesel generators in Africa.
The report, titled “Renewable Energy Roadmap: Nigeria” and developed in partnership with the Energy Commission of Nigeria (ECN), highlights the significant issue of dependence on backup generators in Nigeria and its impact on the country’s economy and businesses.
Many businesses and households in Nigeria rely on backup generators because of problems with the power supply. The power supply in Nigeria is heavily dependent on natural gas power stations and large hydropower plants.
However, the unavailability of gas, machine breakdowns, seasonal water shortages, and limited grid capacity have severely limited the operational performance of these power plants, affecting the power supply in the country. As a result, Nigeria imports the highest number of generators in sub-Saharan Africa, with an estimated 3 million out of 6.5 million generators in SSA used in the country.
The high cost of grid electricity is another major factor contributing to Nigeria’s dependence on backup generators. In effect, many are turning to self-power generation in order to reduce costs.
According to a report by Stears Business, households and businesses in Nigeria spend an estimated $14 billion annually on fuel for backup generators. Additionally, data from the International Trade Centre shows that Nigeria spent $5.26 billion importing electric generators and other electrical machinery and equipment between 2020 and 2021.
This not only increases the cost of doing business for these households and companies, but it also makes Nigerian products less competitive in the global market as the cost of self-generating power makes them approximately one-third more expensive than imports.
According to the International Renewable Energy Agency (IRENA), Nigeria’s power sector requires substantial investment to achieve a constant power supply.
To improve electricity access, around $34.5 billion in total investment will be required to provide electricity access to all households by 2030.
The report also recommends focusing on strategies to replace backup generators with clean energy alternatives, which are becoming increasingly competitive in many countries due to cost reductions in recent years.
