With only one in four Nigerian households having even sporadic electricity, the Nigerian state oil company has announced plans to shift focus from strictly oil and gas to power generation and transmission.
The National Petroleum Corporation (NNPC) said this week that it would transform itself into an integrated energy company in order to tackle the country's dire power problems.
By comparison, Brazil and Pakistan-both with similar population sizes-each generate 24 times more power than Nigeria.
Only one in four Nigerian households have access to the grid, and only for a few hours a day. Nigerians who can afford generators spend an estimated $0.40/kWh, one of the main expenses of the average household.
The NNPC's "decision to diversify into the power sector was hinged on the need to bridge the huge energy gap in the Nigerian market," NNPC managing director Maikanti Baru was quoted by local media as saying.
There were no indications from the NNPC as to a timeline or size of planned investment for this transition.
Earlier this month, NNPC announced a $15-billion investment to build thermal power plants with a capacity of 4,000 megawatts (MW) across the country over the next 10 years. According to the plan, three of the power plants would be built in Abuja, Kaduna, and Kano
The poor condition of the power grid is the result of many years without investments in infrastructure, a poor maintenance record for the existing facilities, and rampant corruption.
The lucrative nature of oil, however, rendered electricity unattractive for the state-owned company, though experts argue that reliable grid power could boost Nigeria's GDP by 14 percent.
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NNPC said it was already working on a project to generate four Megawatts (4MW) of electricity, but that low transmission capacity was throwing a wrench in the works.
According to NNPC, there is enough gas to generate eight gigawatts (8GW) of electricity, but the transmission grid could not support this volume.
In 2013, according to Nigerian media, the country privatized the bulk of the power sector, while maintaining control over the grid operator, the Transmission Company of Nigeria (TCN).
By Damir Kaletovic for Oilprice.com
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