CPPE Calls For Broader Steps In Renewable Energy Development

The Centre for the Promotion of Private Enterprise (CPPE) has warned that rising costs of energy will lead to significant strain in the economy.
He therefore recommended a shift towards enhancing investment in the renewable energy sector through fiscal, regulatory incentives that would encourage businesses to adopt renewable energy solutions and reduce structural energy cost burden.
According to the Centre the current surge in global energy prices, driven by escalating geopolitical tensions in the Middle East, has intensified cost pressures on businesses in Nigeria, which depend heavily on petrol and diesel to power their operations amid persistent electricity supply challenges.
Such businesses are also faced with rising transport and distribution costs due to higher energy prices.

The chief executive officer of CPPE, Dr Muda Yusuf, pointed that the “the current surge in global energy prices that are largely triggered by geopolitical tensions in the Middle East, have once again highlighted the vulnerability of businesses and economies to external shocks in global energy markets.”
According to Yusuf, “for Nigerian businesses, resilience will depend on improving energy efficiency, diversifying energy sources, strengthening financial management and improving logistics efficiency.

“For government, the crisis underscores the urgency of accelerating reforms in electricity supply, renewable energy adoption and domestic refining capacity.

“With the right combination of proactive business adaptation and supportive public policy, Nigeria can significantly mitigate the impact of the current energy price shock and strengthen the resilience and competitiveness of its business environment.”

He said that “government should expand fiscal and regulatory incentives that encourage businesses to adopt renewable energy solutions.

“This may include tax incentives for solar installations, import duty waivers for renewable energy equipment and fiscal support for investments in energy-efficient technologies.

“Such measures would help reduce the structural energy cost burden faced by Nigerian businesses.”

The CPPE also made a case for providing affordable financing for energy transition, strengthening domestic refining capacity and improving reliability of electricity supply.

Yusuf identified access to affordable financing as one of the major barriers preventing SMEs from investing in alternative energy systems and urged government, development finance institutions and commercial banks to create dedicated financing windows that would support investments in renewable energy solutions and energy-efficient equipment.

He said: “Reducing the cost of financing will accelerate the transition to cleaner and more affordable energy systems for businesses.”

He also noted that domestic refining is a critical pillar of Nigeria’s energy security and an important buffer against volatility in the global energy market.

He therefore said that, “expanding local refining capacity and ensuring a stable and predictable supply of crude oil to domestic refineries are essential for strengthening the resilience of the country’s petroleum products market.

“A well-functioning domestic refining ecosystem can help moderate the transmission of global supply disruptions into the domestic economy.

“Over time, a strong domestic refining base can also support export opportunities for refined products within the African region, further strengthening external reserves and Nigeria’s position in regional energy markets.”

He argued that the most sustainable solution to Nigeria’s high energy cost environment resides in improving the reliability and availability of grid electricity.

“Government, therefore, needs to intensify efforts to expand electricity generation capacity, strengthen transmission infrastructure, and enhance the efficiency and financial viability of electricity distribution networks across the country.

“A more reliable electricity supply would significantly reduce the heavy dependence of businesses on diesel and petrol generators, which currently constitute a major component of operating costs.

“Improving power sector performance would lower production costs across the economy, enhance business competitiveness, and provide much-needed relief for small and medium enterprises,” Yusuf said.

The CPPE pointed out that energy costs pressure is coming at a time businesses in Nigeria are already contending with multiple macroeconomic pressures, including high inflation, elevated interest rates and weak consumer purchasing power.

“The latest escalation in energy costs therefore compounds an already challenging operating environment.

“Without deliberate adjustments by businesses and supportive policy interventions from government, rising energy costs could significantly erode profit margins, weaken business sustainability and dampen economic growth,” the CPPE warned.

Yusuf also outlined strategic responses for businesses and Small and Medium Enterprises (SMEs).

He said that improving energy efficiency remained the quickest and most cost-effective strategy for businesses to manage rising energy costs.

He, therefore, advised firms to undertake a comprehensive review of their energy consumption patterns with the objective of minimising waste and maximising productivity per unit of energy used.

“Businesses should intensify efforts to improve energy efficiency within their operations as a key strategy for managing rising fuel costs.

“This includes optimising generator operating hours, deploying energy-efficient machinery and equipment, strengthening internal energy management practices, and promoting energy conservation among staff.

“Even relatively modest improvements in energy efficiency can yield significant reductions in fuel consumption and operating expenses, thereby helping to cushion the impact of escalating energy prices on business sustainability,” he said.