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Developments and Opportunities in
the Nigerian Electricity Industry
By
Uzoma. D. AchinanyaSenior Special Assistant to the President of Nigeria on
Electricity Distribution and Market Operations
Outline
• Nigeria in perspectives
• What are the issues?
• Recent Developments
• Current Challenges
• Investment opportunities in the Nigerian Power Sector
• Comforts to the investors
• Summary
Nigeria in Perspective I
• Power Supply– Generation
• About 6,000MW capacity from 15 grid connected generating plants.
• The mix is twelve (12) thermal and three (3) hydros
• Ten (10) state owned, supplying 70%, and five (5) IPPs supplying30% of the power
• Hydro : thermal ratio (capacity) is 25:75
– Transmission• Transmit at 330KV and 132kv
• Transformation capacity = 6,500MW at 330KV and 7,500MW at 132KV
• About 5,500Km of 330KV lines and 7,000Km of 132KV lines
• Average transmission loss factor = 9%
Nigeria in Perspective II
• Power Supply– Distribution
• Transformation capacity = 16,000MW
• Average distribution loss factor = 26%
– Commercial• No. of connections = 4.9million
• Average end-user tariff = 12.0/KWh ($cent 8/KWh)
• Average tariff paid by consumers = N8.5/KWh ($cent 5.7/KWh)
• Average subsidy provided by Govt. = N3.5/KWh ($cent2.3/KWh)
• Average monthly revenue collection = 11.5bn NGN ($77m)
Nigeria In Perspective III
• The Population
– Population is about 150 million – the largest in Africa and seventh largest in the world. For every 5 black people in the world, there is one Nigerian
– The population is not just large, it is also growing at a fast rate
– More than 50% of Nigeria’s population is below age 20 years
– Population’s access to electricity is about 40%
– Nigeria has enormous appetite and capacity for energy
6
Nigeria Vs the Rest of the World on power Supply
Country *
Generation Capacity
(GW) Watts per capita
S. Africa 40.498 826
Egypt 20.46 259
Nigeria 5.96 40 (25 available)
Ghana 1.49 62
USA 977.06 3,180
Germany 120.83 1,468
UK 80.42 1,316
Brazil 96.64 486
China 623.56 466
India 143.77 124
Indonesia 24.62 102
Sources:•World Fact book - http://www.cia.gov/library/publications/the-world-factbook/index.html
* Energy Information Administration – www.eia.doe.gov
Nigeria Vs the Rest of the World II
• Nigeria’s population is nearly 3 times that of
South Africa, but South Africa’s Power Supply
Capability is about 10 times that of Nigeria
• Electricity is the key driver of economic
development world-wide. Lack of it is
strangulating growth and development in
Nigeria
What are the Issues?
• Lack of investments in electricity generation, transmission and distribution
• High technical and non-technical losses
• Low customer satisfaction and poor revenue collection
• With poor revenue collection, there has been little or no investment feedback in the industry. Due to lack of investments, generation capability reduced from 6,200MW to about 2,000MW between 1990 and 1999
• Overbearing government influences in the management of the electricity industry
Funding To The Nigerian Power Industry
0
100
200
300
400
500
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
Investment ('US$millions)
Source: Presidential Retreat On Power
9
Investments in the Nigerian Power Industry (1974 – 2006)
Recent Developments I
• The FG, in response to the people’s demand for real and immediate improvement in supply set up the Presidential Action Committee on Power (PACP), chaired by the President, and with most decision makers in the economy as members
• Simultaneously, a Presidential Task Force on Power (PTFP), was set up to carry out the day to day responsibilities of the PACP. The Task Force is made up of technocrats and Industry Experts
• The PTFP developed a Roadmap (launched in August 2010) which outlines the plans to – Determine the status quo and update the actual supply needs of the
Country
– Improve service delivery in the short run
– Set medium to long term supply targets for the country
– Fast track the power sector reform programme to meet the supply needs
Recent Development II
• Through the Task Force
– The actual status of Power Supply in the country
was determined
– Strategies developed for improving service
delivery in the short term
• Projects to close short term gaps identified, most are
currently under construction, to be delivered before
June 2011
– Medium to long term supply targets set
Short-to-Medium Term Targets
July 2010 Dec. 2010 April 2011 Dec. 2011 Dec. 2012 Dec. 2013
Fuel to
power
capacity
(MWE)
4,558 5,627 7,711 9,184 11,701 11,780
Generation
capacity
(MW)
4,612 5,379 7,033 9,767 11,879 14,218
Transmissio
n capability
(MW)
5,155 5,515 5,995 6,555 7,866 8,653
Distribution
capability
(MW)
5,758 6,334 6,900 7,485 8,061 9,057
Projected Demand to be met by 2020 = 20,000MW
Current Challenges
• Fund, for investments in the industry
• Adequate management expertise, without government interferences
• Government alone cannot provide the needed investment, and is not in the position to provide the necessary expertise
• Incentivize the private sector to make the investment and provide the expertise– The need to pursue and conclude the fundamental
changes to the ownership, control and regulation of the power sector as outlined in the NEPP(2001) and EPSR Act 2005 - A lot has already happened in this regard
The Most Frequently Asked Questions
• What are the real opportunities for investments in the Nigerian Power Sector?
