Minister of Solid Minerals Development, Dr. Kayode Fayemi
Okechukwu Nnodim, Abuja
The development of coal deposits for
power generation will not qualify for funding from the World Bank and
many multilateral financial institutions despite the abundance of the
mineral resources in Nigeria.
Analysts on Monday stated that the
Federal Government had plans to generate about 30 per cent of Nigeria’s
electricity from coal, but described the initiative as “unclean power.”
In April this year, the Minister of
Mines and Steel Development, Kayode Fayemi, announced that his ministry
was collaborating with the Federal Ministry of Power, Works and Housing
on coal-to-power projects, which is expected to account for 30 per cent
of the country’s electricity mix.
“We can get power from coal, which we
have in abundance. We need people, private sector players to set up
plants that will use coal,” Fayemi had said.
But in their report on Monday, analysts
at the FBNQuest Research, a research arm of First Bank Plc, stated that
despite the abundance of coal in some states in Nigeria, international
financial organisations would not fund the development of the deposits.
They said, “Another route (for energy
mix) open to the authorities is unclean power. Bart Nnaji, a former
power minister and founder/chairman of Geometric, has estimated that the
coal deposits in the Anambra Basin could sustain generation of more
than 4,300 megawatts per year for 20 years.
“The development of the deposits would not qualify for funding from the World Bank and many multilaterals.”
On its website, the mines and steel
ministry observed that nearly three billion tonnes of indicated reserves
of coal were in 17 identified coal fields and over 600 million tonnes
of proven reserves in Enugu State alone, adding that the most
significant use of the commodity was in electricity generation, steel
production, cement manufacturing and as a liquid fuel.
Analysts at the FBNQuest also gave a general health warning about expansion plans for Nigeria’s power industry.
They said, “At best, we can say that the
industry is taking two steps forward for each step backwards. One
particular challenge is intra-industry indebtedness including the debts
of government agencies to the distribution companies, the debts of the
Discos and service providers to the Transitional Electricity Market, and
debts predating the privatisation of generation and distribution, some
covered by the CBN’s intervention fund for legacy arrears.”
They further noted that one route
actively being pursued by government was a mix of clean energy, as it
had set a target for renewable to provide 16 per cent of total energy
generated by 2030, with contributions from hydro and solar of 7.1 and
5.9 per cent, respectively.
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