Nigeria: think-tank calls for energy sector overhaul

Nigeria: think-tank calls for energy sector overhaul
Egbin thermal power plant, Nigeria

A think-tank in Ngeria has called on the government in-waiting to transform the country’s energy sector in order to increase grid connectivity.

Agora Policy said that the “centrality of adequate and reliable electricity supply to individual welfare, economic growth and overall national development cannot be over-emphasised.” 

“This message is not lost on Nigeria. However, various initiatives and reforms aimed at creating an optimal power sector for the country have fallen short.” 

The organisation said there is a need for the government to stop thinking of installed generation capacity and start to think in terms of the amount of electricity delivered. 

It should also consider an increase in megawatt-hours delivered to electricity customers. This could be achieved “if there is a seamless conversion and flow of energy from the natural gas fields to the generation stations…”

“This is an important paradigm shift with positive impact for government, as having such policy mindset changes the prioritisation and allocation of public and private resources to projects, interventions and initiatives across the electricity value chain that will increase the energy output, availability, reliability and quality of electricity delivered to end-users.” 

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Citing data from the World Bank, the think-tank said Nigeria has the largest energy access deficit in the world – 85 million Nigerians, representing 43% of the country’s population, don’t have access to grid electricity. 

“In comparison, 85% of Ghana’s population have access to electricity, while 70% of Senegal’s population have electricity access.” 

The World Bank estimates that the lack of reliable power costs the Nigerian economy over $26.2 billion which is equivalent to about 2% of Nigeria’s GDP.

“This is not to say that Nigeria has not made some progress in the power sector since 1999. For instance, in 1999, Nigeria had nine power generating stations – three hydro and six thermal stations – with a total installed on-grid generation capacity of 5,906MW, but with available generation below 1,500MW.

Nigeria’s energy mix still dominated by fossil fuels 

“Today, Nigeria has up to 26 on-grid generation stations with a total installed capacity above 13,000MW. However, available generation capacity hovers around 4,000MW, with average daily energy output of about 100,000MWh.” 

Agora Policy said the little progress that has been made in the power sector since 1999 is “neither at par with our population growth nor adequate for the energy needs necessary to achieve our economic potential.”

“For reference purposes, Nigeria’s energy consumption per capita at 140kWh is relatively low and is three times lower than the average for Sub-Saharan Africa.”

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In terms of Nigeria’s energy mix, the report said it consists of fossil fuel and renewable energy sources, mainly hydropower generation and increasingly generation from solar energy. 

“However, our energy mix is still dominated by fossil fuel – natural gas and diesel/petrol (largely for self-generation). This is understandable as Nigeria has Africa’s largest crude oil and natural gas resources. 

“However, this presents a problem for Nigeria as the world moves to cut fossil fuel consumption in order to achieve carbon neutrality (net-zero CO2 emission).”

Renewable energy sector needs to be harnessed and fed into the national grid

At the United Nations Climate Change Conference event in Glasgow (COP 26), Nigeria committed to carbon neutrality by 2060, and to this effect has unveiled its Energy Transition Plan (ETP). 

“It is reassuring that the World Bank in a recent publication recognises that natural gas can be a transition clean fuel for developing countries like Nigeria with vast natural gas resources and existing natural gas generation plants.

“Consequently, the in-coming administration must continue the implementation of the ETP to achieve a faster transition to carbon neutrality by 2060.” 

Agora Policy said there needs to be targeted new investments in additional power generation.

“At the moment, there is no solar energy generation into the national grid – and for obvious reasons ranging from grid connection, grid instability, existing stranded generation and payment assurances for the power to be produced.”

See the full policy memo here

Originally published by Yunus Kemp on ESI-Africa.