• Will the investments be secure in Nigeria?
• Will there be adequate returns on any investments in the Nigerian Electricity Industry?
Investments Opportunities in the
Nigeria’s Power Sector
• Generation – Gas to power development: Nigeria has massive gas
reserves yet to be explored and exploited for power generation (source, transport, reliability issues). MWE of current Gas to Power supply capability is about 8,000MW
– Large scale Hydro generation capability: Mambilla (2,600MW), Zungeru (700MW), over 300 small and medium hydro power sites
– Coal to power development: the Nigerian Coal Belt is vast. There is on-going consultancy to determine the type, actual quantity and the overall bankability of coal to power projects in Nigeria
Investments Opportunities II
• Generation
– Developments in Renewables: Nigeria will like to join the rest of the world in the race for green energy, but it needs sufficient generation capability from other sources and a robust grid to be able to tap the available solar and wind resources, due to reliability issues and intermittency
– Most of the existing power plants are over 40 years old and have suffered large scale degradation. A good number of them require refurbishment and replacements
Investments Opportunities III
• Transmission – Development of a Super Grid (700KV): The Transmission
grid is far from robust. Super grid is needed to be able to move power over long distances from point of generation to major load centres
– Stranded generation: mainly in the South Eastern part of the country, due to inadequate transmission infrastructure to evacuate the power, even for local consumption
– Grid security: transmission grid is currently redial and fragile. The grid should be looped, and greater part of the network need rehabilitation and replacement
– Serious low voltage problems in the Northern part of the country due to very long lines at low transmission voltages
Map 4: Existing NEPA Transmission Line System
ONITSHA
KAINJI
JEBBA/GS
JEBBA/TS
SHIRORO
AJAOKUTA
Abeokuta
Ikeja
Akure
Benin City
Asaba
PortHarcourt
Owerri
Uyo
ALAGBADO
BirninKebbi
Minna
Kaduna
Abuja
Jos
Bauchi
Gombe
Damaturu
MaiduguriKano
IIorin
AdoEkiti
Lokoja
Lafia
Makurdi
MAKURDI
EnuguAkwa
Umuahia
Ibadan
AFAMPOWER ST.
Sokoto
Gusau
Katsina
Hadejia
Jalingo
Yola
Abakaliki
Calabar
JIGAWA
KANO
KATSINA
SOKOTO
ZAMFARA
KEBBI
KWARA
KADUNA
ABUJA
NIGER
NASSARAWA
TARABA
YOBE
PLATEAU
BENUE
EBONYI
CROSSRIVER
AN AMBRA
OSUN
BAYELSA
KOGI
EDO
ABIA
RIVERS
DELTA
ONDO
OYO
ENUGU
IMO
ADAMAWA
BORNO
GOMBE
BAUCHI
EKITI
LAGOS
AKWAIBOM
ATLANTIC OCEAN
NIGER
REPUBLICOF BENIN
REPUBLICOF CAMEROON
REPUBLICOFCHAD
TRANSMISSION LINE LEGEND132KVLINES - EXISTING
132KV LINES - AWARDED
132KV LINES - APPROVED
132KV LINES - UNDER CONSTRUCTION
330KV LINES - EXISTING
330KV LINES - AWARDED
330KV LINES - APPROVED
330KV LINES - UNDER CONSTRUCTION
BULK SUPPLY - EXISTING
BULK SUPPLY - UNDER CONSTRUCTION
BULK SUPPLY - APPROVED / AWARDED
HYDROELECTRIC POWER SUPPLY
THERMAL POWER STATIONS
132 KV 330 KV
H
SAPELEP/ST.
DELTAPOWER ST.
2 Circuits
OGUN
Osogbo
2 Circuits
3 Circuits
Notes:1. Multi-circuits are not indicated for the 132KV system.
2 Circuits
2 Circuits
2 Circuits
EGBINP/ST.
