Challenges and Opportunities of Sustainable Electricity Access in Nigeria

Table of Contents

1 Introduction
1.1 Research Area
1.2 Research
1.3 Research Method

2 Access to Electricity in Nigeria
2.1 Nigeria and General Statistic

3 PHCN (Power Holding Company of Nigeria)

4 Challenges of Electricity Access in Nigeria
4.1 Inadequate Infrastructure
4.2 Underutilized Energy /Human Resources
4.3 High Investment Cost
4.4 Energy Mix

5 Energy Use & Energy efficiency in Nigeria
5.1 Energy Efficiency
5.2 Energy Access and Improving access

6 Energy poverty in Nigeria
6.1 Impact and Implication
6.2 Environmental Impacts

7 Opportunities
7.1 Investment Option as Opportunities
7.2 Sustainability Electricity by Reform
7.3 Employment Opportunities
7.4 Efficiency and Reliable Services
7.5 Energy Alternatives and Strategies
7.5.1 Biomass Energy:
7.5.2 Wind Energy:
7.5.3 Solar Power
7.5.4 Hydro Power
7.6 SWOT/PEST Matrix of the Nigeria Power Sector

8 Conclusions and Recommendation

References

1 Introduction

Nigeria is a nation in west Africa with various energy resources, and abundant sources of energy like crude oil natural gas , coal and it is also endowed with large renewable energy resources such as, wind power, hydro power, bio-mass and solar power.

1.1 Research Area

Nigeria is a nation with enormous oil wealth, but many of its citizens do not have access to effective electricity supply. According to (Babatunde & Shuaibu 2009, p1), Nigeria has approximately 5,900 megawatts (MW) of installed electric generating capacity. The Power outages are frequent and the power sector operates well below its estimated capacity. A fundamental reason offered is the low generating capacity of the Nigerian power sector relative to installed capacity. Even with observations and research in Nigeria Electricity Access has become one of the country´s most significant problems. As electricity use is seen as the engine that drives the nations economy. But, because lack of Electricity access to every household, the national governments and the policy makers want to ensure that the citizens of Nigeria has adequate access to electricity both in rural and urban areas.

This is because, full electricity development in Nigeria will drive and enhance the national economy, because electricity is seen as the engine that drives industrialization in every nation’s economy, as electricity access has many important benefits and potentials; 1) a stable Electricity access supply can become a key for the Nigerian nation to becomes one of the most developed in the world especially in terms of economy and the marketing environment as well improving the communication system to helps innovation in science and technology and providing adequate healthcare delivery system and improving the citizen’s standard of living. According to (Emovon and Kareem 2008,) it’s unfortunate that the biggest problem in Nigeria is electricity crisis, a crisis without end. Despite all these inherent problems associated with Electricity access in Nigeria, there is a growing call for the need of a significant reform that will transform the energy sector in general. This study tends to fill in the gap in understanding the challenges and the opportunities affecting the Electricity access in Nigeria

1.2 Research

One of the United Nations Development Program (UNDP) goals across the world is to strengthen nations in their ability to manage their resources in a sustainable way. The Energy Sector in every national government has significant impact in the lives of every citizen in every nation; the role of every government is to provide the basic needs of its citizens in ensuring a great and significant effect in a way to improve economic development. The need for electricity is paramount for the growth of a country, access to electricity as the basic form of energy supply to the masses is vital for the development of a nation’s economy because of this; Electricity access is particularly crucial to human development as electricity is, in practice, indispensable for certain basic activities, such as lighting, refrigeration and the running of household appliances, which cannot easily be replaced by other forms of energy. Every individuals’ access to electricity is one of the most understandable and un-distorted indication of a country’s energy poverty status. This study will explore most of the challenges and the opportunities of having a viable electricity access in Nigeria and proposing strategies to help Nigeria in providing its citizens with clean and efficient energy supply.

1.3 Research Method

This study will review and analyze the challenges and opportunities facing the Electricity Access in Nigeria, the study will employ features and approach to good Sustainability that will clearly demonstrate how to understanding of the challenges and the opportunities in accessing electricity in Nigeria. This study will use the theoretical research methods, the theoretical will be beneficial to the study because, it will be useful to gather literature on Energy Sector in general and existing literatures on the Nigeria Energy Sector.

This study tends to fill in the gap in understanding the challenges and the opportunities affecting the Electricity access in Nigeria and proposing strategies to help Nigeria in providing its citizens with clean and efficient energy supply.

Also, PEST and SWOT Analysis will be used in other to understanding the challenges and opportunities of the Nigerian Electricity Access System.

2 Access to Electricity in Nigeria

Access to clean and sustainable electricity has become a major problem facing Nigeria, Nigeria is a nation with vast majority of abundant energy potential, still the country’s energy crisis has challenged its ability to reduce poverty and support for free market economy as well as strengthening the socio-economic development of the country. For over two decades, Nigeria has experienced problem in electricity generation, transmission and distribution making electricity inaccessible. According to the IAEA report of 2011, it estimated that in 2009 about 1.3 billion people in the world lacked access to electrical energy of which 590 million lived in sub-Sahara Africa, especially in the rural areas. Presently, access to electricity in Nigeria is through power holding company of Nigeria (PHCN) which its power generation capacity is estimated to be around 6,000megawatts, with average working capacity of 2000 megawatts, to provide electricity to over 150 million people, this result to high importation of electricity generating sets (Generators) in other to have alternative electricity supply access

However, the inability of the governments to provide better electricity access to its citizens has made the nation; to fall short of achieving the millennium development goal. For instance, the ability for many great nations being able to achieve better basic education was due to the fact that their educational facilities has the required necessary electricity facilities as a basic teaching tool for their citizens ability to read and write, this is because basic lighting for home may help reduce child mortality and improvement of maternal health. Also, electricity is needed for better health facilities as to enable preservation of drugs and vaccines in the refrigerator as well as better service delivery for emergency and intensive care to patients in the hospitals, Electricity energy is needed for better health living, cooking of foods for a comfortable living temperature, lightings for appliances, piped water or sewerage, educational aids, communication technologies such as radio, televisions, emails, and the internet) and transport, Energy also Fuels productive activities such as farming, trading, industrialization of products and mining activities and leisure and sports.

