‘How Small Hydro-Projects Can Revolutionise Nigeria’s Industrial Sector, Others’

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Dr. Ezedinma Chuma is the Officer in Charge of the United Nations Industrial Development Organization (UNIDO) Regional Office, Nigeria.  He had worked as the Monitoring and Evaluation Advisor for European Union’s Support to Reforming Institutions and as Chief of Party for United States Agency for International Development, Nigeria. He was at one point a Senior Scientist and Agricultural Economist at the International Institute of Tropical Agriculture, Ibadan. Between 1992 and 2001, he was Associate Professor at the Federal University of Technology, Owerri. In this interview with EMEKA ANUFORO in Abuja, he speaks on the ongoing programmes to establish the Nigerian National Quality Infrastructure Programme and how small hydro-power plants can boost industrial activities , among others. Excerpts.

What are the main areas that UNIDO has been involved recently?

Over the last 10 years, UNIDO has been striving to support Nigeria in its non-oil development and diversification of the economy- something that we have been preaching for decades, not just in the last 10 years.

UNIDO’s mandate is about inclusive, sustainable and industrial development. Our mandate is specifically related to Sustainable Development Goal 9, which is on building inclusive and sustainable industrial infrastructure and innovation. So, basically, because we talk about inclusive and sustainable industrial development, we are looking at three core areas of UNIDO. One has to do with shared prosperity. The second has to do with improving competitiveness, global competiveness for countries and the third has to do with safeguarding the environment.  If you break this down a little bit more, basically, what it means is that we are trying to help in poverty reduction by introducing productive activities, basically creating wealth.  The second has to do with improving the trade capacity of countries that cannot trade, especially developing countries.

In other words, that is where the competitiveness lies with. We are looking at improving the three C’s- competiveness, compliance and conformity.

In the third aspect, we have been providing renewable energy and safeguarding the environment. All these three components are actually linked.  Without energy, you cannot do the industrial aspect, and without the industry you cannot create wealth, while without wealth you cannot trade and so on. Basically, they are somehow interlinked. But we are trying to make it inclusive because we have seen in the case of Nigeria that there has been growth without jobs.

That means that something is fundamentally wrong somewhere and that is because our economy is skewed towards oil export.  If you don’t then expand into other areas of real sector of the economy, that is, agriculture, manufacturing, solid minerals or minerals generally, and then environment- a  lot of people would not know that you can make a lot of money from environment and then, it is not possible for you to attain inclusive growth.

So, UNIDO has been striving in these areas to help Nigeria in several ways. And fortunately, Nigeria is the only country in Africa that has all UNIDO programmes existing in it, whether it is in creating jobs, industrial development, just name it.  And for sometime, in fact, in the recent past, we have some very key programmes in Nigeria, I mean globally impactful programmes.  One of them is what I call the National Quality Infrastructure Programme, which has to do with actually developing Nigeria’s capacity to trade.  A lot of people are jumping and saying agriculture is the opportunity and now we can trade. But, unfortunately, as we speak, Nigeria does not have an internationally accepted trade quality infrastructure.

What really does that involve and what is trade infrastructure?

For now, it involves five components. In fact, there are six of them, but the only one that we have in existence is the Standards Organization of Nigeria (SON).  So, we don’t have a quality infrastructure programme and we don’t have a quality infrastructure policy. We have just been able to develop that policy and it still needs to draw down some bills that have to be passed in the National Assembly before we have a full policy document, and before we have a full complement of the policy. That policy is yet to be signed by the Federal Executive Council (FEC), but it is ready.

The second policy component of it is that we don’t have a National Accreditation Service. Now, a lot of people think that it is certain bodies or organisations like they say in our universities ‘they accredit a course’ or you accredit a discipline’. That is not what we mean by accreditation in this instance. Usually an accreditation body for a trade infrastructure, is one service, which accredits every other thing that is linked to marketing and trade.  We have also been able to establish the Nigerian National Accreditation Service. Right now, we have a board and all that.

