Power to run the engine of the national economy has been in deficit over the years due to neglect of the sector by successive administrations. Mr Hyacinth Udemba, an engineer and chief executive officer, Prostar Global Energy, a firm that specialises in renewable energy, says the Federal Government must come out with a blueprint that will spell out yearly addition of megawatts to the national grid. In this interview with LUCAS AJANAKU, he speaks on the constraints facing telecoms companies, the need for governments and banks to fund alternative power provision and other sundry issues. Excerpts:
How would you assess the performance of the economy, especially when the Federal Government says the economy is growing and such growth is not creating jobs?
Job creation may not be the only index for scoring a performing economy. I can rate the performance with reference to where the economy was before leadership changed hands from Umaru Musa Ya Adua to Goodluck Jonathan.
At the moment, we seem to look at our currency exchange rate in relation to other major currencies. So far, it has been fairly stable. The exchange rate might be comparatively high, but that is a function of the level of our exports and narrow band economic activities in terms of variety of local manufacturing and export commodities. It may remain high as long as we have a mono export commodity which is oil. Job creation becomes a possibility when the enabling frameworks are put in place. The main factor to achieving the feat remains the availability of electricity. Aside this, we can actually give ourselves a pass mark if we look around and see the level of infrastructural changes. I guess our thinking of poor performance is in relation of manpower and resources available to us compared with some other nations. In a way, Nigeria is really a peculiar nation and more complex than we sometimes assume. I believe we are making progress.
How can the economy be made to work?
Believing in one nation is the key. The economy can be made to work as expected if we all do what we are supposed to do and the government is sincere with programmes and policies. We all should learn to sound less about political party or tribal affiliations. All manners of corruption are tied to the fact that we do not love the country, hence, tribal or party affairs take precedent in our hearts.
At what level of megawatts of electricity would Nigeria be at peace?
I will base my answer on the fact that we are clamouring for industrialisation as the needed antidote for quick growth. If this must come through, then we must make provision for its sustainability through availability of electricity. I will like to look at a situation where companies are hooking on to the national grid as power is gradually being made available. To this extent, considering the size of the country, Nigeria would need about 50,000Mw in the next 25 years. Of the 50,000Mw, 10,000Mw will be a reserve while 40,000Mw remains the daily output to the grid.
In seeking alternative electricity supply to the national grid, at what point should government come in?
The government has no reason not to advance technologically in the power sector like other developing countries which include Kenya, South Aftrica, India, Malaysia and Indonasia. The story is different these days as the cost of renewable energy materials and accessories are nose diving. Nigeria can actually pick up with other countries when the right policy is in place with incentives. What stops Nigeria from producing solar panels or wind turbine parts? One of the government agencies, the National Agency for Science and Engineering Infrastructure or NASENI, under the Ministry of Science and Technology, tried to lead the way in producing solar panels locally. What is the fate of the age ncy today? If the policy for the use of solar energy in Nigeria is promises incentives, foreigners will troop in to manufacture, solving the problem in the sector and creating jobs. The enabling environment for foreign manufacturers may include but not limited to loan facilities (access to credit), land acquisition, provision of security, and for the users of solar power, a grant of carbon credit.
How is this going to happen?
One of the ways to get the country running for the renewable energy sector is to put a policy in place. For instance, the government sets aside $900 million as laon for people going into battery and inverter production, solar panel assembly and also make a policy that every new estate built must incorporate renewable energy, or that every bank, estate must use solar energy for their perimeter lighting. Such a policy will spur people to purchase these materials massively. Those who want to come into the industry will have confidence that there is a policy in place. Before an installation of a 10Mw production capacity of solar panels, the manufacturers must have extrapolated the sale of at least 1Mw of solar panels per annum. This will assure the manufacturers that installation of a 10 MW photovoltaic plant will lead to recouping investment in about five years time. Without such policy, it will be difficult to get investors to the sector. No sane entrepreneur will go to the bank and obtain loan without assurance that there is a policy in place that will guarantee the market for the product. For instance, anybody can now come and invest in the oil and gas sector because the market is there. If an investor wishes to refine petroleum in the country, he can refine and sell. If he’s able to refine at competitive price, he will sell because the market is there for him.
How?
When Germany began her own 100,000 roofs on solar programme in 2004, banks were involved because people had to take loans secured by the government and insured by insurance companies. During summer, they sell the power to the government, during winter, they buy from the government, thus, they gradually offset their loan and at a constant interest rate which was cheap enough to attract investors. The government also put incentives in place to compensate them for saving the environment from global warming, hence, the carbon credit. So, there must be some incentives to attract investors. Until the right things are done, at the right time, we may not really get anywhere.
You are calling for an all-encompassing power sector policy?
Yes, a policy not only on the conventional means of generating power but that which will encapsulate renewable energy and spur people to invest in the sector. That is the way it is in Germany, Japan and even South Africa. These countries have policies in place that allow people to invest. The advantage of this is that you will be creating employment opportunities. One of the ways President Obama of the US is creating job is through the support he is giving to alternative energy, wind energy precisely. By the time you set up about four to five factories in the US, that will employ tens of thousands of people. The same thing can happen here. Let us begin with the battery and inverter production. Solar panel may not be a big employer of labour but it is part of it.
