The business angle to Nigeria’s Energy Transition Plan

Wealth creation, healthy living, food security and good nutrition, water provision, infrastructure development, qualitative education, and high life expectancy are significantly related to the consumption of energy per capita. The problem of energy poverty is as important as our climate reliability aspirations. It is on this basis that it is important to design our poverty eradication around energy transition. The current lack of power hurts livelihoods and destroys the dreams of hundreds of millions of Nigerians, especially the young people. Nigeria’s Energy Transition Plan, a roadmap to tackle the dual crises of energy poverty and climate change, should be driven as a business entity by business concerns. Impact investment of Nigerian businesses should complement this effort of the government.

In Nigeria, particularly, and Africa, generally, energy use is crucial for almost every conceivable aspect of development. It has been estimated that Nigeria, with a population of about 220 million people, requires about 40,000 megawatts (MW) capita annually to be self-sufficient in energy. In 2012, the electricity industry laboured to distribute 5,000 MW. At present, 144 kwh per capita is being generated annually. There is a significant gap between energy demand and supply and although Africa’s current unmet energy needs are huge, future demand will be even greater due to expanding populations (Nigeria is predicted to grow to 400 million in 2050!), urbanisation, and movement of people into the middle class.

According to Vice President Professor Yemi Osinbajo, “the scale of resources required to attain both development and climate ambitions is significant. Nigeria would need to spend $410 billion above business-as-usual spending to deliver our Transition Plan by 2060, which translates to about $10 billion per year. The average $3 billion per year investments in renewable energy recorded for the whole of Africa between 2000 and 2020 will certainly not suffice.” Nigeria’s Energy Transition Implementation Working Group is currently engaging with partners to secure an initial $10 billion support package ahead of COP27 along the lines of the South African Just Energy Transition Partnership announced at COP26 in Glasgow in November, 2021.

The World Bank plans to commit over $1.5 billion towards the Energy Transition Plan on renewable energy, on power sector reforms, on clean cooking, electric transportation means and other areas where there are opportunities for energy use. Energy Transition in Nigeria is very crucial because of the potential dangers its abstinence can cause. Energy transition will help to curb greenhouse emission and reduce its impact on climate change and global warming. Climate change threatens crop productivity in regions that are already food insecure, and since agriculture provides the largest number of jobs, reduction in crop productivity, which is already being threatened by insecurity, will worsen unemployment and affect trade in Nigeria.

Businesses in Nigeria, especially those in the energy sector, should see the business sense in embracing the energy transition plan. Now is certainly the time for decisive action, and they cannot afford to delay because delay may be dangerous. A beckon to an estate surveyor and valuer, as the first point of call, will do well to prospective investors. All African countries have signed the Paris Agreement and countries like Angola, Nigeria, South Africa and Sudan have also announced net-zero targets and dates. A lot of foreign companies are already warming up to seize the investment opportunities in the Nigeria Energy Transition Plan. The CEO of Sun Africa, Mr. Adam Cortese, stated that, “the launch of this plan has further accelerated our efforts, proving Nigeria to be fertile grounds for investments in the sector. We are in the final stages of discussion with US EXIM Bank on a USD 1.5 billion financing package.”

Since each country will need to take unique pathways in order to achieve a just, inclusive and equitable energy transition for all, Nigeria has developed her Energy Transition Plan to engage with the rest of the world in a solemn, thorough and data-backed manner. The plan was anchored on the key objectives, including lifting 100 million people out of poverty in a decade, driving economic growth, bringing modern energy services to the whole population and managing the expected long-term job losses in the oil sector due to global decarbonization. The plan recognizes the role natural gas can play in the short term to facilitate the establishment of baseload energy capacity and address the nation’s clean cooking deficit in the form of Liquefied Petroleum Gas (LPG) and electricity.

The plan foresees vivacious industries powered by low-carbon technologies; streets lined with electric vehicles and livelihoods enabled by sufficient and clean energy. The other ambitions of the roadmap are to create about 340,000 jobs by 2030, and 840,000 by 2060. It also presents a unique opportunity to deliver a true low-carbon and rapid development model in Africa’s largest economy. The government is currently implementing power sector initiatives and reforms with the aim of expanding Nigeria grid, increasing energy generation capacity, and deploying renewable energy to rural and underserved populations. Apart from the transition plan, there is the institution of Universal Energy Facility (UEF). UEF is an innovative, results-based, finance programme that focuses specifically on scaling up electricity access for productive uses.

This finance programme will provide grant payments to subscribers to enable solar companies to expand their operations to small and medium-sized enterprises across Nigeria, while attracting additional private capital. Projects supported by the Universal Energy Facility will help grow businesses and create jobs, making them key contributors to Nigeria’s Energy Transition Plan. Solar companies and other organisations in renewable energy businesses will surely benefit from the innovative financing opportunity, which is being managed by Sustainable Energy for All. From September 20 to 23, 2022, at Landmark Centre, Lagos, Nigeria, in a show tagged “Nigeria Energy”, the main focus of key players in the energy sector will be how to maximise the opportunities thrown up by the Nigeria Energy Transition Plan.