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Decarbonising the power sector budget


Electricity Distribution Company

Sir: A Decarbonised budget for the power sector refers to a budget that prioritises power sources and processes that emits little or no carbon dioxide gas. Generating power from sources like coal emits high quantity of carbon dioxide while generating power from sources like solar does not emit carbon dioxide. Preparing and implementing a decarbonised budget eventually leads to running a decarbonised economy. Decarbonising the power sector budget can be achieved through numerous ways. The existing installed capacity available for generating power will have to optimised. Nigeria’s total installed capacity for generation of power is about 12,000 Megawatts while the actual generation from the installed capacity hovers around 4,000 Megawatts.

The implication is that carbon dioxide emission from the generation process is 100 per cent while the actual power generated is 33 per cent of the installed capacity. Why should our power generation emit maximum carbon dioxide and generate only 4,000 Megawatts when we can actually generate more energy at the same rate of carbon dioxide emission? The more Nigeria optimizes power generation from her installed capacity, the more the power sector budget is decarbonised. Nigeria needs to restore lost gas supply through the Gas Flare Commercialisation Programme and produce strategy towards elimination of gas infrastructure vandalism. Completion of major gas infrastructure lines to plants and main trunk lines to facilitate gas supply for power generation is relevant.

Decarbonising the power sector budget entails mobilising investments to execute renewable off-grid power solutions to improve energy mix. Restructuring the Transmission Company of Nigeria to improve management and operational efficiency will also be inevitable. The various policies, plans and strategies of the government for the power sector should be judiciously implemented. The Rural Electrification Strategy and Implementation Plan as well as the National Renewable Energy and Energy Efficiency Policy (NREEEP) should be meticulously implemented. Implementation of the Power Sector Recovery Plan is also relevant. The National Energy Efficiency Action Plan seeks to improve energy efficiency in the residential, public and services sectors. The plan targets an energy efficiency of six per cent in new large private buildings by 2020 and 10 per cent energy efficiency in new public buildings by 2020.

There is need to improve the financial capability of NBET (Nigerian Bulk Electricity Trading) to support the electricity market and strengthen governance and capacity of sector agencies. Attempting to decarbonize the power sector budget will lead to the introduction of a strategy for capital market and banking programmes that ensure all upstream industry operators get paid for each contract. Decarbonising the budget will also lead to a review of the gas pricing structure to recover all prudent costs as services improve and give willing developers access to underdeveloped gas resources. Ensuring strict contract compliance both for the public and private sector power investments will have to be done.

Small scale and modular energy generation projects usually emit little or no carbon dioxide. These small scale energy generation projects should be encouraged.

Embedded generation should be supported while electricity generation companies should be encouraged to procure embedded generation. Execution of Independent Power Projects which is currently being done in a haphazard manner should be addressed. Accelerating standardisation of the process for executing Independent Power Projects (IPPs) and defining pricing to encourage private sector participation is long overdue. A clear, legal and commercial framework for investments in power projects should be deployed while the privatisation of National Integrated Power Projects (NIPP) generation assets should also be done. This will lead to a reduction in transmission and distribution losses as well as reduction in energy theft. The lingering crisis over debts owed by MDAs (Ministries, Departments and Agencies) to Distribution Companies should be resolved.

There is need to establish central payment system for MDAs electricity bills and tie payment of bills to Distribution Companies to their commitments to install meters in MDAs. Relevant stakeholders within the power sector should make budgetary provision to undertake nationwide customer enumeration and energy audit, support the roll out of a nationwide metering programme and identify sources of funding to resolve accumulated payment deficits. The stakeholders should also design public communication and stakeholder engagement strategy to enlighten public on key policies, review the disbursement and management of the ₦213 billion Nigerian Electricity Market Stabilisation Facility and enforce existing laws that criminalise power theft as well as ensure prompt payment by heavy public defaulters. All these measures which leads to increased efficiency of the power sector also leads to reduced emission of carbon dioxide across the numerous value chains of the energy generation and utilisation process.

Martins Eke is a programme officer at Centre for Social Justice, Abuja.

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