*Ayodele Babalola
INTRODUCTION
Recently, there was a consideration of the Generating Sets Prohibition Bill 2020 (the Bill) at the Senate of the Federal Republic of Nigeria. The Bill seeks inter alia to prohibit the importation, sale and usage of diesel, petrol and kerosene propelled generating sets in Nigeria also creating an exception for essential services and other services which obtain an exclusion approval granted by the Minister for Power. This piece examines whether the Bill is a blessing or a premature step.
THE PROBLEM
Nigeria presently needs an estimated 50,000 Megawatts (MW) to attain uninterrupted power supply. While Nigeria’s installed generating capacity is presently at an estimated maximum of 11,000 to 17,000MW, the grid presently provides a dismal 4,000MW for a population of over 200 million. Grid power in Nigeria is generated through thermal and hydropower sources with natural gas accounting for over 80% and hydropower filling the rest. Petrol/diesel propelled generators presently dominate the residential market and local power generation in Nigeria. Small scale businesses and families spend a reported average of N3.5tn ($21.8bn) yearly to power their generators with diesel and petrol. An estimated 90% of businesses power their operations with diesel or petrol propelled generators. These generators are used as ready back up to the unstable grid power. There have been interesting developments in the offgrid renewable space with: minigrid developments; on-grid and off-grid collaborations; and solar deployments in federal government universities and teaching hospitals.
However, Nigeria has simply not been able to generate sufficient, stable and reliable grid power. Grid collapse and power cuts are very frequent. This forms the basis for the widespread use of the petrol and diesel propelled generators.
THE BIGGER PROBLEM
Greenhouse gases (GHGs) pose a serious threat to human health and also contribute to climate change. There is a direct correlation between the use of petrol/diesel propelled generators and climate change because such generators emit GHGs, notably carbondioxide (CO2). In SubSaharan Africa (SSA) alone, CO2 emitted by generators is equal to nearly 20 percent of vehicle emissions – the equivalent of 22 million passenger vehicles on the road. With a steady economic growth of five percent per year and under a business-as-usual scenario, Nigeria’s GHG emissions is expected to grow to around 900 million tonnes per year in the year 2030, which translates to around 3.4 tonnes per person. The global Unconditional Nationally Determined Contributions are estimated to lower global anthropogenic emissions in 2030 by up to 6 GtCO2e compared to a continuation of current policies. This level of ambition needs to be roughly tripled to be aligned with the 2 degrees Celsius limit and increased around five-fold to align with the 1.5 degrees Celsius limit.
RECENT GOVERNMENTAL EFFORTS AT BOOSTING SOLAR ELECTRICITY
The federal government, through the Rural Electrification Agency (REA) recently signed grant agreements for the Performance Based Grant (PBG) and Output Based Fund (OBF) with seven renewable energy investors under the World Bank funded Nigeria Electrification Project (NEP). While the PBG is for the deployment of mini-grids to un-served and under-served communities in Nigeria, the OBF is for the sale of solar home systems (SHSs) to homes and businesses across Nigeria. The Energizing Education Programme (EEP) entails the provision of an independent power plant, upgrading existing distribution infrastructure, street lightning and development of a world class training centre on renewable energy for each university. Through the Rural Electrification Agency (REA), the EEP is to be implemented in phases with phase 1 already ongoing. For phase 1, 9 federal universities, 1 teaching hospital, 127,757 students, 28,657 staff, and 15 clinics will receive uninterrupted power supply totaling 28.5MW using solar hybrid and/or gas powered plants. 156 access roads will also be illuminated by 2,850 street lights, and a projected 206 generators will be decommissioned
THE BILL – BLESSING OR PREMATURE?
The Bill is a blessing but also premature for various reasons. It is a blessing because it seeks to combat air pollution and climate change emanating from the power sector. While deaths resulting from air pollution is alarmingly on the increase, recent studies have also linked air pollution with dementia and cardiovascular diseases. There have also been various incidents of people dying from CO2 poisoning emanating from the use of residential generators. It is indeed a global environmental and public health problem.
There are a few bold policy and regulatory actions Nigeria should take before the Bill can be termed ready to go.
We have to improve grid infrastructure and supply. A smart grid will detect faults beforehand and gather intelligence on the entire electricity chain. A decent grid supply is the foundational basis for any policy action so we also need to improve our grid supply.
Furthermore, the government has to do more with respect to policies in the area of renewable energy development stimulation. A framework of intertwined policy and regulatory injections aimed at redirecting fossil power finance to environmentally conscious investments is a great approach. This should start with a regulation setting standards for the quality of solar panels, wind turbines and storage batteries imported into Nigeria followed by tariff free importation. This will increase both the quality and the inflow of renewable energy components into the country. Then, a tax holiday for large scale investments in renewable power generation in Nigeria should follow. The tax holiday will significantly reduce tariffs payable for renewable power thereby paving the way for high demand from the market. It will also create room for the much desired investments in local production of renewable energy components. The next step should then be a legislative action to make mandatory the federal government’s Electricity Vision 30:30:30 which targets generation of 30GW in 2030 with 30% of renewable energy contribution to on-grid generation capacity. So for example, a law can then be introduced to mandate power generation companies to dedicate the generation of a certain percentage of their power from renewable sources. Similarly, distribution companies can also be mandated to purchase a certain percentage of their distributed power from renewable sources. A future commencement date can be set for these legislative initiatives to ensure readiness. This legislative action will trigger major renewable energy investments in the power generation sector.
With the above stated in place and functioning properly discussions on the Bill can resume. In 2018, Nigerian importers spent a total of US$332.6m on electricity generators and converters creating a fast growing market for companies in China, France and the United Kingdom. The ban, when ripe will free up a lot of finance that can be redirected to off grid renewable sources which has continued to enjoy a decrease in costs globally. When ripe, an incremental approach is however favoured starting from a ban on importation. Then with respect to generators already in use which constitute existing sources of emissions, there should be an incremental policy geared towards their eventual phase out. The policy should limit the number of days when the generators can be used as well as districts where they can be used. It should also make it illegal to use a generator after its projected life span. Small scale businesses and families spend an average of N3.5tn ($21.8bn) yearly to power their generators with diesel and petrol. Again, this finance can be redirected to renewable sources.
Whenever we get to the point where we can discuss a complete ban on the importation and use of generators in Nigeria, such discussions should also be kickstarted at the ECOWAS level to prevent carbon leakage resulting from aggressive exports to other ECOWAS countries with similar electricity issues thereby multiplying the emissions problem. A regional treaty will become useful at this point so as not to defeat the bigger picture of global environmental and public health preservation.
CONCLUSION
The Bill has passed first reading at the Senate. A lot of things have to be put in place first. It is a blessing in the sense that it seeks to combat global environmental and public health issues like climate change and air pollution. However, if passed and strictly enforced at this time, it will cripple both residential and economic activites. The baton has been passed to the executive arm and its agencies to seek out policies and strategies to stimulate and significantly increase grid supply and off grid renewables. When we have sufficient grid supply and offgrid renewables, the Bill will become mature. For now, lets concentrate on boosting the grid and renewable production and supply. We will surely get there.
* Ayodele Babalola is qualified to practice law in Nigeria and has a degree of Master of Laws (LL.M) with specialization in Environmental & Energy Law and Public Law from the University of California, Berkeley. He is the Founding Partner, AOB Willows LP where he leads the Dispute Resolution, Environment, Elections and Sports Practice
Photo credit istockphoto.com
