‘Nigeria, others should cautiously decommission fossil fuels’
Despite the gradual transition to renewable energy, African countries have been warned of the impending economic challenges that may arise from the urgency in decommissioning fossil fuels by 2050.
Speaking at the 12th edition of PwC Nigeria’s yearly power and utilities roundtable, a Partner at PwC, Pedro Omontuemhen, said Africa needs to have a say in the path to net zero.
The event with the theme, “Sustainable power supply in Nigeria-What next, gain, perspective from Ghana and South Africa’, Omontuemhen added that achieving power stability for the country would require huge capital investment.
“If you look at the total emissions from the world, Africa is just contributing about three per cent and we do not have the resources, technical resources at the moment to transition to the 2050 deadline; that would be a near impossible deadline for Africa to achieve.
“Africa needs to use the resources it currently has to transit. We need to be allowed by the rest of the world to continue to produce our fossil fuel and then use the financing from fossil fuel to transition gradually to the net zero target.
“From power production to transition to distribution, a lot of money is required and if you look at the current energy poverty in Nigeria, you need a lot of money to be pumped into that sector. No matter the number you are hearing that has been spent on the industry I think there is much to be done for us to have a stable electricity supply,” he said.
In his presentation, Energy and Infrastructure Strategy Lead, PWC South Africa, James Mackay, remarked that with Africa’s three per cent contribution to global C02 emission, the continent faces the double challenge of energy transition and energy poverty.
He noted that the private sector must play a critical role in financing and driving renewable energy initiatives in the continent.
Similarly, the Senior Assistant to the President on Infrastructure, Ahmad Zakari, believes that with government intervention within the power sector, it would require time for the nation to begin to see the dividends.
He hinted that they recently concluded the contract for substations for some corridors in the country.
“The Minister recently accelerated the programme by identifying empty slots for some of the mobile transformers that we need in sub stations and some of the equipment will be landing very soon by the year,” he stated.
Managing Director, Nigeria Bulk Electricity Trading, Dr. Nnaemeka Ewelukwa, remarked that besides closing the metering gap in the distribution segment, implementing the Siemens Presidency power initiatives would lead to accountability in the sector.
“To get more funds into the sector, closing the metering gap in the country would enable funds to flow in the electricity market. Energy transition fund is the bigger picture facing the country in view of the global net zero.
“There is a massive gap between the generation capacity in the country and what is currently supplied to the citizens, so the generating capacity is under 14, 000 Megawatts.”
But if you look at what is available it is about 6000 to 7000 Megawatts according to data from TCN. But on a given day, what comes to the citizens is about 4500 Megawatts.”
Meanwhile, Special Assistant on Energy to the CBN governor, Ebipere Clark also stated the need to create a conducive environment that would be friendly for investors to thrive in the sector.
The Chief Executive officer, Central Electric, Adedoyin Adele-Fadipe opined that onboarding those off-grid into the power space remains critical as 43 percent Nigerians do not have access to the grid.
“We need to understand the economics for those within the underserved consumers and this would lead to collaboration between those that have invested in the technology and other stakeholders in the industry.”
This is even as Partner PwC Power Utility Sector, Pedro Omontuemhen opined that the net zero race is on and African needs a target path to 2050.
He said the mini-grid operators should take equity funds and take loans from banks and other financial institutions to support themselves adding that the cash flow will flow seamlessly when they have the appropriate channels of funding.
He hinted that the outlook for the power sector in 2022 will see investors’ confidence renewed and a better positive outlook to attract private investors to play while doing their risk analysis to weigh their options and benefits.