Report Reveals Why There Is Less Investment In Power Sector

Many factors have been identified to be causing poor investment in the Nigerian and African power sectors.

Nigeria’s national electricity grid collapsed no fewer than seven times this year alone. The country’s power sector has been labelled as inconsistent as citizens have been thrown into thicker darkness in many parts of the country this year.

Sahara Group, a global energy player in power generation and distribution, revealed in its recent reports that the African nations suffer less willingness to invest in the power sector because of revenue losses, inadequate regulations, and lack of trust, among other concerns in the industry.

Naija News understands that the revelation is contained in the report titled “Energy Mix – The Challenges with Funding and Deploying Commercially Viable Renewable Energy Solutions,” released in November.

The report sighted by newsmen in Abuja on Thursday outlined other challenges of the sector to include; transmission and distribution losses, lack of cost-reflective tariff, and issues around regulatory standards.

On transmission and distribution losses, the report indicated that this was mainly caused by inadequate maintenance, ageing infrastructure (such as transmission lines), and slow expansion of infrastructure to match the growing population and development.

“This sometimes leads to trips and eventual system collapse, which are significant financial losses,” it stated.

On cost-reflective tariffs, the report by Sahara Group stated that many African countries did not have cost-reflective electricity tariffs. Nigeria is not an exemption, it said.

Sahara Group also observed that the electricity tariffs set by the country’s regulatory bodies are below the cost of generation and distribution for reasons of socio-political expedience.

It added, “This reduces the amount of money coming into the utilities, which can impact their ability to fund the value chain. This can create a liquidity crisis, deterring private investment.”

It named the next challenge limiting power sector investment as bill collection losses from electricity billed to consumers but not paid for.

“This occurs when customers fail to pay their bills. These bill collection losses can also occur due to inadequate metering across the customer base,” the company added in the state.