According to the Federal Government, Nigerians purchased generators, petrol, and fuel for their electricity generation in 2023 for a total of N16.5 trillion. This is far less than the N1 trillion that the formal electricity sector brought in that same year.
This information was disclosed by the minister of power, Adebayo Adelabu, on Tuesday at the 2024 Nigeria Oil and Gas conference.
He drew attention to the stark disparity between the amount spent on inefficient personal power generation and the national grid’s earnings.
He stated, “You know how much our people spend each year on diesel, petrol, generators, and maintenance? According to our most recent report from 2023, N16.5 trillion was spent on self-generation of power. Some industries are not even connected to the grid. With gas-powered generators, they now possess their own captive power in between environments.”
“So, spending in this industry outside of the grid is close to N20 trillion. And here’s something that will blow your mind: in 2023, the formal electricity sector brought in just N1 trillion, all of which went to the distribution, transmission, and generation corporations. only formal revenue of N1tn. However, the informal spending on generators, diesel, and petrol was close to N20 trillion.”
Adelabu underlined the financial advantages of joining the grid, noting that grid-supplied electricity is far less expensive than alternatives that rely on generators.
For example, residences on Band A of the national grid that have almost continuous power supply pay N206 per kWh, whereas those that rely on petrol generators spend N450/kWh and more for diesel generators.
“As of the most recent survey, Band A users pay N206 and have continuous supply. Businesses that use gas to generate their own electricity cost roughly N290 per kilowatt-hour.”
“For those who use petrol generators, it costs roughly N450 per kilowatt-hour. Additionally, the cost is higher than N900 for individuals whose generators run on diesel. Therefore, it continues to be the least expensive, most effective, and least costly of our producing operations,” the minister said.
The minister also talked about how important natural gas is to Nigeria’s electrical industry. About 60% of the country’s domestic gas supply currently comes from gas, which is necessary to fulfill the ambitious energy goal of the nation.
The minister emphasized that this strategy seeks to generate 30 gigawatts (GW) of power by 2030, with 70% coming from gas and 30% from renewables.
During the conference, Adelabu urged investors to think about funding Nigeria’s gas industry, specifically the vast untapped non-associated gas reserves.
He outlined recent initiatives taken by the government to increase investor interest in the power sector, including cost-reflective pricing and the settlement of residual debts.
The minister conveyed assurance over the government’s dedication to developing a feasible and appealing electricity industry for capital infusion.