Similarly, lack of electrical energy access can contribute to energy poverty, and deprivation can lead to economic decline of a nation. Even though, energy and poverty are not fully integrated together but with the socioeconomic development which involves productivity, income growth level, health and education Ajayi and Ajanaku (2007).

2.1 Nigeria and General Statistic

Nigeria is situated in Western part Africa. It bordered Niger and Chad through the north, and Cameroon through the south, and Benin through the west, it’s also surrounded by the Gulf of Guinea which borders Togo and Ghana by the water.

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Figure 1. Map of Nigeria ^[1]

Table 1. Statistic

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3 Introduction of PHCN (Power Holding Company of Nigeria)

Power Holding company of Nigeria (PHCN) is owned by Nigeria Government. It is responsible for electricity production and supply in the country. It is active in the area of generation, transmission and distribution of electricity. PHCN is primarily in charge of governing the use of electricity in Nigeria. The company generates power from hydro power generation and thermal plants generation. PHCN has an installed generating capacity of around 6,000 MW. However, the company usually records low availability. The company is focusing on development of new generation projects in the area of power generation, transmission and distribution. PHCN was formed in 2005 as a result of vertical and horizontal unbundling of NEPA. The company is headquartered in Abuja, Nigeria. (Global Data 2011)

Power Holding Company Nigeria has monopoly for the generation, transmission and distribution of centralized grid power and empowered by the government to keep up an efficient, coordinated and economic system of electricity supply throughout the Nigeria. Sequentially to produce greater efficiency and sustainability in the system, a reforms process has was in progress to remove government’s monopoly on generation, transmission and distribution. Thus, in 2005, the Electric Power Sector Reform Act (EPSRA) was enacted. The law is intended at liberalizing the power sector.

The PHCN started with four major power stations namely: Ijora, Delta, Afam thermal power station and Kanji hydro power station, providing electricity for about five million customers nationwide, In turn increases industrial growth. As a result of the reform process, the distribution and generation areas of the electricity market are deregulated. PHCN is grouped into six different generation companies and eleven distribution companies for the various parts of the country.

According to the (Central Bank of Nigeria, Research Department) PHCN currently accounts for about 98% of the total electricity generation. Power generation by other agencies such as the Nigerian Electricity Supply Company relies on thermal power for electricity generation unlike PHCN, which relies on both hydro- and thermal power. However, electricity is also a consumer of fuel and energy such as fuel oil, natural gas, and diesel oil. The importance of these sources of energy and fuel for generating electricity has been decreasing in recent years. However, hydropower that is relatively cheaper than these sources has grown to be more important than other sources (Famuyide, et al., 2004). Thus, more recently, the Power Authority has generated electricity through a mix of both thermal and hydro systems.

The national electricity grid presently consists of 14 generating stations (3 hydro and 11 thermal) with a total installed capacity of about 8,039 MW. The transmission network is made up of 5,000 km of 330-kV lines, 6,000 km of 132-kV lines, 23 of 330/132-kV substations, with a combined capacity of 6,000 or 4,600 MVA at a utilization factor of 80%. In turn, the 91 of 132/33-kV substations have a combined capacity of 7,800 or 5,800 MVA at a utilization factor of 75%. The distribution sector is comprised of 23,753 km of 33-kV lines, 19,226 km of 11-kV lines, and 679 of 33/ 11-kV substations. There are also 1,790 distribution transformers and 680 injection substations Fagbenle et al., (2006).

Despite the current power situation in Nigeria, and in spite of the current deregulation process, the Federal Government is still increasing investments in the sector to increase the generation capacity to 10,000MW by 2011 and to 20,000MW by 2015 through the National Integrated Power Projects being implemented across the country. Most of the additional capacity would be thermal (Gas) plants with renewable such as solar, biomass and wind contributing a minimal amount. Nuclear power has been factored into the energy mix, and it is expected that the first nuclear power plant of 1,000MW capacity is expected to be commissioned not later than 2020 (Erepamo, 2009).

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Figure 2: Index Score ( New statesman 2013 )

-Power Holding Company of Nigeria Currently Scores 50% in the index.
-Power Holding Company of Nigeria Currently ranked equal 15 out of 35419 included in the NS Company Index. This is the top of 0.042% of all companies.
-Power Holding Company of Nigeria is currently ranked 3 out of 10785. This is the top 0.028% percent of Energy companies ranked in the index.
-User perception of the company stands at 0% percent. This differ 50% percent over the score attributed to the company by other scoring factors. presently PHCN comprises of the following:

Three hydro and seven thermal generating stations with installed capacity of about 6,852MW and available capacity of 3,542MW , a radial transmission grid (330KV and 132KV) and Eleven distribution companies(33KV and below) in charge of wires, sales, billing, collection and customer cares (PHCN, 2013). However, the Nigeria government and the 14 preferred Bidders (Company) created out of PHCN as a result of the reform process has sign a share sale Agreement and Concession Agreement. The government and the Preferred Bidders will work together to archive a successful facilities handover to the Bidders, these has been regarded as a boost and in turn will increase generation, transmission and distribution capacity and will increase sustainable electricity access in Nigeria.

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^[1] http://upload.wikimedia.org/wikipedia/commons/0/0a/Population_density_map_of_Nigerian_states_-_English.png