But we need to put the issue of trade at the highest level of government, because the face of every country when it comes to trade is the face of the President of the country or the highest decision making body in the land. We now need to set up what is called the Office of Technical Regulations, which has to be in the Presidency. That Office of Technical Regulations oversees all regulations related to trade in this country. It is the same thing in other countries.  Most of the issues related to trade are domiciled as near to the President of that country as possible so that if there is an issue, it is only a phone between the two Presidents most of the time.

We still have issues of energy infrastructure with electricity supply dropping on a daily basis. You have a project focusing on small hydro power now.

Where are you with that project and how can it assist in reducing the nation’s electricity crisis?

Let me start by stepping back a little. UNIDO’s energy programme is focused on renewable.  When it comes to renewable energy, we have solar. We have wind, biomass and we have hydro. Our strength in Nigeria is specifically in small hydro.  When it comes to small hydro, we have done a survey of over 200 rivers.  We have been able to identify over 200 rivers, including those with dams and those without dams and so on and in my opinion, the beginning of wealth creation in Nigeria, is the provision of energy whether it is renewable or non-renewable.  I have been working in the sector for the past 25 years.  I started with agribusiness and agro-industrialisation before I came to UNIDO and I found out that 30 per cent of the cost of production is energy cost alone in Nigeria.

I was in one of the remotest villages in Brazil a couple of years ago and I saw that they had electricity. In fact, as at the time I went to 2006, Brazil had enough energy to last it till the year 2025 and was already planning another 25 years energy supply by building more dams. Things run on electricity- motors, quietly and silently.

How can you compete with that kind of economy where energy cost is below five per cent?

What I am looking at in the area of power for Nigeria is to utilize all available technologies and encourage embedded generation. Let every river be able to produce power for a productive activity, whether it is an industrial estate or cluster, or common facility centre. But let every single river in the country be able to produce power for a productive purposes. That is the meaning of wealth creation.  You can then begin to look at how to harness the biomass. If you look at how much waste we generate, this can actually be used to clean up the environment. If you look at solar, which you have in abundance, that one is a business on its own, same thing with wind.

The major challenge in Nigeria, especially when it comes to hydro, is the fact that it takes a lot of investment.  The civil work is massive. The electro-mechanical component is even easier to manage because they cheaper than the civil works.  When you do the cost benefit analysis or a project profile especially for small hydro, the returns are very small.  Reason is because small or medium hydro gives you a life span of 150 years. The one in Jos was built in 1929 and is still running. So, how can you get your money back? That is the challenge.

If it is privatize, for an investor to get their money back, it is either the state government specifically takes off the component of the civil works, puts in the hydro, and then the private could be able to manage it.  A typical example of what I am saying, though it is not happening, I will give you an idea. Kano State started two hydro power plants in two dams. The dams had been built by previous governments.  What they need to do is consider the cost of the dams as a sum cost, then put in the electromechanical component. That is where you base your project profile assessment, and on the basis of that you can invite the private sector to invest in it and charge a certain amount so that they can recover on just the electromechanical component.

 But if you add the cost of the dam, they would never recover.  There has to be a structure or a system that should be able to take off some of the investment costs.  That way, you can be able to mass produce the use of small hydros. In fact, there is even Pico hydro which gives like five megawatts.The good thing about renewable energy is that the technologies are wild and the costs are dropping. UNIDO has even tried to build the capacity of Nigerians to even manufacture turbines for small hydro power.  We are looking at a business system where people can manufacture small hydro power for specific rivers and streams across the country and install them.

In fact, in some instances, from what I saw recently in a picture, you may not need a dam. You may just need a casing system that holds can stand in water and rotate without the structural dams.  The technologies are variant and adaptable.  The general idea here is to help support the existing system.  What we have on our map shows that small hydros can produce 3,500 megawatts across the country.

What is the average cost of a small hydro project, its capacity and the number of years for construction?

The small hydro plant is usually considered between one to 10 megawatts.  Some people define it as ranging from less than one megawatt to 50 megawatts. It varies from documentation to documentation. Anything above 50 megawatts is huge. But if you consider the fact that Abuja as a city at full capacity only needs 25 megawatts, you can then know the size of 10 megawatts.  10 megawatts can power an industrial estate.  When it is hydro, it is like in perpetuity.

