Investment in Electricity Generation and Transmission in Nigeria : Issues and Options

Substantial expansion in quantity, quality and access to infrastructure services, especially electricity, is fundamental to rapid and sustained economic growth, and poverty reduction. 1 Yet, for the past three decades, inadequate quantity and quality and access to electricity services has been a regular feature in Nigeria, a country with 140 million people with a majority living on less than US$2 a day. The electricity industry, dominated on the supply side by the state-owned electricity utility, National Electric Power Authority (NEPA), and succeeded by the Power Holding Company of Nigeria (PHCN), has been unable to provide and maintain acceptable minimum standards of service reliability, accessibility and availability. Nigeria's electricity crisis is striking for a variety of reasons. First is its occurrence despite the enormous endowments of non-renewable and renewable primary energy resources. The resource endowments of crude oil and natural gas currently estimated at 35 billion barrels and 185 trillion cubic feet, trespectively, are more than adequate to fuel much of Sub-Saharan Africa (SSA) energy demand for several decades. 2 Coal reserves are also substantial at 2.75 billion metric tons. Also, large amount of renewable energy resources including hydro electricity, solar, wind and biomass energy are present. One of the many paradoxes in Nigeria is energy/electricity poverty amid plenty. Second, despite being a world ranking exporter of liquefied natural gas (LNG), Nigeria's gas-dominated electric grid experienced frequent collapse linked largely to inadequate gas supply. Gas pipeline vandalisation associated with resource control-linked militancy in the oil producing Niger Delta has compounded the supply problem. Huge gas flaring has been a regular feature of the Nigerian oil industry since production began in 1958. 3 This wasteful gas flaring has consistently ranked Nigeria among the world's largest source of carbon emissions, a major factor in global warming. Third, the several billion dollars of public investment that went into generation and transmission capacity expansion in the past decade contrasts sharply with the extremely poor outcomes measured by frequent power outages and voltage variation. 4 Fourth, there are the high social, economic and environmental effects of poor public power supply and its extensive substitution with highly polluting generators. Anecdotal evidence suggests that Nigeria has one of the highest concentrations of generators globally. The negative impact of the ubiquitous generators on environmental quality and the health of the population has elicited major concerns particularly among environmental and health scientists. Fifth is the depth and duration of the …