Change Nigeria Project

Introduction

Nigeria’s public power company-Power Holding Company of Nigeria has an installed generating capacity of about 6GW (which is 6,000 Megawatts) but actual available output is less than 2.5GW (2,500 Megawatts). As a result, Power black-out is frequent.

Available public capacity is supplemented by private captive generation serving industrial clusters and specific companies in the Cement, Steel and Oil & Gas sectors of the economy. A set of newly licensed independent power producers (IPP) is estimated to add more than 10GW (10,000MV) if all come on stream before 2010-12.

 

Major Obstacles in Power Generation:

·         Presently power generation is mainly from thermal plants (about 61%) while hydro power generation is about 31%.

·         Most of the generating assets in the public power sector are old, between 18 and 43 years.

·         Lack of timely routine maintenance had caused significant deterioration in plant output and is a key explanatory factor in the lingering electric power crisis.

·         According to industry watchers more than two decades of poor planning and underinvestment had left a huge supply deficit.

·         There was no new infrastructure in over a decade despite rapid population growth and rising demand for power.

·         The Sector was at the brink of collapse; average daily generation in 1999 was 1,750MW (and almost 10 years after, the situation is not remarkably different as available capacity output is still less than 2.5GW).  So all things being equal, Nigeria has only added a pathetic 750 MW in 10 years after spending between $16-$30 Billion dollars factoring in cost of inflation.

·         Add this to the fact that between 1990 and 1998, no new capacity was added. The focus has been on rehabilitation of existing infrastructure.

Reforms to date:

·         Two set of public sector action-steps emerged in response to the power crisis; there is the

o   period of infrastructure Rehabilitation (1999-2004) and

o    Infrastructure Expansion (2004 to Date) - a major part of which is being implemented under the National Integrated Power Project (NIPP) (Transition Phase).

·         The other is the focus on implementing a comprehensive sector reform (Restructuring; Deregulation and Privatization) within the framework of the Electric Power Sector Reform Act 2005).

·         The Act is expected to facilitate an Electricity Supply Industry (ESI) that is driven by the private sector.

·         In line with this, a new direction is the emergence of IPPs.

o   Oil companies are also into independent power production.

o   On account of inadequate public power supply, a lot of captive generation is currently being implemented; others are in the pipeline.

o   An increasing number of State Governments are now encouraged to set up gas-fired power plants and the federal Government has promised to assist such move.

o   Also, some State Governments are planning to buy into distribution companies when these are on offer.

·         It is important to note that the environment is safe and conducive for new entrants into Nigeria’s power generation sector.

NEW STRATEGY TO BOOST SUPPLY:

Nigeria seeks policies that promote least-cost generation while ensuring a viable mix of fuel sources, all within the framework of a comprehensive energy policy, presently being articulated.

·         Gas will play a major role in new generation, especially as Nigeria seeks an end to gas flaring and the monetization of its vast gas resources.

o   Although the flare-down target date of end 2008 is no longer considered achievable, the recently endorsed National Gas Master Plan is considered a step in the right direction to encourage

§  gas-utilization projects-gas-fired power generation,

§  Gas to Liquid projects (GTL),

§  new LNG plants, etc.,

·         The midstream segment-the transmission and distribution systems- will need to be developed accordingly to deliver gas to the appropriate sites.

·         Projected gas demand is estimated to increase from current level of 660 mmcfd to 1,700mmcfd by 2010.

·         Given the close linkage between gas and electricity and the fact that gas will increasingly offer the primary fuel alternative to electricity (especially for industrial consumers), Nigeria is recognizing the importance of ensuring consistent plans and regulatory regimes to govern natural gas utilization.

o   This vision has been encapsulated in the Gas Master Plan recently approved by the President Umar Yar’Adua-led Administration.

o

ALTERNATIVE ENERGY SOURCE

Government will encourage the use of alternative sources of energy for the generation of electricity, so as to maximize the resources available and provide least-cost solution to access expansion.

Accordingly:

·         hydro,

·         coal,

·         solar energy sources,

·         wind

·         High Level BTU

·         Bio etc., will be developed.

The Nigerian electric power sector offers significant opportunities for foreign firms in areas including the following:

State of the Nation Committee:

Robert Ngwu, Chair

Hadjia Fatima Wali