INTRODUCTION

While Energy Transition is not a recent phenomenon, its global momentum and prominence have notably surged since the adoption of the Paris Agreement at COP 21 in 2015. Faced with the pressing challenges of climate change, the Paris Agreement received widespread acceptance from majority of nations around the world and has culminated in the introduction and implementation of various measures to address climate change both on the international scene and domestically.

Africa, responsible for roughly 4% of global carbon emissions1, has been tagged the world's most vulnerable region to the adverse impacts of climate change2. Despite being host to about 30% of the world's mineral reserves,3 as at 20224 Africa had approximately 431 million people living below extreme poverty line5 and 43% of its total population lacking access to energy.6 Confronted by extreme poverty and significant electricity deficit, many oil-rich African nations found themselves at crossroads on the global transition train. Recognizing that sustainability entails addressing current needs while preserving the ability of future generations to meet their own needs, African leaders have consistently advocated for the adoption of a 'just transition'.7 This approach leverages readily available resources, including fossil fuels, towards meeting developmental needs, building capacity, and funding a gradual shift to clean energy.

ELECTRICITY DEFICIT IN NIGERIA

Nigeria, the most populous country in Africa, grapples with a multidimensional poverty rate of 63%8 and holds the unenviable position of the country with the largest energy deficit globally.9 This deficit imposes significant hardships on individuals and businesses, leading to an annual loss of approximately $26.2 billion, equivalent to 2% of Nigeria's GDP.10 To meet energy needs, Nigerians spend about $15- $20 billion each year on o-grid fossil fuel generators,11 contributing substantially to emissions from the Power Sector which account for 27% of in-scope emissions.

THE NIGERIAN POWER SECTOR: 10 YEARS POST-PRIVATIZATION

A decade post privatization, the Nigerian Power Sector remains burdened with a multitude of challenges, resulting in a meager ability to fulfill just 15% of the overall energy demand.12 These challenges include liquidity issues, poor infrastructure, substantial ATC&C losses, vulnerability to fluctuating exchange rates, unresolved gas-to-power debts, low metering and colletion rates, and incidents of vandalism, among others.13 According to a recent report by NERC, the average available generation capacity of the 27-grid connected power plants was 4211.44MW in the 3rd Quarter of 2023,14 falling significantly short of the ambitious 40,000MW generation capacity target set for 2020.15

In the past year, the Power Sector witnessed a trend of banks taking control of Distribution Companies (DisCos) due to their inability to service their debts.16 The distribution infrastructure has suered significant neglect over the years, primarily because investors who participated in privatization acquired shares using loans from banks, which they are now repaying, leaving them unable to allocate resources to improve infrastructure.

Despite garnering substantial investments exceeding N7 trillion17 through diverse initiatives funded by entities like the World Bank, African Development Bank, French Development Agency, Japan International Cooperation Agency, and the Central Bank of Nigeria, the Power Sector continues to grapple with a myriad of challenges even after multiple bail outs by the Government. Considering these challenges, stakeholders have advocated for a reevaluation of the privatization of the Sector.

Yet, amid the Sector's evident under performance, in December 2023, the Federal Government announced its intention to divest 40% of its shares in Distribution Companies (DisCos).18 Concerns have been voiced by stakeholders regarding the potential of this decision to exacerbate the current state of aairs within the Sector. This apprehension revolves around potential political biases which may influence the sale of shares, resulting in further entrusting the Sector in the hands of individuals who lack the requisite financial or technical expertise for proficient management.

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Footnotes

1. https://www.aljazeera.com/news/2023/9/4/how-much-does-africa-contribute-to-global-carbon- emissions#:~:text=Comprising%20about%2017%20percent%20of,emissions%20at%201.45%20billion%20tonnes. (Last accessed December 25, 2023)

2. https://www.afdb.org/en/cop25/climate-change-africa#:~:text=Africa%2C%20despite%20its%20low%20contribution,scenarios%20above%201.5%20degrees%20Celsius. (Last accessed December 25, 2023)

3. https://www.unep.org/regions/africa/our-work-africa (Last accessed December 25, 2023)

4. https://www.statista.com/statistics/1228533/number-of-people-living-below-the-extreme-poverty-line-in-africa/ (Last accessed December 25, 2023)

5. https://www.statista.com/statistics/1228533/number-of-people-living-below-the-extreme-poverty-line-in-africa/ (Last accessed December 25, 2023)

6. https://www.iea.org/reports/africa-energy-outlook-2022/key-findings (Last accessed December 25, 2023)

7. https://www.un.org/africarenewal/magazine/november-2022/just-transition-renewable-energy-%C2%A0africa (Last accessed December 25, 2023)

8. https://www.nigeriapovertymap.com/ (Last accessed December 25, 2023)

9. https://www.worldbank.org/en/news/press-release/2021/02/05/nigeria-to-improve-electricity-access-and-services-to-citizens (Last accessed December 25, 2023)

10. https://www.undp.org/sites/g/files/zskgke326/files/2022-10/INFF_Report%5B100%5D.pdf (Last accessed December 25, 2023)

11. https://www.thisdaylive.com/index.php/2023/07/27/nigerias-renewable-energy-operators-push-for-clean-energy-to-replace-20bn-generators-spend (Last accessed December 25, 2023)

12. https://www.thecable.ng/tinubu-concerned-about-undercapitalisation-in-power-sector-says-privatisation-objectives-unmet (Last accessed December 25, 2023)

13. https://www.thisdaylive.com/index.php/2022/10/02/62-years-of-unbroken-jinx-in-nigerias-power-sector (Last accessed December 25, 2023)

14. https://nerc.gov.ng/index.php/library/documents/func-startdown/1165/ (Last accessed December 25, 2023)

15. https://nerc.gov.ng/index.php/home/nesi/403-generation (Last accessed December 25, 2023)

16. https://businessday.ng/energy/article/fidelity-bank-dissolves-boards-of-three-indebted-discos/ (Last accessed December 25, 2023)

17. https://www.icirnigeria.org/post-privatisation-power-sector-failed-despite-over-n7trn-interventions/ (Last accessed December 25, 2023)

18. https://punchng.com/fg-plans-sale-of-40-stake-in-discos-others/ (Last accessed December 26, 2023)

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