If electricity supplied to industries increases to 40,000Gwh within the next seven years, the manufacturing sector’s contribution to the Gross Domestic Product (GDP) is projected to rise to N49.6 trillion with at least 46.59 million jobs created.
Estimates from PwC Nigeria, shows that increasing electricity supply to industries has an indirect effect on employment in other sectors of the economy at a multiplier rate that almost triples direct employment.
Besides, stakeholders in the power value-chain noted that consumers only pay for about 1,000MW of the average 3,500MW energy distributed daily, hence causing a dislocation in the value chain.
To address financing challenges in the power sector, the stakeholders advocated improved revenue collection, metering of consumers and review of energy tariff to check losses suffered by value-chain operators.
“The effect of charging industries a tariff of N80/Kwh and supplying 50% of electricity received by DISCOs to industries 24/7 is an increase in the level of manufacturing GDP from N6.4 trillion to N13.3 trillion”
Speaking at the yearly power and utilities roundtable organised by PwC, themed “Financing the Power sector: The facts, fiction and the future”, Partner and Chief Economist, PwC Nigeria, Dr. Andrew Nevin noted that with population growth rate higher than GDP growth, there is a need to increase power generation and utilisation for productive use.
Nevin, who spoke on “Effective power sector financing: An economic perspective”, noted that people in the diaspora are the ones sustaining the economy as a result of their huge remittances, adding that the country needs an investment rate of at least 26 per cent of the GDP to grow at 7%.
“To revitalize liquidity in DISCOs, we consider 50% of the energy received by DISCOs is transmitted to industries at a cost-reflective rate of N80/Kwh. At N80/Kwh charged to industries, an estimated N400 billion will be injected into the power sector yearly.
“The effect of charging industries a tariff of N80/Kwh and supplying 50% of electricity received by DISCOs to industries 24/7 is an increase in the level of manufacturing GDP from N6.4 trillion to N13.3 trillion”, he added.
On his part, Managing Director/CEO of Niger Delta Power Holding Company (NDPHC), Chiedu Ugbo in his keynote address, advocated the need to explore alternative financing models that would spur economic growth and revitalise the power sector.
Culled from The Guardian