NIGERIA
Report Maps 7-24-00
Existing Transmission Network
18
19
TRANSMISSION GRID STRUCTURE WITH THE SUPER GRID IN PLACE
ONITSHA
KAINJI
JEBBA/GS
JEBBA/TS
SHIRORO
AJAOKUTA
Abeokuta
Ikeja
Akure
Benin
Asaba
PortHarcourt
Owerri
Uyo
ALAGBADO
BirninKebbi
Minna
Kaduna
Abuja
Jos
Bauchi
Gombe
Damaturu
MaiduguriKano
IIorin
AdoEkiti
Lokoja
Lafia
Makurdi
MAKURDI
EnuguAkwa
Umuahia
Ibadan
Sokoto
Gusau
Katsina
Hadejia
Jalingo
Yola
Abakaliki
Calabar
JIGAWA
KANO
KATSINA
SOKOTO
ZAMFARA
KEBBI
KWARA
KADUNA
ABUJA
NIGER
NASSARAWA
TARABA
YOBE
PLATEAU
BENUE
EBONYI
CROSSRIVER
AN AMBRA
OSUN
BAYELSA
KOGI
EDO
ABIA
RIVERSDELTA
ONDO
OYO
ENUGU
IMO
ADAMAWA
BORNO
GOMBE
BAUCHI
EKITI
LAGOS
AKWAIBOM
ATLANTIC OCEAN
NIGER
REPUBLICOF BENIN
REPUBLICOF CAMEROON
REPUBLICOFCHAD
TRANSMISSION LINE LEGEND
BULK SUPPLY POINT
HYDROELECTRIC POWER STATION
THERMAL POWER STATIONS
330 KV
H
SAPELEP/ST.
DELTAPOWER ST.
OGUN
Osogbo
EGBINP/ST.
NIGERIA
Potiskum
Niamey
132 kV
2
3
2
3
4
2
2
Aliade
Mambila
Bali
2
AFAMPOWER ST.
2
2
330KV LINES – MULTIPLE CIRCUITS
330KV LINES - EXISTING
2
2
2005 : new
2
2015 : new
2015 : new
2015 : new
2015 :
3rd Circuit
2010 : new
2015 : new
2010: new
2
2
42015 : new
SAPELE
P/ST.
Okitipupa
Geregu
2015 : 2nd Circuit
Agip
Zaria
2015 : new
2015 : new
2015 : new
2015 : new
700KV LINES – SUPER GRID
700 / 330KV SUBSTATION
Mambila Hydro
Some 330kV lines especially in Lagos and Delta areas could not be indicated on this geographicalMap.See attached single diagram for Details.
NOTE:
PROPOSED SUPERGRID NETWORK
Investment Opportunities IV
• Distribution – Legacy distribution infrastructure. The Electricity
Corporation of Nigeria (ECN) was set up in 1951 to oversee the business of electricity distribution in Nigeria. Some parts of the network are more than 50 years old and need urgent replacement and upgrade.
– Distribution network should grow at about 20% pa to cope with the requirement by 2020. Current growth rate is about 1% pa, due to limited investments, and the fact that available investments go into replacements
– Metered consumers constitute about 50% of total population. About 25% don’t have meters while 25% have bad or obsolete meters
Investment Opportunities V
• Distribution – Out of 2million Pre-payment to be implemented under the
National Pre-payment metering programme, only 500,000 meters were installed. About 1.5 is still outstanding
– Billing and collection infrastructure need to be upgraded to meet current international standards
– Demand Side Management – for virtual generation
• General– Demand for power has continued to grow in excess of supply
– Economies are based on human activities. The six most populous countries in the world are either economically developed or are making serious advances towards development. There are Potentials for growth in Nigeria
Comforts to the Investors I
• A lot has happened and a lot more is still happening to give comfort to the prospective investors in the Nigerian Power Sector
• Supportive Energy Policy – when Nigeria woke up to its energy problems, it developed a Power Policy which was approved in 2001. Actions of successive govts have been very consistent with the Policy. There is a sustained political will to progress power sector reform.
• Legal Framework exists: Power Sector Reform Act was passed in March 2005 to give legal backing to the reform initiative
• The people’s need for power is real and urgent. Consumers are willing to pay for reliable power. They are paying more for lack of it. The demand for the reform of the Power Sector is universal.
Comforts to the investors II
• Existence of a Sector Regulator- Following the Power Sector Reform Act of March 2005, the Nigerian Electricity Regulatory Commission was set up in Oct 2005 to drive the electricity Market development and promote competition
• Favourable Tariff Structure – the Multi-year Tariff Order (MYTO) has been developed by the Regulator as a transparent methodology for tariff determination. MYTO is currently undergoing a major review to ensure prices are adequately aligned to cost
Comfort to the Investors III
• Robust Gas Master Plan with appropriate pricing for gas
• Bulk Trader:Bulk Trader has been registered and licensed, credit enhancements being put in place to enable BT take off
• Electricity Liability Company exists: NELMCO already in place, currently being resourced for operations – take over legacy liabilities
• Nigeria is Very Accessible:- Can be reached by the rest of the world by sea, Apapa Port in Nigeria is one of the largest Sea Ports in Africa. Can be reached from anywhere in Africa by road
Summary
• Electricity problem is an African problem, but most acute in Nigeria.
• The need for power in Nigeria translates to huge opportunities for investors world-wide
• Solving the Nigerian power supply problem is solving the African problem
• It is not Sprint, but a Marathon. Nigeria, and indeed Africa, cannot do it alone
Thank You
Questions please!