Opinion
Nigeria And Alternative Energy Source
To promote commercial viability and further investment in the power sector, the Nigerian Electricity Regulatory Commission (NERC), in 2015, announced a 45 per cent tariff increase, designed to come into effect on February 01, 2016, which was nullified by a decision of a federal high court.
Although the organized labourhailed the decision of the court, others, mostly energy industry practitioners, criticized it. To the former, the Nigerian Electricity Supply Industry (NESI) should improve its performance before considering a tariff increase. And to the later, an improved electricity supply hinges on the implementation of cost-reflective tariffs.
After about five days, NERC approved increase in electricity tariff by the 11 Electricity Distribution Companies (DISCOs) in the country. “The new tariff regime takes effect from January 1, 2020”.
This time consumers may have appeared to be silent, yet asking a loudly quiet question; “is it about tariff increase or quality service delivery?”. Consumers no doubt appreciate the challenges of the power generators and distributors, but those challenges would go noticed when no quality service is dispensed to the consumers at the end of the day.
The consequences of this abysmal service delivery for Nigeria’s economic development are well-understood, and the causes of the deplorable situation are laid bare, it is still not certain which way to take, out of the problem.
Everyone knows that shortages in electricity supply, are significantly impeding Nigeria’s economic growth. OlayinkaOyedepo (2012), in his work on “Energy, Sustainability and Society”, stated that about 60 to 70 percent of the Nigerian population does not have access to electricity.
Suffice it to say that while some parts of the country have little or no access to the national grid, in other areas, electricity is only available for short and varying periods of the day.
This ongoing failure of the Nigerian power sector to provide adequate electricity supply to domestic households and industrial producers has not only contributed in crippling the agricultural, industrial and mining sectors, it daily impedes the country’s economic development.
There is no doubt that the present power crisis afflicting Nigeria will persist unless the government diversifies the energy sources in domestic, commercial and industrial sectors and adopts new available technologies to reduce energy wastage and to save cost.
The writer is of the view that given the fundamental nature of electricity to the socio-economic development of Nigeria and poverty eradication, nothing short of access to modern energy services which though had remained an enormous challenge facing the African continent, can suffix.
Although from an economic point of view, implementing the country’s renewable energy target will have significant costs, nevertheless, its contribution to the sustainability of economic, environmental and social development of our country; Nigeria, far outweighs its cost.
Recall that way back in 2005, the Energy Commission of Nigeria developed a Renewable Energy Master Plan (REMP) which suggested ideas for renewable energy policies, as well as possible technologies that could be used to fulfill their goals. Nigeria’s target, at that point, was to expand her energy access to 90 percent of the population by the year 2030.
With the above projection, the expectation was that 30 percent of the total energy generation would be solely from renewable sources, a course which, if well executed, will not only regularise power supply in the country, but will reduce significantly the energy bills for poor households.
Since 2005, Nigerian power reforms have focused on privatizing the generation and distribution assets as well as encouraging private investments in the power sector generally, while government retained the power to control transmission assets and creating a regulatory environment attractive to foreign investors.
This conscious effort in this direction actually robbed off on Nigeria’s primary energy consumption which came up to about 108 MW in 2011. According to official report, most of the energy came from traditional biomass and waste, which accounted for 83 percent of total primary production. The rest was from fossil fuels (16 percent) and hydropower (1 percent).
Midway into the projected year 2030, renewable energy penetration in Nigeria is still in its nascent stage. Until late, Nigeria generates a small amount of energy from renewable sources. The only source of renewable energy in the country is hydro-power and biomass; wind and solar energy have only been deployed in a minuscule amount.
However, with emerging energy policies and initiatives, wind and solar energy generation projects are gradually being planned throughout the country. With the discovery of their high potentials and benefits for Nigeria’s environment and society, developments in solar and wind energy are gradually increasing.
In February 2018, Nigeria completed the Renewable Energy and Energy Efficiency Project, which supplied about 261,938 citizens with clean renewable energy. This project was in partnership with USAID, private donors, government agencies, financial institutions and non-governmental organizations. The goal of the project was to build connections to 2.5 MW of power through off and on grid sources, which will reduce carbon dioxide emissions by 4.5 million metric tons.
Nigeria no doubt, has the potential to generate most of its energy through solar. After all, most of the big cities in Nigeria (Lagos, Abuja, Benin City, Port Harcourt, Kaduna and Kano) now power their street lighting with solar energy through state beautification projects.
Two years ago, the Lagos State Government signed a contract with UK- based Low Energy Designs for the supply and installation of energy efficient streetlights. The project covered about 300 km of road. The $6.9 million contract included the provision of an intelligent control system for real time operation of the LED streetlights.
The World Bank’s loan to Nigeria to build a solar power grid by 2023 that will help generate power for hospitals, rural areas, schools and households, should be a stepping stone for the government to diversify its energy source for other sectors.
Apart from reducing overall energy consumption, lowering carbon emissions, solar lighting technology allows the customer to be in control of light intensity. Moreso, the ability to remotely monitor operations is expected to reduce maintenance costs.
With lighting manufacturers virtually non-existent in Nigeria, we can still push to the next level, revolutionize the energy market and increase sustainability for the future in Nigeria by partnering with recognized established local companies to manufacture low energy design lighting’s.
