NIGERIANS SPENT OVER N700BN ON DIESEL FOR POWER GENERATION IN Q2 2022.
This is four times more than the revenue generated from the on-grid power sector in the same period.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) estimates that Nigerians consumed an average of 14 million litres of diesel per day in Q2 2022. It is noteworthy that diesel-powered vehicles are not prevalent in Nigeria, except for heavy-duty trucks. Hence, it is reasonable to infer that at least 90% of the diesel consumed is used to power generator sets around the country.
According to the National Bureau of Statistics (NBS), the average Q2 2022 diesel price was N686/litre, which means that Nigerians spent approximately N875bn on diesel in the quarter. The Nigerian Electricity Regulatory Commission (NERC) Q2 2022 report shows that Distribution Companies (Discos), who collect revenue for the entire NESI value chain (Generation, Transmission & Distribution) made a total of N188bn from electricity sales in the same period. This shows a revenue potential of N687bn per quarter in the Nigerian on-grid electricity sector if improvements in power supply and reliability are made.
Based on the revenue potential, it is clear that ability to pay for good power supply amongst Nigerians exists, however, the willingness to pay remains very low due to poor and unreliable supply. We must continue exploring impactful Initiatives to solve the power sector challenges in Nigeria.
NOTE: This revenue potential is only based on Diesel consumption and does not capture the consumption of fuel generator sets, meaning there is even greater revenue potential.