Illuminating Nigeria
A look into the Nigerian Electricity Crisis
Photo source: Insider
Shedding Light on Electricity Access in Nigeria
Nigeria is the most populated country in Africa, with a population of over 206 million people in 2020 (Statista, 2020). It is also Africa's largest exporter of crude oil and natural gas, yet as of 2018 only 56.5% of Nigerians had access to electricity (The World Bank, 2021). The United Nations' Sustainable Development Goal 7 addresses the importance of access to affordable and clean energy for all by 2030 (United Nations Department of Economic and Social Affairs, 2021). Electricity is necessary to power our homes and businesses. Children rely on electricity to warm their schools. We need electricity to maintain communication networks. As the need for electricity increases, Nigeria must find ways to keep the lights on for its population.
A Problem of Power
The Supply Side
Nigeria has been blessed with immense energy potential in the form of natural gas, oil, solar, and hydro power. USAID predicts that at full capacity Nigeria could be producing 12,522 MW of electric power from existing plants (2021). But on average, Nigeria only manages to produce a meager 4,000 MW, an insufficient amount of power to serve its population (USAID, 2021). Nigeria's electricity industry faces many challenges. Complex problems demand multifaceted solutions to keep the lights on.
Who runs the show?
Image by Ariel Wexler
The diagram to the right breaks down the major players in policy and the daily operations of Nigeria’s electricity sector. Nigeria began to generate electricity in 1866 to serve the colony of Lagos. In 1951, through an act of Parliament, the Nigerian government established the Electricity Commission of Nigeria (ECN). The commission was created to regulate and operate power supply in the country. In 1972, the ECN was converted to the Nigerian Electric Power Authority (NEPA). At this time the Nigerian government had complete control over the power sector (Aelex Report).
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In 2005 the Nigerian government attempted to expand the electricity sector by privatizing it with the enactment of the Electric Power Sector Reform Act. Subsequently, NEPA became the Nigerian Bulk Electricity Trading PLC (NBET) and was unbundled into 18 companies, specifically six generation companies (GenCos), eleven distribution companies (DisCos), and one transmission company known as the Transmission Company of Nigeria (TCN). The GenCos and DisCos are privately owned, whereas the government has maintained ownership of TCN. The Nigerian Electricity Regulatory Commission (NERC) was established to act as the overarching regulator of the power sector and was to be responsible for licensing, tariffs, codes etc.
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Unfortunately, NERC abandoned its tariff setting responsibilities and pushed the task to the NBET, who was also tasked with guaranteeing payments to the GenCos. The government has been subsidizing electricity, but without a cost-reflective tariff, the generation companies are not earning enough to cover their costs of production, thus creating problems of insolvency.
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Transmission and production of electricity has been an important factor when considering electricity access in Nigeria. The majority of power plants are located in the south of the country with large concentrations in the southeast portion of Nigeria. Urban electricity access is of particular concern as there are far fewer numbers of power plants in the most populated states of Kano and Lagos State.
The map shows the distribution of high and medium voltage transmission lines. Transmission lines are imperfect conduits of electricity. There is always a small amount of energy lost as energy travels through transmission lines. In addition, transmission lines must be regularly serviced in order to maintain optimal function. A limited number of transmission lines within the context of a centralized energy system can contribute to shortages due to issues of access.
If the eleven DisCos are unable to receive adequate electricity to distribute to consumers they are likely to raise the cost of electricity. Decentralized energy production (such as solar farms located near rural villages) may be a short term solution to improve electricity access to areas where transmission lines cannot easily be built.
Transmission Challenges
The importance of
Cost-reflective tariffs
Nigeria’s power sector hasn’t been able to make enough money to cover the costs of generation, transmission, supply, and distribution costs. When NBET set low non-cost reflective tariffs, the DisCos weren’t able to earn enough money from customers in order to sufficiently cover the costs of distribution and pay the other actors in the power value chain, thereby creating insolvency in the industry. As they aren’t assured payment, the GenCos are operating at a lower capacity than they normally could because there isn’t a financial incentive to produce more electricity. By operating at a loss and lack of profitability, the Nigerian power sector loses appeal to foreign investors who already are wary of operating in Nigeria due to issues of violence from terrorist groups such as Boko Haram. Without foreign investment, the Nigerian electricity sector hasn’t been able to find the capital to expand production and distribution. The result is an unbalanced energy value chain because electricity supply is not meeting electricity demand. Recently, the government in Nigeria changed to cost-reflective tariffs (which are inflated now) to try to cover costs, but this does not mitigate other issues that affect the crisis as a whole, such as transmission system constraints (Eyo Ekpo/TED Talk, 2018).
Source: Take Light documentary still
Source: VOA Hausa Service
The map above (left) depicts levels of electricity production in Africa by country. The data from 2010 was measured at the terminals of alternator sets in a station. Power generation sources include hydropower, coal, oil, gas, and nuclear, as well as renewable energy sources such as geothermal, solar, wind, and tidal wave energy. Data output is in kilowatt hours and was obtained from plants designed for electricity production. The map depicts South Africa and Egypt to be major electricity producers in the African continent. Furthermore, Nigeria is the second largest electricity producer in Sub-Saharan Africa at approximately 26.12 billion kilowatt hours. According to research from the Nigeria Power Baseline Report, 85% of electricity produced in Nigeria is from gas thermal plants and 15% from hydroelectric plants (Baseline Report, 2015). Despite Nigeria's large oil production, 41% of their gas is exported to other countries (Baseline Report, 2015).
