Nigeria’s ongoing power problems cost the economy an estimated $26 billion annually.
This is according to the latest African Trade Barometer report by Standard Bank.
The report notes that companies spend about $22 billion annually on off-grid fuel to mitigate the impact of unreliable power, further exacerbating operational costs.
The report states: “In Nigeria, the companies surveyed have to contend with a national electricity grid that frequently collapses as it is unable to meet daily peak demand nearly four times its generation capacity. Economic losses resulting from electricity shortages in Nigeria are due to off-grid This is estimated at $26 billion per year, not including fuel costs for generators, and an additional $22 billion.
The report identified electricity supply as a significant barrier to business operations in Nigeria and some other African countries.
“Across 10 African markets, electricity supply infrastructure remains the most serious barrier to the operations of surveyed companies. It is one of the least recognized infrastructure characteristics. At the same time, it is reported to pose the most significant disruption to business operations.
“Power outages cause production downtime, jeopardize the quality of goods that require a controlled environment, impact water supplies and even impact the communications infrastructure that businesses rely on for payments. As a result, sales and profits decline,” the report said.
It also called for diversification of energy sources to reduce risks posed by over-reliance on the national grid.
The report also highlighted the need for policies to stabilize power generation and attract investment in renewable energy.
Recall that despite huge investments in the power sector, the national power grid collapsed about 105 times under the administration of President Bola Tinubu and his predecessor Muhammadu Buhari.
According to the findings, Nigeria has secured about 10 loans worth $4.36 billion from the World Bank over the past decade to address key challenges in the power sector.
Although not all 10 World Bank loans have been fully disbursed, the federal government and other multilateral institutions have provided financial support to the country’s power sector.
They provided billions of naira to revamp the industry, but despite these funds, the industry is still struggling, with constant power grid collapses and the country repeatedly suffering major power outages. I can see myself falling into it.