Nigeria’s energy crisis: Shedding light on corruption, obstacles, reforms for Energy Transition

In the sweltering heat of Nigeria, where temperatures soar above 36 degrees Celsius, the oppressive reality of epileptic power supply casts a dark shadow over daily life. As citizens endure the unbearable heat and frequent blackouts, the quest for reliable electricity becomes a desperate plea for relief.

Unfortunately, only 45% of Nigerians have access to grid-electricity and the 55% that have access to electricity have to depend on fossil generators mostly over 22 million small “I-pass-my-neighbour” generator sets that they can hardly fuel due to the high fuel prices. Yet, amidst this struggle, a glimmer of hope emerges the growing demand for pay-as-you-go solar systems. Nevertheless, are they affordable?

Over the past three days alone, over five friends and acquaintances seeking information on where to procure these life-saving systems have approached me. Reflecting on my own journey to acquire solar power, I am dismayed to discover that the cost has skyrocketed by over 50% in just two years, driven primarily by the surge in the value of the dollar. This unsettling reality challenges even the most fundamental economic principles, leaving me to question the efficacy of market forces in Nigeria’s shadow economy.

Despite the increase in fuel prices by over 200% because of the subsidy removal in May 2023, one would think that more Nigerians would be switching to solar. However, numerous obstacles hinder this transition. Dollar scarcity hampers the import of technology, while the loss of naira value and high import duties further inflate costs. Government bureaucracy and delays in port clearance exacerbate the situation, as do multiple custom bills and the failure of the government to subsidise clean, reliable energy for the poor masses and public projects.

Additionally, the burden of multiple taxation weighs heavily on the very few local companies that dare to invest in manufacturing and assembling clean energy components in Nigeria, let us not forget power sector corruption that killed the then National Electric Power Authority (NEPA) and is now swelling even in the nascent renewable energy sector with government not only informing bureaucracy, but also racking over N1.2 billion contact frauds.

Indeed, in a country plagued by corruption and mismanagement, the power sector stands as a glaring example of institutional failure. Despite vast natural resources and untapped potential in renewable energy, the Nigerian government has consistently fallen short in providing its citizens with access to reliable electricity. The consequences are dire: businesses struggle to operate, students are unable to study, and healthcare facilities are crippled without power; unemployment and violence steam hot.

It is time to shine a spotlight on the rampant corruption that undermines progress in Nigeria’s power sector and the myriad obstacles hindering the transition to renewable energy. From fraudulent contracts to bureaucratic red tape, the barriers to access must be dismantled, and the perpetrators held accountable. Furthermore, the government must recognise the invaluable role of development partners in driving progress in the renewable energy sector.

Organisations like AllOn, GIZ, NuMap, etc have demonstrated their commitment, and capacity to support local partners to implement projects efficiently and effectively, ensuring value for money, creating jobs and impacting the lives of vulnerable Nigerians in far to reach communities. By investing in partnerships with reputable organisations, the Nigerian government can leverage external expertise and resources to accelerate the deployment of renewable energy solutions that is more market lead, free from corruption and poor delivery.

Additionally, there is a pressing need to support small, local start-ups in Nigeria’s burgeoning renewable energy sector. These entrepreneurs possess the innovative ideas and local knowledge needed to address the unique challenges facing communities across the country bedevilled with no electricity. However, without adequate support and guidance, many of these start-ups struggle to survive in a landscape dominated by entrenched interests and bureaucratic red tape.

For instance, AllOn is providing debt, equity matched support to energy enterprises at all range of sizes, who have proven off-grid energy technology solutions, and businesses that are ready to scale their business to enable them offer affordable clean reliable energy to Nigerian households and businesses.

To conclude, Nigeria’s energy crisis is a symptom of systemic corruption, institutional failure, and numerous obstacles hindering progress. It is time for the Nigerian people, stakeholders, CSOs and maybe the government (when ready) to take decisive action to root out corruption, promote transparency and accountability, and invest in partnerships with reputable development agencies and local start-ups.

Only through collective effort and unwavering commitment to reform can Nigeria realize its potential to provide reliable electricity for all its citizens. The time for change is now and several recommendations can be made to address the challenges facing Nigeria’s energy sector:

