NIGERIA ENERGY SECTOR OVERVIEW
Nigeria is the largest economy in sub-Saharan Africa, but limitations in the power sector constrain growth. Nigeria is endowed with large oil, gas, hydro and solar resource, and it already has the potential to generate 12,522 megawatts (MW) of electric power from existing plants, but most days is only able to generate around 4,000 MW, which is insufficient. Nigeria has privatized its distribution companies, so there is a wide range of tariffs.
GENERATION CAPACITY
- Installed Capacity: 12,522 MW
- Thermal: 10,142 MW
- Hydro: 2,380 MW
- Reached Financial Close: 3,034 MW
- Power Africa 2030 Pipeline: 11,750 MW
CONNECTIONS
- Current Access Rate: 45%
- Rural: 36% Urban: 55%
- Households without Power: 20 million
- Target: Universal access by 2030
- Power Africa New Off-Grid Connections: 454,432
- Power Africa New Grid Connections: 496,723
INVESTMENT AND ENABLING ENVIRONMENT
Biggest Issues
Macroeconomic forces
Lack of creditworthy utilities
- Lack of strong, transparent regulator
Power Africa Interventions
Loss reduction work with utilities
Transaction advisory services
- Partnership with National Association of Regulatory Utility Commissioners
POWER AFRICA’S ENGAGEMENT IN NIGERIA
MW GENERATION
Power Africa assisted the Government of Nigeria with agreements to move the Qua Iboe gas project closer to financial close. In parallel, Power Africa is assisting with agreements on several solar projects that will help Nigeria diversify its energy mix. Power Africa also helped Nigeria’s first private IPP, the Azura Edo Project (link is external), reach financial close in 2015, including a $50 million investment by The Overseas Private Investment Corporation (OPIC). The Azura plant became operational in 2018.
CONNECTIONS
Power Africa, through the United States Agency for International Development (USAID) and the U.S. Trade and Development Agency (USTDA) is working to improve commercial operations and reduce losses at five distribution companies: Abuja, Benin, Eko, Ibadan, and Ikeja.
Power Africa is supporting off-grid options as well. With a $15 million OPIC loan, Lumos, Inc. is deploying rooftop solar panel kits to approximately 70,000 residential and small commercial customers in Nigeria, using a lease-to- own business model. In partnership with General Electric, the U.S. African Development Foundation (USADF) and others, Power Africa has awarded nine $100,000 grants to entrepreneurs for innovative, off-grid energy projects in Nigeria.
ENABLING ENVIRONMENT
Power Africa provides support to the Nigeria Electricity Regulatory Commission (NERC) (link is external) through a partnership with the National Association of Regulatory Utility Commissioners (NARUC) (link is external). This organization provides guidance on regulatory practices and tariff setting. Power Africa also provided planning support to the Transmission Company of Nigeria (TCN) (link is external) to try to attract new investment in the transmission network.
SUCCESS STORY
Power Africa is assisting the Ministry of Petroleum Resources to structure and implement a program that will attract competent third-party off-takers to invest in the capture and utilization of gas flares using tested technologies. This work in support of the Nigeria Gas Flares Commercialization Program (NGFCP) (link is external) will improve access to finance for gas flare projects to achieve quicker financial close through incentives to investors and strengthen capacity of regulatory agencies to monitor and sustain the implementation, as well as subsequent bid rounds.
Power Africa was instrumental in providing ongoing support to the Nigeria Bureau of Public Enterprise for the Afam privatization transaction. READ MORE
The Office of the Vice President of Nigeria
Firing Up the Afam Power Plants: Power Africa Support Brings $344 Million Power Transaction to Financial Close in Nigeria
The Nigeria Bureau of Public Enterprises engaged Power Africa to provide technical advisory support to evaluate submitted proposals, select a preferred bidder, and ensure that the transaction was a success.
By acting as an independent facilitator and advisor to this transaction, we were able to provide inputs on leading international practice, evaluate the Performance Agreement to ensure that implementation commitments and milestones were accurately captured, and that any potential gaps were highlighted
“Power Africa was instrumental in providing ongoing support to the Bureau for the Afam privatization transaction,” shared Yunana Malo, Director of Energy at the Bureau of Public Enterprises. “The team provided insights, analysis, and knowledge that expedited the transaction to financial close and ensured that the Federal Government of Nigeria received full value from the transaction.
Meanwhile, the Advisory Power Team report showed that the national grid capacity stood at 4, 000 Megawatts, MW. The report noted that the average power sent out by the Electricity Generating Companies, GENCOs, on the 14th of January, stood at 3, 851.06mw, down by 168.58mw, recorded the previous day, adding that the peak generation averaged 4, 425mw, down by 5.5 percent.
According to the report, “On January 14 2018, average power sent out was 3,851MWh/hour (down by 169MWh/h from the previous day). 1437.9MW was not generated due to unavailability of gas. “0MW was not generated due to unavailability of line infrastructure, while 680.5MW was not generated due to high frequency resulting from the unavailability of distribution infrastructure. 290MW was not generated due to unavailability of water.
“The power sector lost an estimated N1,121,000,000 on January 14, 2018, due to insufficient gas supply, distribution infrastructure, transmission infrastructure and water reserves.” Consequently, a total of 63.1mw of energy was sent out from Omoku thermal power plant with a constraint of 16mw.
Alaoji National Independent Power Plant, NIPP, had a constraint of 240mw which affected the ability of the plant to generate commercial energy. Energy sent out from Delta power plant on the same day was 340.76mw with a high-frequency constraint of 100 Hertz. Jebba plant sent out 302.88mw of energy, while Shiroro had a water constraint of 290mw, along with high-frequency constraint of 95 Hz, limiting the sent out energy to 160.31mw, while Kainji dam sent out 359.49mw of power to the transmission company of Nigeria, TCN.