Energy zones and what they mean for Nigeria’s energy sector

Nothing is more indicative of progressive reform than telling a citizen that his or her light may be unstable so that a manufacturer can cool its executive water bottles to subzero temperatures.

However, here’s the drift. After many years of financial illiquidity in the power sector, gloom in many parts of the country and recurring collapses of the national grid, here comes a brilliant idea to identify high demand commercial and industrial hubs such as Lagos, the Abuja-Kaduna-Kano corridor and the Enugu-Port Harcourt axis and concentrate uninterrupted electricity 24 hours a day.

When Joseph Tegbe first took over as Energy Minister, he identified something crucial. “The energy sector’s problem, I would say, is largely financial,” he said. He explained that the lack of liquidity affects the entire energy value chain, which ultimately harms the reliability of energy supply to homes and businesses.

From the inability to pay gas debts to energy companies to the financing needed to replace aging transmission lines, he highlighted how the issue is largely financial, without ignoring the technical challenges facing the sector.

The federal government’s strategy aims to address distribution bottlenecks, unlock industrial demand and save electricity distribution companies from their endless losses. The approach to creating energy zones is based on the idea of ​​letting those who are growing financially help support the system for everyone else.

It is true that, according to data from the Nigerian Electricity Regulatory Commission (NERC), electricity collection rates are gradually improving among distribution companies, but there is still a large portion of Nigerians who are unwilling to pay for the electricity they receive, as well as people who are illegally connected to the grid.

Energy zones target the manufacturing side of our economy, which needs reliable energy to drive national industrial growth.

Look at it this way. Getting reliable energy instead of spending money on expensive diesel results in a lower cost of production and, ultimately, lower prices for goods purchased by everyday consumers.

The designation of specific industrial and commercial corridors for 24/7 energy is intended to bridge the gap between generation capacity and effective distribution deployment, ensuring steady cash flow for electric utilities anchored around major economic arteries.

The energy zones initiative is undoubtedly a big bet. If successful, it could revive production, cut production costs for businesses and ultimately demonstrate that Nigeria’s electricity infrastructure can deliver 24-hour reliability somewhere other than on paper.

We have already seen success stories in projects such as the Agbara Independent Power Plant and the Azura Power Plant, which demonstrate that this is possible.

We are also seeing examples of success from the Rural Electrification Agency (REA), which has established special electrification zones for farming communities and universities. So far, REA has delivered over 200 MW of installed capacity spread across 15 universities, over a thousand mini-grid projects in more than 23 states, with recent installations in Oke-Uyi, Kwara State, and Epe, Lagos State.

The federal government doesn’t stop at creating economic zones. Most recently, the Minister of Energy celebrated the groundbreaking ceremony of a National Control Center in Osogbo, needed to address the growing and anticipated demands of the energy sector.

Once completed, the center will offer modern computer systems, large screens and data tools to help operators spot developing faults, plan preventative maintenance and better utilize existing power plants and transmission lines. It will also improve responses to grid problems, support the use of renewable energy and strengthen Nigeria’s coordination within the West African energy pool, underpinned by greater physical and cyber security.

If the government’s strategy on energy zones works, the industrial centers will maintain constant power, but our responsibility as citizens begins right there. We must therefore keep the promise of the minister and the authorities, monitoring the revenues to ensure that they flow back into the development of other parts of the country’s electricity infrastructure. Only then will these energy zones become a stepping stone for all of Nigeria, rather than a permanent luxury for a few.

Mathew, an energy journalist, writes from Lagos, Nigeria.