Nigeria

Nigeria Power Market


History of Power Sector

The history of the Nigerian power Sector dates back to the 19th century when the first generating plant was installed with a capacity of 20MW. The first utility company in Nigeria, The Nigerian Electricity Supply Company was established in 1929. Further developments led to the creation of the Electricity Corporation of Nigeria (ECN) in 1950 tasked with the responsibility of coordinating the distribution of electricity in the country. After independence, the Nigerian Dams Authority (NDA) was established with the responsibility of overseeing the construction and management of hydropower stations in the country. The NDA was mainly a power generating entity while the ECN was a distribution entity. In 1973, these two entities were merged which formed the now defunct National Electric Power Authority (NEPA)

Nigeria’s Electricity Demand
Electricity demand in Nigeria far outstrips supply. Nigeria trails far behind countries such as Egypt with around 27,000MW of installed generation capacity and South Africa with an installed generation capacity in excess of 40,000MW. Nigeria’s electricity consumption on a per capital basis is among the lowest in the world. More than half of the population have no access to grid supply electricity replying on self-generation.

Current supply gap in Nigeria shows that there is a projected demand of about 20,000 MW vs. supply of 4,000 MW. This constituted a short fall of about 16,000 MW of electricity power supply nationwide. The implication is that there is still a huge demand for electric power across the country, presenting an opportunity for more investment into the sector. The Nigerian electrical power sector is in a highly charged state.

The national power utility has a total installed capacity of 8,644MW, with available capacity of 3800 – 4000MW functional. With a current population of about 160 million which is expected to reach 200 million by the year 2020, the current installed capacity, even if fully operational, will not be able to satisfy the electricity demand. Unfortunately, electric power supply in Nigeria is far below the national demand. Given that only 36% of the population has access to electricity, Nigeria could easily absorb 60,000MW. By way of comparison, South Africa has an installed electricity generation capacity for supply to the national grid of over 52,000 MW with a population of only about one third the size of Nigeria’s. On the other hand, demand for electricity in Nigeria presently is estimated to be between 10,000 MW to 12,000 MW and is projected to increase by 26,561 MW by 2020 if the Nigerian government is to meet its current economic development goals. The World Bank estimates that approximately 85 percent of businesses in Nigeria own electricity generators and that privately-owned self-generation power accounts for roughly 40 percent of the total capacity of Nigeria. The historically poor performance of the power sector in Nigeria has been a significant barrier to private investment in the country. (Source: “Nigerian Power Sector Reforms: Opportunities and Challenges for Investment” – Latham & Watkins Finance Department February 2011).

Delta State Electricity Market
Delta State has a market potential of 3,025 MW of which only 210 is being supplied creating a demand gap of 2,904 MW for which at the end of 2007, the state had an estimated population of 4,090,000 with a projected growth rate of 3%. This translates to approximately 872.977 households with a per capita energy consumption of 143kWk. This estimate doesn’t include any projections or estimates of population influx due to business investments or economic relocation into the state as a result of available electricity. The State has estimated potential 257,000 connections of which only about 57,000 of these are connected to some form of electricity and the remainder using either diesel generators or other fuels. With the average cost of diesel increasing daily, the average consumer will welcome regular electricity from the proposed Patina Energy power plant.

Power Market (Buyers)
As of December 2014, the principal power buyers are constituted largely by the NBET, the 11 Regional Distribution Companies (DisCos) and regional manufacturing industries.

Consumer Market Segments
The power consumption market is primarily divided into three key segments:
1. Industrial Sector
2. Non-Residential Sector
3. Residential.

The industrial segment consumes approximately 45% of the power generated while the Non-Residential segment, which constitutes mainly daytime customers like (offices and daytime traders), consumes approximately 15%. The Residential segment consumes about 40%.