Nigerians Spent N16.5 Trillion on Diesel, Petrol, and Generators in 2023, Reports

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In 2023, Nigerians spent a staggering N16.5 trillion on diesel, petrol, and generators to generate electricity, the Federal Government announced on Tuesday.

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In contrast, the formal power sector, comprising electricity generation, transmission, and distribution companies, generated a total revenue of only N1 trillion last year, despite the N16 trillion spent by consumers in the informal sector.

Minister of Power, Adebayo Adelabu, disclosed this at the ongoing 2024 Nigeria Oil and Gas Conference in Abuja. He noted that electricity consumers in the Band A category now receive up to 24 hours of power supply.

“If you know how much our people spend on diesel, petrol, generators, and servicing them in a year, it’s N16.5 trillion on self-generated power in 2023. Many industries are off the grid, using captive power with gas-powered generators,” Adelabu said.

He highlighted that total spending on off-grid power approaches N20 trillion, while the formal power sector’s revenue was just N1 trillion in 2023. Adelabu suggested that redirecting even a quarter of the informal spending to the official power sector could boost its revenue to N6 trillion, potentially ensuring near-uninterrupted power supply in Nigeria.

The minister emphasized that the government is working to regain consumers’ trust in the national grid, which offers a cheaper alternative to diesel or petrol-powered generators.

“Band A customers enjoy uninterrupted supply at N206/kWh. Companies with gas-powered captive power pay about N290/kWh, petrol generators cost around N450/kWh, and diesel generators cost upwards of N900/kWh. The national grid remains the most cost-efficient source of power,” Adelabu explained.

Adelabu also noted that the power sector consumes the largest share of Nigeria’s domestic gas supply. He urged increased investment in gas development to meet the goals of the Nigeria Energy Transition Plan, which aims for 30GW of power by 2030, with 70% from thermal sources and 30% from renewables.

“The power sector would need over five times the current domestic gas supply to achieve the 70% thermal energy target. Additional investments are needed to boost gas production without compromising export obligations,” Adelabu stated.

He called on investors to focus on developing Nigeria’s abundant, untapped non-associated gas reserves. The minister highlighted recent government initiatives, such as the introduction of cost-reflective tariffs and resolving legacy debts to generation and gas companies, to ensure efficient gas supply and attract investment in the power sector.

“The Federal Government is committed to creating a viable and bankable power sector. We believe the industry is ready for investment,” Adelabu concluded.

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