THE BANE OF DIESEL ECONOMY
The authorities must do more to generate enough energy to power the economy
That Nigeria still relies heavily on diesel generators to run her economy raises several questions. Speaking during the U.S.-Africa Leaders Summit in Washington DC, last month, President Muhammadu Buhari pledged the commitment of Nigeria to eliminating the use of petrol and diesel generators in the country by 2060. That, he added, has necessitated the deployment of renewable energy, particularly solar in the country. But given what he described as the “considerable financial and technical support” to achieve the goals, there are questions about the feasibility of the idea.
No fewer than 70 per cent of Nigerian firms, according to the World Bank, rely on generators for their electricity. This revelation corresponds with a similar data from Nigeria’s Rural Electrification Agency (REA) that Nigerians spend an estimated $14 billion annually on small-scale diesel generators in the absence of reliable supply from the national grid. To begin with, how is it that we have found it extremely difficult to fix our public power system and grow its capacity to levels that would ensure the permanent removal of diesel generators in our economy? How have we even failed to implement the content of a regulatory guideline on importation of generators into Nigeria which the Nigerian Electricity Regulatory Commission (NERC) passed in August 2011 to amongst other objectives check the influx of generators into the country and consequently push for improvement in public power supply?When will Nigeria get its power sector to work and what is it doing about the prevalent abuse of its environment with diesel generators?
The Rural Electrification Agency (REA) in its report of opportunities in Nigeria’s off grid electricity market, explained that the generating sets Nigerians use to power their homes and offices are inefficient and expensive – costing on the average, $0.40 per kilowatt hour (kWh) or more. The REA equally pointed out the health and environmental impact, just as the World Bank has explained that diesel generators contribute emissions of fine particulate matter (PM) which include black carbon to the environment. The bank even stated that the PM is a predisposing factor for respiratory and cardiopulmonary disease leading to increased hospital visits and risk of premature death.
A country the size of Nigeria should never run on diesel generators which are costly to it and the environment. ‘All On’, a seeded company of an oil major Shell, has advised that Nigeria should initiate and implement a graduated and weighty tax system on the production, assemblage and importation of power generating sets that use diesel and petrol. But while we subscribe to the view that the country should focus on fixing its public power supply system and controlling the influx of diesel generators into the economy, it is not going to be done by delivering speeches.
In its recommendations on the way forward for the country, ‘All On’ had proposed that the importation of generators be discouraged with the introduction of additional levies in the form of Import Adjustment Tax (IAT), raising it from the current rate of between 15 per cent and 35 per cent on varying categories of generating sets to 50 per cent. The Shell subsidiary had asked the country to set a timeline of three years to kick out generators in the country and transit from using such fossil fuel generating sets to clean energy sources such as solar. Raising duties on petrol and diesel generators, ‘All On’ argued would enable the growth of clean energy sources mostly in off grid communities, but suggested that industries located in such communities could be exempted from the proposed regulation provided they are able to satisfy certain conditions.
Sadly, people in government are interested more in delivering speeches.
