With Current 4,000Mw, Nigeria’s Plan to Grow On-grid Power to 45,662Mw Remains in Doubt

Emmanuel Addeh

Nigeria’s plan to generate 45,662 megawatts on-grid electricity by 2030 remains in doubt, with just eight years to the ‘magic’ year, given the current generation of 4,000Mw or less on some days.

Latest industry documents obtained by THISDAY indicated that if Nigeria is to experience a marked increase in supply today, it must grow on-grid power to at least 17,556Mw currently, although it is only able to achieve about 20 per cent of that for now.

For instance, the documents which provides an overview of the current state of the sector showed that available capacity of Generation Companies (Gencos) connected to the grid increased by a meagre 1,425Mw from 6, 175Mw since 2015, growing to just 7,600Mw in the last seven years.

Going by that growth pattern, it could take over two decades to hit the projected 45,662Mw, given that the government has spent trillions to ramp up supply nationwide to even achieve the modest rise in capacity.

THISDAY recalls that the Federal Executive Council (FEC) approved the Power Sector Recovery Plan (PSRP) in March 2017 and made further amendments in 2019 with strategies to phase-out federal government support to the electricity market by end of 2021.

The federal government further provided a Payment Assurance Facility (PAF) of N701 billion to ensure generation companies are paid to maintain operations for the period 2017 to 2018 in view of insufficient remittances by Distribution Companies (Discos) due to non-cost-reflectivity of tariffs.

The federal government also approved an extension of the PAF by N600 billion subject to the accountability framework that include provisions for Minimum Remittance Requirements as contained in the successive Tariff Orders.

In addition, the government is currently finalising negotiations to secure a $3 billion loan with the World Bank to support the PSRP.

“Available capacity is far still less than the required capacity to meet current energy demand from the on-grid estimated at 17,556MW in 2020 and expected to grow to 45,662MW by 2030,” the data showed.

It further indicated that the actual generation averaged 4,223MW in 2021, which is significantly less than the available capacity 7,600 for the period.

According to the data, the capacity utilisation rate in the Nigerian Electricity Supply Industry (NESI) remained low at only about 54.57 per cent of the available capacity as of 2021 due to technical and operational constraints from gas shortage, transmission and network constraints and commercially induced low load offtake by Discos.

This year alone, the national electricity grid has collapsed at least five times with its associated disruptions to commercial and social activities.

Power supply in the country has always been erratic, although it has gone worse in recent times, with hope waning as to whether the Muhammadu Buhari-led administration will be able to make any marked difference in the remaining months.

But to improve on the current status of the sector, on July 1, the Nigerian Electricity Regulatory Commission (NERC) commenced the process of gradually activating the NESI contracts to provide certainty to the minimum volume of energy and properly allocate risks among the industry operators. The move has somehow marginally increased supply to some Nigerian homes this month.

A plan last year to ensure supply of an average generation of 5000Mwh/h by July 1, 2021, did not come to fruition, although it would have helped to meet tariff assumptions and migration of customers to higher bands as well as improve supply of gas and predictable dispatch by Gencos.

It was also geared toward securing available generation capacity of at least 6,000Mw by January 2022, improve capacity offtake by Discos, create certainty in the gas-power market segment through contracting and grow the electricity market in line with transition requirements.

If fully operational, the document showed that the upside of reliable power supply aside encouraging investment and small businesses could lead to crime reduction.

In addition, it drew a positive correlation between power supply and economic growth, noting that Lagos, the 5th largest economy in Africa is currently allocated more than 20 per cent of Nigeria’s total available grid capacity.

Before now, Nigerians had expressed high hopes that the national grid could at least deliver up to 10,000Mw of electricity by 2023 and ameliorate the decades of inadequate and unreliable power supply.

But as it is, added to the problem of capacity, that target is now under serious threat as the national power assets have become objects of attack in various parts of Nigeria.

This year alone, aside gas lines supplying the fuel to thermal-powered facilities, there have been direct strikes on assets run by the Transmission Company of Nigeria (TCN) for which innocent consumers have suffered the consequences.

But the document noted that although all the objectives of the Nigerian power sector reform are yet to be fully realised arising from a number of structural, regulatory and policy missteps two decades after the commencement of the reform process, substantial progress can be said to have been achieved.