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The Problem With Nigeria's Energy Sector, By UNIDO Boss

Published by Guardian on Sun, 26 Aug 2012


How 90-percent Completed Projects Were AbandonedDirector General, United Nations Industrial Development Organisation (UNIDO),Dr Kandeh Yumkella, was in Nigeria during the week for the lunch of Sustainable Energy for All, a global initiative that began last year. Having worked in Nigeria for over 11 years as country representative, he disclosed some of the failed initiatives at improving power efficiency in the country. In an interview with BRIDGET CHIEDU ONOCHIE, he gave reasons why Nigeria is yet to get the energy issue right.About the conferenceFirst, we send our gratitude to the government of Nigeria, especially the Minister of Power for working with us to organise this launch of the Sustainable Energy for All initiative. Our goal is to create awareness of the initiative within Nigeria. It is a global initiative that has three goals - achieving universal access to energy by 2030, double the rate of improvement of energy efficiency by 2030 and to double the share of renewable in the global energy mix by 2030.Those are the global goals. We are lunching it in Nigeria because the government is determined to achieve this goal earlier than 2030; so, this forum will give the government an opportunity to present the country's energy vision for up to the period 2030 or 2050.This is important because energy policy and planning must have long time view. It must be linked with industrialisation strategy and demographic projection of the country. We know that Nigeria wants to diversify its economy into manufacturing in order to create jobs. To do that, it needs reliable supply of energy; otherwise, manufacturing cannot get a foothold in Nigeria.Most of the textile industries closed due to lack of energy. It is also clear that Nigeria's population may be 300 million in 25 years. With that amount of people, would there be access to energy'In the city, if you don't have reliable supply of energy, you cannot have supply of water and you cannot move your agric business agenda. As we know, the government is investing in agric business to help create jobs and food security, but there is need for energy to process food and produce fertilizer.The country also needs to invest in downstream petrochemicals to produce fertilizer and stop gas flaring. This conference has combined all of those themes to see that the long-term view of the Nigerian energy strategy moves forward.We have the President and the Energy Minister to give the vision and I know, from the number of donor agencies, that Nigeria has recorded a success with production of over 4000 mega watts of energy on records. But it needs 20,000 mega watts if it is going to become a medium income country, process its mineral and produce its own fertilizers or energy in the downstream petrochemicals. The 20,000 mega watts cannot be achieved in short term, it requires a long term plan, a 20-year plan to achieve structural change to move into a modern manufacturing agro business economy.Benefits to the Nigerian power sectorLed by the European Union, World Bank and UNIDO, we had the meeting with key donor agencies in the country. All of them recognised the situation because the same debate is going on in their countries. They are concerned about energy development and energy security in their countries.They know what energy did to transform and help their countries industrialised. They have seen the potentials in Nigeria.They are also doing something at the state level. For example, the World Bank, the African Development Bank and others are supporting the effort of the government to liberalise and transform the energy sector. You need to do that if investors are going to come in. Also, you need to take federal programmes to the state level.You need to bring in NGOs in to do the advocacy and show the link between energy security, water security and food security even in rural communities.For instance, you need energy to do effective irrigation schemes, we know the Minister of Agriculture is pushing irrigation but you need good energy system to help that irrigation system work; and with solar power, you can do that.We know that to store food for the market and to add values, you need energy; you need to educate the NGOs to see that linkage, what we call the nexus in United Nations - the nexus between energy, food and water security. But the most important one is energy and women economic empowerment. Women do about 80 per cent of food production and they also take it to the market.By providing energy, you are empowering women, because they collect firewood and water and come back to cook. Most of them are suffering from pulmonary diseases based on indoor air pollution. So, we need coking solutions.Imagine what the stove, microwave and washing machine did for women in advanced countries; it will save their time to join the workforce. So, here, when you look at women economic empowerment, you must address energy.Why Nigeria is yet to get energy supply rightIt is because of lack of consistent long-term vision linking energy access with industrial transformation. What we do in Africa is ad-hoc policy: When power supply goes off, we get the generator. We never sat down to ask where we want the nation to be in the next 20 to 25 years ' how fast do we want to grow, how much jobs we want to create and what sectors of the economy we need to develop.Instead of putting the generators, you would have built the hydro power plant, and Nigeria has a lot of