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The map above (right) depicts the total output of electricity in Africa by country (in gigawatt hours). The data, compiled from the World Bank in 2015, showcases a large amount of African countries with less than 2126 GWh. The electricity generation for the highlighted countries does not indicate a lack of access to a transmission grid, but rather a possible indication of failures in infrastructure and other capacity shortages. Nigeria's output lies at 31,246 gigawatt hours, within a range of GWh significantly higher than its neighboring countries.
Photo source: TONEX
Image by Sazia Nowshin
The Power Value Chain
From generation to distribution
Part of Nigeria's electricity crisis stems from systemic issues in different phases of the power value chain. To better understand these issues, one can investigate the process itself by highlighting any potential bottlenecks in the journey from generation to distribution. Energy comes from the generation companies (GenCos) who own 25 grid-connected plants concentrated in southern Nigeria, varying between public and private ownership. Of these 25, about 22 are ​gas-thermal (85%) and three are hydro-electric (15%) (Baseline Report, 2015).​ The energy is later transmitted by the Transmission Company of Nigeria, or TCN. This stakeholder owns and runs operations for the transmission grid, which subsequently sells the energy to the distribution companies (DisCos). Broken up into 11 regional (privatized) grids, Nigeria's DisCos sell the electricity to individuals and various industries directly. Some challenges this sector faces are losses in collections (customers not paying for electricity) and the poor accounting of technical and commercial losses (Baseline Report).
Nigeria drone footage source: Videvo
The Demand Side
Lack of access to electricity and daily power outages have negatively impacted the livelihoods of Nigerians. A shortage of electricity production, inadequate transmission lines, and illegal tapping have contributed to low supply and high costs for consumers. Angry consumers are left wondering why their electricity bills are so high when they are being left in the literal dark. As a result, many Nigerians are forced to rely on unclean and primitive sources of fuel such as burning wood or charcoal in order to cook and heat their homes, while others invest in personal generators to power their homes and businesses all on their own dime.
Nigeria's Electrical Consumption
Electric consumption "measures the production of power plants and combined heat and power plants less transmission, distribution, and transformation losses and own use by heat and power plants" (World Bank, 2021). Nigeria's 2014 electricity consumption, that is, the amount of energy that is available and utilized by consumers, is only 144.5 KWh per capita. For reference, a Kilowatt hour (KWh) is a measurement of an amount of energy that a 1,000 watt appliance needs to run for 1 hour (Electricityplans, 2021). A refrigerator might consume 54 KWh per month, and a laundry machine uses 2.3 KWh per load. Nigeria's electricity consumption is far less than South Africa, whose population is roughly three and a half times smaller than Nigeria's. Despite its potential to completely source its energy locally, Nigeria has significant shortages.
Access to Electricity in Africa
Although the rest of the globe is slowly gaining access to electricity, much of Sub-Saharan Africa is living in the dark. About 42.8 percent of the population in Africa had access to electricity in 2016 and more than 600 million people in Africa live without electricity. Some countries in the continent, like Mauritius and the Seychelles, have close to 100% access to electricity, resulting in universal coverage for citizens. However, this does not change the fact that almost two-thirds of African countries have accessibilty rates of 50% or less (The World Bank, 2019).
Daily power outages have forced Nigerians to rely on diesel-fueled generators. It costs more than double in fueling generators than grid-based power (Baseline Report, 2015). Despite high costs, individuals must rely on alternative electricity generators to maintain their businesses and power their homes. Petrol and diesel generators have a negative environmental cost, increasing air pollution and further contributing to climate change while affecting human health. According to the World Bank, 41% of Nigerian businesses generate their own power supply (2020). Frequent blackouts have caused international manufacturers to flee the country. Inflated electricity prices have increased the prices of all goods and services throughout the country, making it one of the most expensive places to live (Al Jazeera, 2012). This can be especially challenging for an already vulnerable population. Nigeria has a poverty rate of 40.1% (Statista, 2019).
The country has a burgeoning technology industry, accounting for 14% of the country’s GDP (National Bureau of Statistics [NBS], 2019). In Lagos however, frequent outages are burdening entrepreneurs and the potential for a diversified economy. The economic impact of these power shortages is estimated to cost approximately $28 billion, nearly 2% of the GDP (The World Bank, 2020). Energy sector mismanagement has created a push for alternative energy sources. Energy solutions such as solar power are viable alternatives that would diversify the energy sector. A combination of centralized and decentralized power systems would create greater reliability and access to rural populations (The Conversation, 2020).
How are average Nigerians affected?
The MESARi Team
Methi Satyanarayana
Methi is a proud first generation Adivasi Indian-American based in Bethesda, Maryland. She has a BS in Anthropology & Geography from California Polytechnic State University, San Luis Obispo. Methi has worked with women and children for much of her career, including as a Peace Corps English Education Volunteer in Armenia. She is passionate about capacity-building and the role of policy-making in post-conflict settings and hopes to start a research career after graduating with her MA in Sustainable International Development from the Heller School for Social Policy & Management at Brandeis University.
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Sazia Nowshin
Sazia is a first generation Bangladeshi-American based in Newton, Massachusetts. She earned an undergraduate degree from the University of Scranton, where she majored in political science. She is passionate about community development and building social capital for the underserved. Currently, she is earning a Social Impact MBA and MA in Sustainable International Development at the Heller School of Social Policy & Management at Brandeis University.
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Ariel Wexler
Ariel is from Los Angeles, California and earned a undergraduate degree in Environmental Studies from the University of California, Santa Cruz. Most recently she served as a Rural Extension Agent Peace Corps Volunteer in Guatemala. She is passionate about agriculture, social enterprise, sustainability, and rural economic development. Currently, she is earning a Social Impact MBA and MA in Sustainable International Development at the Heller School of Social Policy & Management at Brandeis University.
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