Source: Nigeria Bureau of Statistics (NBS) Get the data Created with DatawrapperNigeria’s Power Market George Tah 15th March 2019 African Business News Power Generation Nigeria has 27 on-grid generation companies, the majority of which are located in the southern part of the country and have a total installed capacity of 12,493 MW. Gas is the primary feedstock, with 89% of the generating plants (24 companies) being gas-fired thermal facilities, while the remaining 11% (3 companies) are hydro plants. Although most of the generating plants are located in the southern part of the country, there is no direct correlation between the location of power plants and areas with highest consumption. Although Nigeria has an installed capacity of 12,493 MW, only an average capacity of 3,904 MW is operational, meaning that on average each generation plant utilises approximately 27% of its installed capacity. The low utilisation of capacity has been widely attributed to old equipment, poor maintenance of power plants and constraints with gas, water and transmission. Despite having sizeable gas reserves of 202 trillion standard cubic feet (scf), there are shortages of gas supply with only about 9% (800,000 scf) of the daily production of gas delivered to the power plants. As 89% of generating plants are fuelled by gas, availability of the resource directly affects capacity utilisation. Factors affecting the flow of gas include low production levels by international oil producers and local independent producers, the high rate of vandalism of pipelines and a lack of investment in gas-processing facilities. Nigeria’s generation plants are divided into National Integrated Power Projects (NIPP) and Independent Power Projects (IPP) in fairly equal measures. NIPP power plants are owned by the Niger Delta Power Holding Company, which itself is owned by the three tiers of government (federal, state and local). IPPs are power plants owned by state governments and/or private organisations and individuals. Transmission & Distribution All electricity generated is sent to the Transmission Company of Nigeria (TCN), the state-owned transmission company, before being allocated to the distribution companies and, through them, the final consumers. The transmission system has the capacity to transmit 5,300 MW but does not utilise full capacity due to constraints of the generation plants. Transmission expansion has also been inhibited by system collapses, frequent outages and low maintenance of current infrastructure. Following the 2005 reform which encouraged private participation, the distribution network of the Power Holding Company of Nigeria was separated into 11 regional companies/grids which were sold to foreign and local investors. The 11 companies have different network sizes, customers and cater to different geographic regions. Power Consumption & Supply Concerns Distribution companies have been faced with several challenges, the major one being financial constraints as they are unable to recover full revenues to pay market costs. According to Power Africa, a US government initiative geared towards improving access to electrical power in sub-Saharan Africa, Nigeria’s distribution companies suffer a 46% loss in collection on energy delivered to customers, which in turn affects their ability to settle costs incurred with transmission and generating companies. There have been several discussion on initiating tariff reforms, which is expected to allow for efficiency improvements by the distribution companies, however before tariffs can be implemented, a metering solution has to be available to capture all customers and system monitoring to avoid electricity theft. Electricity consumption varies by region as can be seen in breakdown of power supplied by the distribution companies across the country. Lagos state is the top power consumer, with 25% of the total energy consumption delivered via the two distribution companies that serve it, Eko and Ikeja. High energy consumption in Lagos is explained by its vast population of over 23 million and its position as the major centre of trade and economy in Nigeria. Abuja follows at 14% of the total consumption, or 7.1 billion KWh, in the last quarter of 2018. Demand for electricity in Nigeria far outweighs the supply, with over half of the population lacking access to the electricity grid and those that are connected suffering from unstable and inconsistent supply. Despite the government’s structural reform in 2005 which focused on privatising legacy power assets and enabling the participation of private companies in the electricity supply chain, challenges persist with insufficient utilisation of generation plants, inadequate transmission infrastructure and distribution losses. Figures from the National Bureau of Statistics show that the power generated by thermal and hydro power plants in Q4 2018 was 8.9 million MW, while total consumption recorded by the distribution companies was 7.1 million MW. The difference between energy injected to the grid and energy supplied to the grid, approximately 1.8 million MW during the period represents the loss incurred by the TCN. A 12-16% loss is a common occurrence and a result of weak infrastructure that fails to transmit all the generated power to the distribution companies. However, this is expected to be reduced following the TCN’s 2018 announcement that it would inject $1.57 billion to increase its current grid capacity to 20,000 MW by 2021. According to a report by Rocky Mountain and the Nigerian Economic Summit Group, domestic and commercial consumers in Nigeria spend $37,000 daily to augment the inconsistent supply of energy though small-scale generation sets fuelled by petrol or diesel. Annual self-generating capacity is approximately 13,223 MW, according to a survey conducted by the University of Ibadan. The chemicals and pharmaceuticals sub-sector is the biggest self-generator of power, followed by the food, beverages and tobacco sub-sector, and the industrial plastics and rubber sub-sector. Most businesses and individuals generate power through the use of generators, inverters, USPs and coal-fired plants, fuelled by gas, low-pour fuel oil and coal.