Imagine the volume and value of contract jobs that are given out each year. Before the end of the year, the government would have given out about N20 billion worth of contracts on renewable energy. I am aware of the amount the Ministry of Environment, Health, Transport, Energy Commission, some state governments and the rest of them may be spending in the sector without really being serious about the correct function of the installed systems. Can’t we make a policy that this N20 billion that we are going to spend, part of it be directed to local production of some of the components? Why do we have to continue to import and install? The government should make a policy that will be private-sector-driven in power generation through both conventional and renewable sources.
It might take several years to get the stable power the government is promising. Anything shorter than 30 to 40 years power plan will bring about power plants that will stop functioning after the exit of President Jonathan.
Thirty and forty years plan?
Yes, Nigeria at the moment is talking about six-10MW power generation if all the plans go well. How do we compare Nigeria with South Africa that currently generates about 47Mw? We may claim to be having fairly constant power supply now and not yet stable power supply. It is only when you have stable power supply that companies like the Nigerian Breweries and the likes will once more hook on to the national grid. Until then, what we have today may best be for domestic use. By the time the redundant loads gets in, we might be back to where were. Nigerians should not be fooled by the slogan of government that they will get stable power supply between now and next two years. It is not possible. It is just not possible.
Nigerians should not expect stable power supply?
Yes, we cannot afford it now. I may be seen as being pessimistic in this regard, it is the truth. Remember what happened under the late Bola Ige when he was appointed power minister. He openly told Nigerians that there will be stable power in Nigeria within six months. It’s the same advisers in the ministry that gave him the wrong signal. The late President Umaru Yar’ Adua came to power with his seven-point agenda, he made same promise of power stability. Once again, those who think that they are helping Jonathan achieve his transformation agenda are beginning to hurry the winners of power generation stations to get going in haste. Setting up and running a power generation station efficiently is not a tea party.
You said Nigeria cannot afford stable power. What do you mean?
We cannot afford it because there is no policy in place to drive that. The operators in the power sector keep telling Nigerians about 6000Mw generation. This is barely enough for domestic energy needs. They are not talking about suppressed demand, those that were switched off because they know the power is not there. When you bring the firms that should be running on the national grid together, you will discover that 6000MW is a dip compared to the demand that will surge. Nigeria does not generate what the New York Fire Department in the USA need for its operation. Imagine the sheer size and industrial level of the country compared with South Africa which has 47000 MW.
Each time they mention 6000MW as the target, I feel ashamed because with those ridiculous megawatts, we are simply going nowhere. So, we just have to think of how many megawatts to add to the national grid yearly. Let the government have a policy that yearly about 1000MW will be added to the national grid. This should be followed to a logical conclusion.
President Jonathan can do it. Add just 1,000Mw to the grid, you will see an improvement. Before the end of his tenure he would have achieved enough. Given that many power stations are under construction at the moment, it is an indication that such may be achieved, at least, to 70 per cent. India is doing just that. India is adding a minimum of 3,500MW yearly. Even if you have enough, you keep the excess as reserve in case there is failure. Despite the volume of power generation in India, the country still experienced failures that nearly crippled its economy a few months ago. This is one of the reasons the government should aim higher and become more focused and target-oriented in this sector.
So, before this country can have stable power supply, it will be between the next 30 to 40 years. We can only prove that wrong if we begin to do something positive from today.
And what do we do?
Aside the policy that will add about 1000MW or whatever we think is within reach into the system, government must ensure that every measure that will make it run steadily is in place. We must also ensure that existing ones run at, at least, 75 per cent of installed capacities. If we are able to do so, then would have charted the path to end the nightmare. We must also make sure that 0.5 per cent of our energy needs is put off the national grid and switched into renewable energy every year. If we now quantify the power needs of the domestic sector, we will know the deficit. In India, today, many British and other foreign companies are setting up business because the country has steady policies. Its textile industry is working fine. Almost all the textile mills in the UK have their base in India.
If telecoms operators run Base Transmission Stattions (BTS) on solar, would there be any respite to their challenges?
To provide renewable energy to the cell sites, because of the capacity of the BTS, the solar panels required will occupy about 90 square metres which is not tenable given the problem of securing land. Anywhere they install BTS, they don’t have enough land and they pay heavily for the small plot.To be able to accommodate about 12,000 watts of power required by each BTS, solar panel of not less than 10,000 watts is required and it will occupy a surface area of not less than 50-60 square metres. You have to supply security for the solar panel too because they will be stolen. If Nigerians steal bridge rails, the rods, irons, pipes used to protect us from falling into the lagoon on Eko Bridge, and also steal our own street lights, how are you sure that the solar panels will not be stolen? So, another thing is the security implication. That is why they find it difficult to deploy renewable energy to power their BTS. The late General Abacha commissioned the use of solar cells to power the railway communication link systems, but within six months of installation, they were all vandalsied. Abacha was resuscitating rail transportation then and you cannot use the rail without communication links as they move from one station to the other. Now, to make sure that communication is enhanced, solar was used but they were vandalised.
