World Bank reiterate lower-carbon energy adoption, subsidy reduction on fossil fuels

In line with its Climate Change Action Plan, the World Bank Group has charged Nigeria and other African countries to embrace lower-carbon sources of energy in a bid to increase electricity access and also reduce subsidies being applied on fossil fuels.

According to the Bretton Wood institution, regions of the world need to think about where they are going to get electricity access, and do it in a way that has the lower carbon output.

President of the World Bank Group, David Malpass, during a virtual media briefing with West and Central African journalists, noted that the Bank wants to work with countries on their long-term strategy, by addressing questions as to where they will get the growth in electricity access that they need, and what are the lower-carbon sources of energy that are available?

“This might be hydro; it might be natural gas; it might be improvements in the transmission grid that save electricity and allow more renewables to be brought on stream.

“We have solar projects in many of the countries that are successful at bringing low-cost, clean energy to the countries, but they also need the expansion of baseload in the city areas. These are all parts of our climate change action plan that are important in moving this along.

“One other thing that we mentioned in the elements of our Climate Change Action Plan is the importance of countries reducing the subsidies that they apply for fossil fuels. That often takes the form of subsidies to the electricity generation facilities that give them fossil fuel energy at a lower cost than the market cost or than the full cost to the world”, he added.

The bank in its report on Nigeria Power Sector Recovery Programme, which was based on latest figures sourced from operators such as the Nigeria Electricity Regulatory Commission, the Rural Electrification Agency, the National Bureau of Statistics, power generators and distributors, stated that most poor households in Nigeria are not connected to the country’s electricity supply network as only 22 per cent of the poorest of them have access to grid power.

In the report, the bank asked, “Who is connected to the grid?” And it answered the question by saying, “Only 22 per cent of the poorest households have access to electricity.”

It then argued that keeping electricity tariff low was beneficial to the rich more than the poor as the former were more connected to the grid and consumed more electricity.

It said, “Who gets the higher benefit? For every N10 the government spends on meeting the tariff shortfall, N8 goes to the richer households who don’t need help paying their bills.”

The bank stated that the average annual per capita electricity consumption of Nigeria was 148 kilowatt-hour, making the nation a fourth of typical middle-income country consumption.

It stated that 40 per cent of people with access to electricity relied on non-grid sources such as generators, solar home systems, while low income households resorted to candles and flashlights.

According to the bank, 41 per cent of Nigerian households pay for grid electricity and only 18 per cent of them pay for more than 100kWh/ month.

The report observed that 58 per cent of non-farm enterprise owners were women and many of them were home-based, reliant on generators and were losing sales.

The bank said, “Large numbers of rural schools and health centres are unelectrified – critical for human development.”

It said electrification in Nigeria had been at 1.1 per cent per annum since 2010 and had not kept pace with population growth, which it put at three per cent per annum, hence increasing the deficit by about three million people to 85 million (57 per cent of population).

“Nigeria now has 25 per cent more unelectrified people than the second most unelectrified country (DRC – in absolute terms),” the bank stated.

It added, “For bottom 40 per cent of the population (mostly rural), access to grid electricity is even lower at about 31 per cent nationwide. Regionally, only South-West has access over 50 per cent (except Kano).”

The bank said Nigeria now had the largest number of unelectrified people globally and the trend was worsening, adding that of the electrified, the supply was very unreliable with widespread blackouts, adding that to achieve universal access to electricity by 2030, Nigeria would need to connect over one million households per year.

The bank, however, said its proposed engagement with the Federal Government on power sector recovery was under two streams, with the aim to provide holistic support for addressing key challenges through results-based lending.

“So, we’re working on all of those through IDA, through IBRD, and also very much by trying to encourage countries to align their development practices–I mean, their development goals, which certainly include clean energy for the health–you know, in urban areas, they are clogged with the output, the emissions, from thermal plants”, Malpass added.