By Yemi Olakitan
The government must take additional measures to provide enough energy to fuel the economy. There are various issues raised by the fact that Nigeria’s economy still primarily relies on diesel generators. In his remarks at the U.S.-Africa Leaders Summit in Washington, D.C., last month, President Muhammadu Buhari reaffirmed Nigeria’s resolve to getting rid of gasoline and diesel generators by the year 2060.
This, he continued, has made the country’s deployment of renewable energy—particularly solar energy—necessary.
However, there are concerns regarding the viability of the concept given what he described as the “substantial financial and technical support” to accomplish the goals.
According to the World Bank, more than 70% of Nigerian businesses rely on generators for their electricity. This information is consistent with data from Nigeria’s Rural Electrification Agency (REA), which estimates that in the lack of dependable supply from the national grid, Nigerians spend $14 billion yearly on small-scale diesel generators. First of all, why has it been so difficult for us to improve our public power system and increase its capacity to the point where diesel generators would no longer be used in our economy permanently? How have we even failed to put into practise the provisions of a regulatory directive on the importation of generators into Nigeria that the Nigerian Electricity Regulatory Commission (NERC) passed in August 2011 to, among other goals, stop the influx of generators into the nation and subsequently push for an improvement in public power supply? When will Nigeria’s electricity sector be fully operational, and what is the country doing to stop the widespread abuse of the environment by diesel generators?
The Rural Electrification Agency (REA) highlighted that the generating sets Nigerians use to power their homes and offices are inefficient and expensive, costing on average, $0.40 per kilowatt hour (kWh) or more, in its analysis of opportunities in Nigeria’s off grid electricity industry. Similar to how the World Bank indicated that diesel generators emit emissions of fine particulate matter (PM) that comprise black carbon to the environment, the REA also highlighted the effects on human health and the ecosystem. The bank went so far as to claim that the PM increases the risk of early death and increases hospital visits due to respiratory and cardiovascular disorders.
Diesel generators are expensive for a nation the size of Nigeria and are bad for the environment. Nigeria should start and implement a graduated and weighted tax system on the manufacturing, assembly, and import of power generating sets that use diesel and gasoline, according to “All On,” a seeded firm of an oil major Shell. Although we agree that the nation should concentrate on improving its public power supply system and reducing the number of diesel generators entering the economy, this cannot be accomplished by giving speeches. The importation of generators should be discouraged with the introduction of additional levies in the form of Import Adjustment Tax (IAT), raising it from the current rate of between 15% and 35% on various categories of generating sets to 50%. This recommendation was made by “All On” in its recommendations for the future of the nation. A three-year deadline had been requested by the Shell subsidiary for the government to stop using fossil fuel-powered generators and switch to clean energy sources like solar. Raising taxes on gasoline and diesel generators, according to “All On,” would promote the development of clean energy sources, particularly in off-grid communities, but it also suggested that certain businesses operating in these areas might be exempt from the proposed regulation if they can meet certain requirements.
Sadly, giving speeches seems to hold more appeal for those in government.