By: Sylvia ThankGod-Amadi
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Opinion
Fuel Subsidy Removal and the Economic Implications for Nigerians
From all indications, Nigeria possesses enough human and material resources to become a true economic powerhouse in Africa. According to the National Population Commission (NPC, 2023), the country’s population has grown steadily within the last decade, presently standing at about 220 million people—mostly young, vibrant, and innovative. Nigeria also remains the sixth-largest oil producer in the world, with enormous reserves of gas, fertile agricultural land, and human capital.
Yet, despite this enormous potential, the country continues to grapple with underdevelopment, poverty, unemployment, and insecurity. Recent data from the National Bureau of Statistics (NBS, 2023) show that about 129 million Nigerians currently live below the poverty line. Most families can no longer afford basic necessities, even as the government continues to project a rosy economic picture.
The Subsidy Question
The removal of fuel subsidy in 2023 by President Bola Ahmed Tinubu has been one of the most controversial policy decisions in Nigeria’s recent history. According to the president, subsidy removal was designed to reduce fiscal burden, unify the foreign exchange rate, attract investment, curb inflation, and discourage excessive government borrowing.
While these objectives are theoretically sound, the reality for ordinary Nigerians has been severe hardship. Fuel prices more than tripled, transportation costs surged, and food inflation—already high—rose above 30% (NBS, 2023). The World Bank (2023) estimates that an additional 7.1 million Nigerians were pushed into poverty after subsidy removal.
A Critical Economic View
As an economist, I argue that the problem was not subsidy removal itself—which was inevitable—but the timing, sequencing, and structural gaps in Nigeria’s implementation.
- Structural Miscalculation
Nigeria’s four state-owned refineries remain nonfunctional. By removing subsidies without local refining capacity, the government exposed the economy to import-price pass-through effects—where global oil price shocks translate directly into domestic inflation. This was not just a timing issue but a fundamental policy miscalculation.
- Neglect of Social Safety Nets
Countries like Indonesia (2005) and Ghana (2005) removed subsidies successfully only after introducing cash transfers, transport vouchers, and food subsidies for the poor (World Bank, 2005). Nigeria, however, implemented removal abruptly, shifting the fiscal burden directly onto households without protection.
- Failure to Secure Food and Energy Alternatives
Fuel subsidy removal amplified existing weaknesses in agriculture and energy. Instead of sequencing reforms, government left Nigerians without refinery capacity, renewable energy alternatives, or mechanized agricultural productivity—all of which could have cushioned the shock.
Political and Public Concerns
Prominent leaders have echoed these concerns. Mr. Peter Obi, the Labour Party’s 2023 presidential candidate, described the subsidy removal as “good but wrongly timed.” Atiku Abubakar of the People’s Democratic Party also faulted the government’s hasty approach. Human rights activists like Obodoekwe Stive stressed that refineries should have been made functional first, to reduce the suffering of citizens.
This is not just political rhetoric—it reflects a widespread economic reality. When inflation climbs above 30%, when purchasing power collapses, and when households cannot meet basic needs, the promise of reform becomes overshadowed by social pain.
Broader Implications
The consequences of this policy are multidimensional:
- Inflationary Pressures – Food inflation above 30% has made nutrition unaffordable for many households.
- Rising Poverty – 7.1 million Nigerians have been newly pushed into poverty (World Bank, 2023).
- Middle-Class Erosion – Rising transport, rent, and healthcare costs are squeezing household incomes.
- Debt Concerns – Despite promises, government borrowing has continued, raising sustainability questions.
- Public Distrust – When government promises savings but citizens feel only pain, trust in leadership erodes.
In effect, subsidy removal without structural readiness has widened inequality and eroded social stability.
Missed Opportunities
Nigeria’s leaders had the chance to approach subsidy removal differently:
- Refinery Rehabilitation – Ensuring local refining to reduce exposure to global oil price shocks.
- Renewable Energy Investment – Diversifying energy through solar, hydro, and wind to reduce reliance on imported petroleum.
- Agricultural Productivity – Mechanization, irrigation, and smallholder financing could have boosted food supply and stabilized prices.
- Social Safety Nets – Conditional cash transfers, food vouchers, and transport subsidies could have protected the most vulnerable.
Instead, reform came abruptly, leaving citizens to absorb all the pain while waiting for theoretical long-term benefits.
Conclusion: Reform With a Human Face
Fuel subsidy removal was inevitable, but Nigeria’s approach has worsened hardship for millions. True reform must go beyond fiscal savings to protect citizens.
Economic policy is not judged only by its efficiency but by its humanity. A well-sequenced reform could have balanced fiscal responsibility with equity, ensuring that ordinary Nigerians were not crushed under the weight of sudden change.
Nigeria has the resources, population, and resilience to lead Africa’s economy. But leadership requires foresight. It requires policies that are inclusive, humane, and strategically sequenced.
Reform without equity is displacement of poverty, not development. If Nigeria truly seeks progress, its policies must wear a human face.
References
- National Bureau of Statistics (NBS). (2023). Poverty and Inequality Report. Abuja.
- National Population Commission (NPC). (2023). Population Estimates. Abuja.
- World Bank. (2023). Nigeria Development Update. Washington, DC.
- World Bank. (2005). Fuel Subsidy Reforms: Lessons from Indonesia and Ghana. Washington, DC.
- OPEC. (2023). Annual Statistical Bulletin. Vienna.
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