A Memorandum of Understanding (MoU) has been signed by the Federal Ministry of Power and the US Agency for International Development (USAID) to execute a technical support program supported by a ₦115.2 billion US government grant that aims to aid development and reforms in Nigeria’s power sector. This agreement solidifies Nigeria’s dedication to market openness, liquidity, and the expansion of access to affordable Electricity supply. Melissa Jones, the director of USAID’s Nigeria mission, and Mahmuda Mamman, the permanent secretary of the Federal Ministry of Power, recently signed the MoU.
Jones reaffirmed the US government’s commitment to promoting electrification in Nigeria. According to her, the goal is to improve relations between the two parties and offer a foundation for partnerships with other significant players, such as state and local governments, the Electricity Generation and distribution companies, and the off-grid sector. Adebayo Adelabu, the Minister of Power, commended USAID for its ongoing support and emphasized the partnership’s potential for revolutionary change. He elaborated that this collaboration marks a critical turning point in the effort to provide all Nigerians with a steady and sustainable supply of electricity.
Government has been relentless in strengthening the sector.
It was revealed that USAID leverages the Power Africa Initiative, a partnership project spearheaded by the US government that enhances sub-Saharan Africa’s access to electricity by combining the resources of the public and private sectors, to address these issues. More than 33 million Nigerians have gained access to this initiative, over 200 private off-grid firms have benefited, and around $4.5 billion has been raised for on and off grid electricity projects in Nigeria. In the end, this endeavour will propel the country closer to its clean energy and net zero carbon Emissions goals by fortifying policy frameworks, enhancing regulatory capabilities, and stimulating Private Sector involvement.
The ministry has assured their commitment in ensuring that these investments provide real advantages to every Nigerian, encouraging Economic Expansion and sustainable development. Richard Nelson, the US government’s coordinator for the Power Africa Initiative, stated that Nigeria is the focal point of Power Africa’s strategy. He expressed optimism about strengthening the alliance in order to further Nigeria’s advancement towards a common goal of guaranteeing that everyone has access to an affordable and steady electricity supply. The Nigerian government has been relentless in strengthening the sector by enacting regulatory changes to draw in private sector investment, increasing funding for Renewable Energy projects, and launching programmes to increase grid stability and decrease blackouts.
Numerous bottlenecks limit actual generation capacity.
Nigeria’s electrification rate as of 2023 is approximately 55 percent, meaning that almost half of the country’s population does not yet have access to reliable electricity. Unlike remote regions where access is still very limited, urban areas enjoy higher rates of electricity. Nigeria has an installed generation capacity of about 12,522 MW, but due to numerous bottlenecks, maintenance problems, and fuel supply limits, the actual available capacity is frequently substantially lower. On numerous occasions, the operational capacity is less than 4,000 MW, which results in severe power outages and shortages.
Ripple effect of the inefficiencies in the sector is felt across every sector and has a big impact on the economy. Frequent blackouts compelled businesses to use pricey diesel for generators, which raises operating expenses and lowers their competitive edge. According to World Bank estimates, Nigeria loses over $26.2 billion, equivalent to 2 percent of its Gross Domestic Product (GDP), yearly as a result of poor electricity supply. For general development, employment generation, and economic expansion, enhanced Infrastructure is essential. One notable example of a successful initiative in the sector is the 461 MW Azura-Edo Power Station, which makes a substantial contribution to the national grid and improves the reliability of the country’s electricity supply.
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Also, the 750 MW Kainji and 578 MW Jebba hydropower projects in Nigeria have undergone rehabilitation and modernization, which has improved the plants’ output and dependability and supported the stability of the country’s grid. Among the government’s future initiatives and plans to develop the sector to watch out for are the joint venture between the government and Siemens, under the Presidential Power Initiative (PPI), which is expected to boost the country’s electricity capacity to 25,000 MW by 2025; Another one is the $500 million Loan provided by the World Bank as part of a broader support package to improve Nigeria’s Power Sector Recovery Operation (PSRO).