Telcos shift to renewables as diesel cost hits N570bn
FILE: Telecommunication signal
Major telecom companies, including MTN and Airtel, are shifting their focus to renewable energy sources such as solar, wind and lithium batteries as diesel costs continue to rise, reaching a staggering N570bn in just eight months.
With diesel prices averaging N1,426.09 per litre monthly, according to the National Bureau of Statistics, the financial strain on the sector has intensified.
Over 50 million litres of diesel are consumed by telecom operators each month to fuel their infrastructure, operators estimate.
An analysis by The PUNCH indicates that telcos spent approximately N71.3bn every month on diesel, amounting to a total expenditure of N570bn over the eight months from January to August.
According to data from the Bureau, the average price of diesel in August 2024 was N1,406.05 per litre. In July, it was N1,379.48 per litre, while June saw a higher rate of N1,462.98 per litre.
The data further revealed that diesel prices in the preceding months were as follows: N1,403.96 per litre in May, N1,415.06 per litre in April, N1,341.16 per litre in March, N1,257.06 per litre in February, and N1,153.01 per litre in January 2024.
The telcos, struggling with rising operational costs due to exchange rate fluctuations, say that diesel consumption constitutes a significant portion of their expenses.
Diesel plays a crucial role in powering Nigeria’s telecom infrastructure, particularly base stations, which rely heavily on generators due to the country’s inconsistent grid electricity supply.
A research document obtained by The PUNCH revealed that in the last five years, a total of 53,460 base transceiver stations have been deployed in Nigeria.
As of the end of 2021, Nigeria had approximately 38,288 base stations, according to the Nigerian Communications Commission, the telecom regulator.
However, with plans to adopt solar panels, lithium batteries, and connect to the grid, telcos could reduce their energy costs by 15 to 30 per cent annually, according to a McKinsey report.
The exact savings will depend on their current energy management practices and the extent of solar integration, the report stated.
Airtel Nigeria, one of the largest operators with over 60 million subscribers, revealed that it consumes 22 million litres of diesel each month to power its infrastructure.
As of May 2024, Airtel’s Director of Corporate Communications and Corporate Social Responsibility, Femi Adeniran, stated on Monday in Lagos that the company’s monthly diesel expenditure stood at N28bn.
As companies strive to align with the United Nations’ Sustainable Development Goals, reducing their carbon footprint has become a priority. Telecom firms are now compelled to seek efficient, cost-effective energy solutions.
The Chief Technical Officer of Airtel Nigeria, Harmanpreet Dhillon, said the operator is focused on expanding grid connectivity and deploying alternative energy solutions across its operations in Nigeria.
“The most important factor for us here in Nigeria is the grid,” Dhillon stated. “Our first goal is to connect all of our sites to the grid, as many of our base stations currently lack grid connectivity. Once we achieve this, we’ll reduce our reliance on generators, which in turn will cut down our diesel consumption.”
The mobile operator is working closely with power distribution companies to ensure consistent grid availability at its sites. “With the grid in place, our generators will operate less frequently, directly lowering our environmental impact,” he said.
A senior telecom executive, who requested to remain anonymous, revealed that industry giant MTN, with about 80 million subscribers, spends over N30bn monthly on diesel to power its approximately 25,000 base stations.
The executive told The PUNCH that while some telcos have begun exploring green energy sources, infrastructure companies like ATC Nigeria and IHS Nigeria have been slow to adopt sustainable solutions.
“ATC is more open to renewables, investing in hybrid, solar, and wind energy. However, IHS, which handles around 80 per cent of MTN’s tower business, remains heavily reliant on diesel,” the executive said.
Last week, the Senior Manager of Growth and New Business Tech Platforms at MTN, Chukwuebuka Ezewuzie, said a lot of advancement is going on at the moment in adopting renewable energy.
“So, how are we going to use the free energy from the sun and the wind to power this equipment to reduce cost? This is one of the key areas that the telcos are currently exploring,” he asserted.