water.When I worked in Nigeria 12 years ago, we surveyed the water basins and started some hydro projects but they were never finished. They were about 90 per cent completed but never turned on.Those dams could be used for irrigations and water supply in cities. So, you have to link energy access with the ambition of governors to transform their states.We also need to convince the politicians that energy transformation is not a quick fix. It is a long-term strategy of 20 to 30 years. We need to stop flaring gas.I did a workshop in this country in 2001 on zero flaring of gas; it has not happened; gas can be converted to energy and can be piped into homes so that women and children don't die from using charcoal.They can do downstream processing for methanol and other products that create jobs and wealth. We should also know that to reform the energy sector, Nigerians need to pay, and we know Nigerians are ready to pay if they can be assured of reliable supply. So, it is chicken and the egg, if you don't pay, investors don't come in, but if we pay, we want reliable service. That is the dialogue we want to start.The conference is the beginning of dialogue, a dialogue of 20 years.Private sector involvement in power transmission and distributionYou must do that. The amount of money needed to transform the energy sector is enormous. The way other countries, including South Africa, has done it is to liberalise the market and change the tariff. People were ready to pay and foreign countries and local banks started providing cash to finance power plant and transmission lines on their own because it is profitable.On the other hand, the citizens are happy because they have reliable access to energy. South Africa and Ghana are good example; but there must be good governance in the energy sector, otherwise, we keep buying generators. Do you know that in these countries, some of your energy costs are higher while you have gas because most people use generator' That increases your cost by 30 per cent and the business cannot grow to employ more people. So, bringing down energy cost is crucial to make Nigerian a middle-income country and the role of the private sector becomes crucial.Nigeria liberalised digital mobile 11 years ago and 70 per cent of the money needed came from Nigeria, not from outside. Businessmen here need the assurance that this public policy would be there for 20 years and they will combine with banks and foreigners to invest in distribution, as you have never seen before.But, as long as it is not governed properly, as long as it is not transparent and you don't have stable government policy, there would not be a recognisable improvement because government cannot finance it with all the money it has.Why policies are not implementedThey include lack of continuous dedication and consistency of government policy. Every new government that comes brings a change in policy. Ghanaians may disagree on politics but not on energy policy. They have been consistent about rural electrification. That is what I tried to do 20 years ago and my successor is doing now, we are working with the government to show a 20-year plan and that is why the donors are backing this reform so that if government changes, the plan cannot change.Nigerians can disagree on politics; they cannot disagree on energy policy.The second is accountability. We need to report to Nigerians annually on how many mega watts that are built, how many transmission lines that are put in place and how many people are connected, We also want governors to pick up this agenda; even though it does not finish during their tenures, their successors will complete it.If the country has power infrastructure, people will put power plants here to supply the rest of the world.On tariff increaseYou must increase electricity rate. We must stop thinking that energy is a free service. If you want to go to 20,000 mega watts, those that will lend you money need to be paid. So, tariff must increased but the question is how fast it will take to transform the sector. You must do the gradual increase in rate. But there must be accountability.For the citizens to have confidence, they need to see evidence. NGOs should be on ground to monitor the situation and see indicators that there is increase in mega watts.When citizens begin to see a change, they will have confidence; but there is the need to know that the change is not overnight. This is what we are going to help the country do with the World Bank. We can help them publish accurate data for people to check. We want to show that when money is budgeted, it is judiciously utilised.Recommended energy mix for NigeriaNigeria is as lucky as Brazil. It has all the resources to be completely energy independent and fully self sustained. You have water resources; you can build more hydropower, big and small. Brazil does all of the above.Nigeria can be number one in bio-energy supply because it is a major producer of ethanol. You also produce sugar. Brazil had 40 years of ethanol policy, there was dedication on research and development and support to farmers; today, they are the only country that when you get to the filling station, you can use 90 per cent diesel combined with ethanol; this was supported by oil company.The energy company recognised the jewel: petrol will finish but bio energy never finishes; you can always grow it and you combine it with hydro.The whole of South East should be declared a petrochemical hub to produce energy for the world and supply to the country because you have cheap gas.
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