With the migration to cash-less economy which means that ATMs and other electronic channels of payment would require energy constantly, why are banks not exploring the solar power option?
Every bank needs a large quantity of energy to run its operation and solar system may not be an option now because of the cost implication compared with the power demand. But ATMs can depend on solar or inverter backup depending on location or the branch of the bank. Deploying solar for full bank operations will require a large space for the panels. But what we are saying is that if banks have policies in place to support renewable energy as we have in other countries, it will be okay. But banks are not looking in that direction perhaps, they are not aware of the roles they can play in the sector.
Operators are therefore left to do the little they can. So, at the moment, we are not encouraged in the sense that the incentives from government through the banks is not there. And also, any time the government wants to give major jobs out, they don’t give them to indigenous experts. It is either they are given to foreign installers, or companies or they are done the same way they do other projects in the country. I want to believe that all that is now changing by virtue of the new Procurement Act, I think they are beginning to give jobs to those who have the competence to do the jobs. But as government is beginning to pick interest in the sector, if things are done properly, I want to believe that in the next five years, we shall be somewhere in the area of energy in the country. It is only then that the rolls of the banking industry in the sector may be established.
But Lagos State is using solar to light the streets and they are not subjected to vandalism. Why?
In the area of using solar power to improve street lights, Lagos State is a just an isolated case because I also know that Peter Odili, former governor of Rivers State did the same in Port Harcourt and within few weeks, many of them installed along the airport road were vandalised. They are only safe if they are installed within the city. Like the one we have in Morrocco Road, Aggrey Road, First Avenue, they are not vandalised but the ones along airport road in Port Harcourt were all vandalised because they were in remote areas. In Lagos State, because they are located within the city, the chances of their being save is there. In Asaba, most of the installed solar street lights were completely vandalised. Same story abound in many other locations including Abuja FCT. You must also bear in mind that Lagos has improved on its security network since the inception of Raji Fashola’s government, so the possibility of safeguarding public infrastructure has improved there.
Are you saying it is the security of the solar panels and other equipment that are keeping telecoms operators away from embracing renewable energy?
There are two principal factors. The first is security while the second is non-avalability of land to accommodate the solar panels that will be able to power base stations.
What peculiar challenges do you have as an operator in the renewable energy sector?
The peculiar challenge we have is the initial cost of deployment and lack of banking sector support. Besides most contracts in the sector are not given to the experts for a reason I may ascribe to corrupt practices. I get ashamed as an expert each time I see failed solar street lights. Its not encouraging at all.
People have talked about inconsistent government policy, especially as it concerns duty paid on some imported components of renewable energy. What is the situation?
As an expert, I believe that the misunderstanding we have in tariffs with officials of Nigeria Customs Service (NCS) can be attributed to lack of knowledge on the part of the NCS officers. They are supposed to have gone for training to understand some of these things, about the interpretation of certain items especially in a new sector like renewable energy. Renewable energy is new worldwide, even standards are yet to be formed in all aspects of the components of the renewable energy sector, so, many of the components are yet to have standards so, they are not well known. In Nigeria, our Customs men fail in their duty for refusing to learn in some cases and insist on what they think is right even when is very clear that they are wrong in some of the clasifications, so when you stand to educate them, they just do what they like. Therefore we are discouraged from importing a lot of things because the duty will make the cost to be completely outrageous. Let me give you an example; if you import a solar freezer, which is just like ordinary freezer because they look alike, but what makes the difference is the compressor. The compressor for solar freezer uses battery, where conventional freezers uses power supplied from the national grid or generators. Because the cost of the solar compressor is extremely high, being a high-tech compressor, if I bring it into the country and pay the same duty as would be paid on conventional refrigerator, I cannot sell it. The retail price will be out of reach. Now see this logic and you can understand me better. If I import the solar freezer, with solar panel and battery, all packed together as one package, it will be seen as a solar freezer and I will pay zero duty, but not so when the solar freezer is imported alone when I will be made to pay 35% duty. But the fact is that one may not need to import the freezer and the batteries all the time. If you look at it, they cannot understand what is inside. That is why I said they still need training to understand some of these things and be able to make some logical decisions in that respect. So generally, the inability of the NCS to correctly interpret the tariff is still a problem but I believe that in the next three, four years, we would have overcome all these challenges.
And also the inconstancy of the officials of the NCS is another problem. An officer may be there for one year within which period he must have learned certain things, but the following year, he is removed and posted to another location. Another person replaces him and you are back to square one. And here, we are not known to have continuity in everything we do. Despite all my views as stated so far let it be on record that I have faith in this country. I have travelled far and wide across the continents and after all This is where I belong and am proud to be part of it contributing my small quota in building the place I can call my Home, my Nation and my Pride.
