How Nigeria can scale through its power sector hurdles

Nigeria is looking to spend about $3 billion on the energy sector within the next two years and plans to end electricity subsidies, body and the air. This comes as Nigeria is aiming to generate 9,000 megawatts of ungrilled power from renewable energy sources, body at 2030. Oti Ikomi, CEO and Executive Vice Chairman of Proton Energy, joined CNBC Africa to discuss these plans and shed light on the current state of the country's power sector. Ikomi expressed optimism about the progress in the sector, particularly highlighting the improved collections by electricity distribution companies (discos). According to Ikomi, the discos have shown a commendable increase in collections from 40 billion NARA in December 2019 to about 60 billion NARA in December 2020, indicating a 40 percent growth. He also pointed out that the collection efficiency, which measures how much is collected out of every bill, stands at 66.5 percent. These improvements are attributed to the recent repricing of the sector and substantial investments totaling $3 billion, including support from the Central Bank and the World Bank. The influx of funds is expected to enhance financial sustainability and customer experience. Despite the positive trajectory, Ikomi emphasized that the sector is a work in progress and urged all stakeholders to maintain the momentum for further advancements. Turning to the transmission capacity, Ikomi discussed the Transmission Company of Nigeria's achievement of transmitting peak power generation of over 5,801 megawatts in March 2021. He acknowledged the progress but emphasized the need to accelerate efforts to surpass current limitations. Ikomi mentioned the Presidential Power Initiative, a collaborative effort between Nigeria and the German government, aimed at ramping up power generation to 25,000 megawatts by 2025. He highlighted the importance of addressing inefficiencies and speeding up implementation to meet the growing energy demands in the country. Additionally, Ikomi underscored the urgency of diversifying generation sources to incorporate renewables and reduce reliance on gas-fired plants. Despite existing capacity, he stressed the need for swift actions to align with global trends moving towards sustainability. Ikomi also provided insights into Proton Energy's projects, noting their focus on on-grid solutions to support industrial and household customers. As a base load company, Proton Energy aims to contribute 150 megawatts to the grid to ensure stability and mitigate system collapses. While off-grid initiatives remain a priority, Ikomi emphasized the critical role of on-grid providers in stabilizing the grid and meeting the country's growing energy needs. The energy sector in Nigeria is undergoing a transformation fueled by investments, improved collections, and strategic initiatives. With key players like Proton Energy driving innovation and sustainability, the future looks promising for Nigeria's power sector.