That estate will see many changes in the industries sitting inside it, because that hydro would remain.

In terms of cost, the rule of the thumb is to use $1 million per megawatt. That includes civil and everything. But if you just do the electromechanical, it drops significantly.  But it does not apply sometime, depending also on the terrain.  That is the situation.

Is the issue of national grid a possible challenge in the operation of small hydros in Nigeria?

I think that if I am not wrong, the energy issue is on the concurrent list. This means that state governments can also do generation.  The Federal Government is actually in charge of the national grid. But that doesn’t mean that states cannot also generate their own power. They can use small hydro to generate their own power.  Why shouldn’t the state do anything below 40-50 megawatts? Even if it is above that but it’s within the states, the grid could be localised.

The truth is that we have come to a stage in this country when we should ignore certain things and provide power otherwise in the next 35 years when it is speculated that the population of Nigeria would be 400 million people, there would be a major energy crisis. How would you give them power? The states can generate their own energy and power the cities within their states.  They can. I am not sure there is a law that says they shouldn’t. I think the issue would be the tariff which at the moment is controlled by the Nigerian Electricity Regulatory Commission (NERC). If the states now want to have State
Electricity Regulatory Commission, they would have to seek it out in the constitution.  I think that they can have such. They can have a different rate from the national rate as far as their generation is not going to the grid.

Capacity for technology is still an issue in Nigeria. What is UNIDO’s solution to this?

We have the UNIDO Investment and Technology Promotion Office, which is the first of its kind in Africa. We don’t have it in Africa.  UNIDO has about 8 Investment and Technology Promotion Offices across the globe. We have two in China, one in Japan, one in Russia, South Korea and so on. We recently had one in Germany. We are also going to have one in Brazil.

I am saying this because investment is key. You know that our foreign direct investments are basically oil based. Now that we have issues with oil prices, we have to be a little bit more proactive in promoting investments into the country. Fortunately, the present administration, especially the Minister of Industry, Trade and Investment has the promotion of proactive investments into the country as one of his pillars.  This investment and technology promotion office is to support this initiative.  The objectives of that office is to bring in technologies into Nigeria and the rest of ECOWAS region, tapping into our network of ITPOs that I have just mentioned in other parts of the world. You also understand that technologies in Nigeria are usually obsolete or driven by the fact that we do not have power to drive automated systems.

Technologies have advanced. We need to bring our people into those new set of technologies that exist globally. They now have the choice to choose which ever one that they want.  ITPOs are one of the ways that we want to do it. It does two things: bringing investments, especially for SMEs and bring in new technologies also for SMEs. I think it is one of the proactive ways that we can target SMEs to bring them assistance.

In what ways are you helping to attract investments into the nation’s renewable energy drive?

We are planning a renewable energy investment forum. Two dates have been proposed in August or October, subject to the availability to the President.  We are organizing that to show the world that there are so many technologies for renewable energy development and those technologies are becoming cheap.  If you take a look at solar, it has a life span of 15-25 years. Hydro has a lifespan of 100 years or more. But there are other battery system technologies that have come up. You charge it once and it keeps recharging itself.  There are new technologies that are on board. In fact, I also learnt that with these new battery technology systems, some people in Canada have been able to generate 5000megawatts from batteries alone.

So, how do we tap into these new technologies? How do we bring them down? Energy is key to our development in this country.

How do we tap into it and maximize usage for our people?  Many things revolve around energy.  We need a structure system utilizing these technologies. We need a financial capacity to encourage investment into these systems.  We need the private sector to tap into it and provide it to the people.  That is the essence of that forum.

We are partnering principally with the Federal Ministry of Science and Technology. We also have the Nigerian Investment Promotion Council (NIPC) and the Federal Ministry of Industry, Trade and Investment. The Local Organizing Committee is working very hard to see if they can meet up with the August deadline. We are bringing in a lot of international exhibitors and how local exhibitors.

We are looking at all issues: finance, institutional support, enabling environment and policy, technology, and environmental energy efficiency.

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