1. Combat Corruption and Improve Transparency:

• We need to implement robust anti-corruption measures throughout the power sector, including stringent oversight mechanisms, transparent procurement processes, and accountability for corrupt practices.
• We need to empower and allow for open independent monitoring of projects and strengthen institutions responsible for monitoring and enforcing integrity standards within the energy sector, empowering them to investigate and prosecute cases of corruption effectively.
• Enforce Open Contract, Open Data and Information Sharing: we must push and enforce laws and culture of transparency by making critical information, such as energy sector contracts, procurement processes, budgets, and performance data, readily accessible and displayed to the public. Enforce laws to compel the utilization of technology platforms to disseminate information in a timely and user-friendly manner, enabling stakeholders to freely monitor and scrutinize the operations of energy companies, renewable energy projects, and access project cites for assessments and public reporting.
• Strengthen Internal Controls and Auditing Procedures: we must implement rigorous internal controls and auditing procedures within energy companies to detect and prevent corrupt practices effectively, especially those that are set for public projects. This can involve conducting regular audits, risk assessments, and compliance reviews, as well as establishing independent audit committees to oversee financial reporting and governance processes.
• Enforce Ethical Standards and Codes of Conduct: Establish clear ethical standards and codes of conduct for employees and officials within the energy sector, outlining expected behaviors, responsibilities, and consequences for non-compliance. Provide training and awareness programs to ensure that personnel understand their obligations and are equipped to resist bribery, extortion, and other forms of corruption.
• Engage Civil Society and Stakeholder Participation: Foster active engagement and collaboration with civil society organisations, non-governmental organisations (NGOs), and other stakeholders in monitoring and advocating for transparency and accountability in the power sector. Encourage public participation in decision-making processes, public hearings, and oversight mechanisms to enhance accountability and legitimacy.
• Implement Electronic Procurement Systems: Transition to electronic procurement systems for energy sector contracts to minimise opportunities for corruption and streamline procurement processes. Electronic platforms can improve transparency, reduce paperwork, and enhance the competitiveness and efficiency of procurement activities, reducing the risk of fraud and favouritism.
• Establish Independent Regulatory Bodies: Ensure the independence and autonomy of regulatory bodies responsible for overseeing the energy sector, granting them sufficient authority and resources to fulfill their mandates effectively. Insulate regulatory decision-making from political interference and vested interests, promoting impartiality and integrity in regulatory processes.
• Strengthen Legal Frameworks and Enforcement: Enact robust legislation to criminalise corruption and enhance penalties for corrupt practices within the energy sector. Strengthen law enforcement agencies’ capacity to investigate and prosecute corruption cases in the sector, providing specialised training, resources, and coordination mechanisms to combat impunity and hold perpetrators accountable.

2. Streamline Bureaucracy and Regulatory Processes:

• Simplify bureaucratic procedures and reduce regulatory hurdles that hinder the importation, distribution, and adoption of renewable energy technologies.

• Establish clear and efficient processes for obtaining permits, licenses, and approvals for renewable energy projects, minimising delays and administrative bottlenecks.

3. Subsidise Clean Energy for the Masses:

• Introduce subsidies or incentives to make clean energy solutions more affordable and accessible to the general population, particularly low-income households and rural communities.

• Redirect funds currently allocated to fossil fuel subsidies towards supporting renewable energy initiatives, promoting sustainability and reducing dependency on costly imports.

4. Support Local Manufacturing and Innovation:

• Provide financial incentives, tax breaks, and technical assistance to encourage domestic production of renewable energy components and equipment, fostering the growth of a local renewable energy industry.

• Foster collaboration between government agencies, academia, and private sector stakeholders to promote research, development, and innovation in renewable energy technologies tailored to Nigeria’s specific needs and challenges.

5. Forge Partnerships with Development Agencies and NGOs:

• Collaborate with reputable international development organisations and non-governmental organisations (NGOs) to leverage their expertise, resources, and networks in implementing renewable energy projects and capacity-building initiatives.

• Establish strategic partnerships with organisations such as GIZ and All On to access funding, technical assistance, and knowledge sharing opportunities, accelerating the deployment of sustainable energy solutions across Nigeria.

6. Promote Public Awareness and Education:

• Launch public awareness campaigns to educate citizens about the benefits of renewable energy, dispel myths and misconceptions, and promote behavioural change towards more sustainable energy consumption practices.

• Integrate renewable energy education into school curricula and community outreach programmes, empowering individuals with the knowledge and skills to embrace clean energy alternatives and contribute to a greener future.

7. Facilitate Access to Financing and Investment:

• Develop innovative financing mechanisms, such as green bonds, venture capital funds, and revolving loan facilities, to mobilise domestic and international investment in renewable energy projects and infrastructure.

• Create an enabling environment for private sector participation in the energy sector through policy incentives, risk mitigation instruments, and public-private partnerships, unlocking capital and expertise for sustainable development.

8. Promote Energy Efficiency and Demand-Side Management:

• Implement energy efficiency measures and demand-side management programs to reduce energy consumption, lower costs, and minimise environmental impact, leveraging technologies such as smart meters, energy-efficient appliances, and building standards.

• Provide incentives and technical assistance to industries, commercial enterprises, and households to adopt energy-efficient practices and technologies, enhancing productivity, competitiveness, and sustainability.

9. Invest in Infrastructure Development:

• Allocate resources towards upgrading and expanding the country’s energy infrastructure, including transmission and distribution networks, to improve the reliability and stability of electricity supply nationwide.
• Prioritise investments in off-grid and mini-grid systems to reach remote and underserved communities, reducing dependency on centralised grid infrastructure and increasing energy access for all Nigerians.

Only if a few of these recommendations are considered and implemented, we may have taken a little step to addressing the systemic challenges undermining our energy sector, foster a transition towards sustainable and inclusive energy access, and unlock the full potential of renewable energy to improve the lives of its citizens.

By Donald Ikenna Ofoegbu