IEA supports state electricity regulation as solution to Nigeria’s power crisis

The International Energy Agency (IEA) said Nigeria could increase its electricity access between now and 2025 by implementing some important plans.

This is according to the latest Electricity Market Report by the IEA released on Wednesday, February 8, 2023, and seen by Nairametrics.

The recommendations are in line with the government’s intervention in the Nigeria Electricity Supply Industry (NESI). They include the following-

Commissioning the Zungeru Hydro Plant: The 700-megawatt (MW) Zungeru hydroelectric power plant is located 77km downstream of the Shiroro Hydropower Project in Niger State.

• The plant is expected to be commissioned by the first quarter of 2023 and will add to the country’s grid power capacity. 
• However, the project has encountered some delays as a result of court cases. In January 2018, President Buhari said the project would be completed by 2019. The hydroelectric project cost $1.2 billion to develop. 

Siemens Presidential Power Initiative (PPI): According to the IEA, the presidential power initiative with Siemens will help to considerably increase Nigeria’s power generation.

• The initiative is an ambitious electricity development plan launched in 2019 with Siemens and with the support of the German government, the initiative would raise the country’s total available generation capacity to 25 gigawatts (GW) by 2025.
• Although the initiative has faced some delays, the Federal Government has started overseeing the arrival of some mobile substations and transformers under the initiative.
• In January 2023, Labour Party presidential candidate, Peter Obi said he will immediately complete the Siemens power initiative if he becomes president in Nigeria’s forthcoming general elections.  

Constitutional Amendment Bill: In July 2022, Gabriel Suswam, the Chairman of the Senate Committee on Power, presented a constitutional amendment bill that would allow states to own and develop electricity generation, transmission, and distribution capacity.

• The IEA believes that this proposed removal of the federal state’s monopoly on the electricity system would contribute to fostering investment in new capacity through public-private partnerships. 
• Nigeria plans to give states more power to regulate electricity ditching a provision in the current act that allows electricity to be regulated centrally by the Nigerian Electricity Regulatory Commission (NERC).

More insights: The report highlights the fact that Nigeria’s electricity access is currently hampered by insufficient available power generation and transmission capacity, and is further constrained by grid collapses as well as low gas-fired generation. The report stated: 

• “Nigeria’s power grid collapsed seven times from January through to September 2022. This is higher than in 2020 and 2021 when there were four grid collapses each year according to the Nigerian Electricity Regulatory Commission (NERC) but still shows some improvement compared to the average rate of default observed since 2015, which averaged 13 collapses per year (with a peak of 28 in 2016).  
• “Earlier, President Buhari announced that electricity availability issues were mainly caused by low gas-fired generation (which represents 73% of the electricity mix in 2022) resulting from sabotage of gas pipelines.”  

For the record: The IEA report says that electricity demand in Africa increased by an estimated 5.7% in 2021, rebounding from a 3.3% decline in 2020 due to the Covid-19 pandemic’s impact on the economy.  

• However, electricity demand growth on the continent is expected to rebound in 2023 to over 3%, followed by an average of 4.5% regional growth for 2024 and 2025.  
• According to the report, the large majority of incremental generation in 2025 will come from renewable sources, followed by natural gas.  
• Natural gas is expected to remain the largest source of electricity in Africa through 2025, rising by around 30 terawatt-hours (TWh) from 2022 to 2025, to close to 400 TWh.