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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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Not Darkest Africa, but Darkest Nigeria - 120 Million Without Electricity

Not Darkest Africa, but Darkest Nigeria - 120 Million Without Electricity

Nigeria’s population of over 160 million people and the country’s large industrial concerns share a mere 6 gigawatts of electricity. The U.S. government’s Energy Information Agency drily notes, “Nigeria has vast natural gas, coal, and renewable energy resources that could be used for domestic electricity generation. However, the country lacks policies to harness resources and develop new (and improve current) electricity infrastructure. The Nigerian government has had several plans to address the need for power, including a recent announcement to create 40 gigawatts (GW) of capacity by 2020 (compared to 2009 installed capacity of 6 GW). Achieving this goal will mainly depend on the ability of the Nigerian government to utilize currently flared natural gas… In 2009, the Nigerian government developed a Gas Master Plan that promotes investment in pipeline infrastructure and new gas-fired power plants to help reduce gas flaring and provide much-needed electricity generation. However, progress is still limited as security risks in the Niger Delta have made it difficult for International Oil Companiess to construct infrastructure that would support gas monetization.”

For those Nigerians lucky enough to be connected to the national power grid, a further source of irritation is the Power Holding Company of Nigeria’s habit of sending estimated usage bills, because of PHCN’s dilapidated metering system and incompetent PHCN engineers tasked with maintaining the system.

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The result is that consumers have taken matters into their own hands; according to the Trade Union Congress, “virtually” every household in Nigeria now owns a generator. TUC President Peter Esele observed, "We obviously need to have more players in this power and energy sector. Meanwhile, Brazil with a population of 192 million people produces over 100,000 megawatts of power, while South Africa, which we helped to attain independence and which has a population of about 50 million people, generates over 40,000 megawatts of power. We understand that the causes of this appalling situation include incompetent management, poor maintenance culture, inadequate funding, corruption, and the vandalizing of facilities. But these are all issues that the government can and must tackle decisively and promptly if we are to venture into the group of 20 most developed nations by the year 2020."

Put another way - Nigeria's electricity sector is relatively small. Brazil and Pakistan, two countries with similar population sizes, generate 24 times and 5 times more power than Nigeria, respectively. According to the World Bank, from 2007-2008 Nigeria has experienced power outages on average for 46 days per year, and the average outages lasted almost 6 hours.

On 5 June, acknowledging the obvious, Nigeria’s Minister of Power Chinedu Nebo told newsmen, "The power situation in the last three weeks has been a nightmare. We have not had the kind of system failure like we have had in the last three weeks. For instance, Bayelsa State was knocked out for three weeks as a result of a breakdown on one of the transmission lines. It took about 12 days to restore power in the state using temporary measures. Another one happened in Kebbi. There is also man-made vandalism. Funding is part of the nightmare we are facing. It was thought that by 2012 the sector’s privatization would have been completed, so there was no provision for maintenance in the budget. It has become very difficult for even routine maintenance to be carried out." Nebo concluded by noting that the power situation in the country had been a "nightmare" due to a combination of system failure and sabotage.

Abuja’s solution?

The free market, of course.

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A Nigerian government and industry delegation is currently in Hong Kong to explore the possibility of privatizing and selling 10 power plants to investors around the world. Putting this in context, there are just 16 power plants in the country, with the PHCN owning 10 of them, while the remaining six are owned by independent producers.

At this stage it is difficult to see what foreign investors would be willing to interact with Nigeria’s notoriously corrupt and inefficient bureaucracy to purchase power facilities. Even China, whose growing presence in Africa has been noted worldwide, while in 2012 it invested $15.42 billion in Nigeria, Beijing has steered clear of such indigenous power infrastructure projects, preferring instead to focus on the country’s oil and gas sector.
In the meantime, most Nigerians had better keep their generators fired up.

By. John C.K. Daly of Oilprice.com

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Leave a comment
  • Bruce Schilling on June 25 2013 said:
    Nigeria does not produce enough engineers, technicians, and competent managers to run a modern electrical power grid. The Chinese could do the job, but that would require depleting some government official's Swiss account. Not likely to happen.
  • tali_sa on June 25 2013 said:
    Nigeria produces enough engineers, technicians, and competent managers.

    The problems are political and corruption.

    Once the political issues are sorted out (including Bokom Haram's problem and dog-fights among politicians), more Nigerians in diaspora will come back and continue to contribute.

    Nigeria has professionals in all areas you can image but they are dispersed around the world.

    Most are first class technical professionals and managers. They are already coming back but once there is more peace and tranquility, a greater number will come back.

    Corruption can be tackled with assistance of the western world governments, if they help to stop illegal transfer of ill-gotten wealth to their jurisdiction with better punishment within Nigeria.
  • Christopher on June 28 2013 said:
    Thanks for this opinion piece but there are a few clarifications needed:

    1. Please stop making population to population to power comparisons re: Nigeria and other countries. I understand why folks do this but Brazil and South Africa also have, between them, over 400,000 factories to Nigeria’s less than 20,000 and we all know they are massive consumers of power.

    2. The Chinese are actually building and financing the largest IPP in Nigeria- the 700 MW Hydropower station in Zungeru: http://bit.ly/14BkH5G. Not exactly sure where you get the idea they are “steering clear” of Nigeria’s power sector.

    3. Nigeria’s power sector problems (and a good deal of its latent political problems) are a function of its addiction to oil. Since infrastructure for that is rather geographically specific and, generally, doing just fine it shouldn't be surprising that the power sector for the non-oil components of its economy- which is basically everything- is in the state that it’s in. Lights work just fine for Shell and Chevron which speaks volumes about previous Nigerian government’s priorities.

    4. Nigeria’s power problems and gas problems are, ofcourse, related and this is mostly a problem w/ transmission and distribution infrastructure. The up and downstream pieces are generally doing fine- it’s the missing midstream that’s holding back BOTH sectors.

    5. Beyond the legal and regulatory framework needed for investors, I actually believe the solution here is rather simple: a) let the market decide all gas prices b) require all modern dwellings to install gas pipes c) offer licenses/concessions/whatever to the four types of gas participants: (1) those who explore/drill for gas, (2) process gas,(3) distribute gas cross-country, (4) and market gas to urban and rural areas d) the Feds should agree to back bonds for cross-country trunk lines so as to both entice investors and fix the “missing middle” I noted above.

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