Why Nigeria needs to fix electricity supply – AfDB Director – EnviroNews

A financial expert, Mr. Wale Shonibare, has called on the Federal Government to prioritize the development of power sector infrastructure to boost the country’s industrial growth.

Shonibare made this call in an interview on the sidelines of the African Investment Forum, Market Days 2024, which recently concluded in Rabat, Morocco.

Shonibare, director of energy financial solutions, policy and regulation at the African Development Bank (AfDB) group, said achieving industrialization requires affordable baseload power.

According to him, it is a necessity for economic growth and development.

Shonibare cited China and Germany as examples, adding that the production of cheap electricity leads to lower production costs and more competitive products.

Shonibare noted that Nigeria has the potential to become a manufacturing hub for West Africa and possibly the whole of Africa with adequate energy infrastructure.

“If we get this energy problem under control, we can add value to our production. We don’t just sell raw materials,” he said.

Shonibare pointed out that to build an aluminum smelter, for example, 40 percent of the cost would be electricity.

According to him, if Nigeria succeeds, Nigeria will produce aluminum and have an automobile market where cars can be manufactured.

“So all of these things are closely related,” he said.

He stressed that sustainability of utilities and a well-structured tariff system are crucial to attract investment in the sector.

“The sector has to make sense. The sector must be liquid.

“It is very important that we manage things like the sustainability of our utilities; We have the right tariff structures because the energy suppliers buy the electricity.

“So if the utilities are not sustainable, it is very difficult to attract investment into the sector.

“When I worked in Nigeria about eight years ago, I was heavily involved in privatization efforts and mobilizing investments.

“Look at what happened to all the loans that were taken out back then. If we do not demonstrate that Nigeria is a viable investment destination, those investments will be made elsewhere. This is because capital is not sentimental,” he said.

According to him, the focus in Nigeria is to ensure that the country builds the infrastructure for the evacuation of power.

He noted that there were many stranded powers in Nigeria that had not been evacuated.

Shonibare stressed the need to prioritize investments in transmission and distribution infrastructure to address the frequent grid failures in Nigeria.

“We have the generation capacity, but the electricity needs to reach the people, which requires robust transmission lines, distribution systems, substations and effective collection,” he said, citing the significant metering gap in Nigeria.

He warned against focusing solely on generation, as a fragile grid makes it difficult to integrate renewable energy.

He added: “Politicians often advocate ribbon-cutting ceremonies related to generational projects, but the entire value chain requires attention.”

Shonibare also called for urgent measures to stabilize the power grid, stressing that once a stable platform is in place, other critical aspects of the power sector can be developed effectively.

“We have learned many lessons and I still believe that the privatization and liberalization of the sector in Nigeria will in the long run produce many innovative companies and approaches.

“States are taking on a greater role and are closer to the people. I think this is a very good innovation because then the governors will be made responsible for the electricity supply.

“We didn’t have that before because power generation was on the exclusive list.

“I see a lot of talent coming from Nigeria and we need to mobilize our local financial sector. Nobody else will do it for us. If the sector is bankable, the money will come in.

“We saw it in telecommunications. This has to happen for the energy sector,” he said.

By Kamal Tayo Oropo