Nigeria’s power infrastructure has worsened in the last decade and exponentially increased the energy costs for Nigerian households and businesses, a combination of centralised and decentralised solutions have been proposed to deal with this.
The crux of this mix of solutions is that it is not viable or feasible to rely exclusively on the enhancement of the transmission and distribution networks, considering Nigeria’s land mass and population size.
Part of the centralised solution received a boost with President Muhammadu Buhari’s recent directive to the Federal Ministry of Finance to release Nigeria’s counterpart funding for the concessionary loan in the deal with Siemens AG to upgrade transmission and the distribution network has received applause.
This is designed to double Nigeria’s electricity generation and triple distribution capacity to 11, 000 megawatts by 2023.
The first phase of the project will fix the transmission and distribution grids in such a way that would enable evacuation of additional capacities, that is stranded right now. “Operational capacities are being upgraded but cannot get to consumers. So fixing transmission and distribution infrastructure would raise peak capacities from 5000mw to 7000mw,” Onyeche Tifase, managing director and chief executive officer of Siemens Limited Nigeria told Businessday in an interview last year. The second phase will focus on the growing generation capacity.
From phase three it is expected that there are 11 gigawatts of electricity and probably by that time there would be about 13,000mw generating capacities working.
“By the third phase we would be looking at extending the grid from11 gigawatts installed capacity to probably around 13 gigawatts or more and we will expand that to 25 gigawatts. So this is really about expansion,” Tifase said.
The Siemens deal seems a sensible approach, but some experts have said it must be complemented by substantial support for decentralised distributed generation (or similar) arrangements- a suite or potpourri of options.
“The Federal Government appears to be headed in the right direction, but more needs to be done to support distributed generation, off-grid arrangements. Other levels of Government (including Local Governments) should be given a role to play and carried along,” Ayodele Oni, energy partner at Bloomfield Law Practice said in a tweet.
Oni suggested that the private sector participants throughout the electricity value chain, be carried along, contending that a collaborative approach is the best bet. “Question though, where are we with the 14 solar plants, which power purchasing agreements (PPAS) were signed in 2016?” Oni queried.
Nigeria has been experiencing an energy supply crisis for years, with approximately only 40 percent of the country’s population connected to the grid. Even those who have access to electricity frequently experience interruptions, with the average daily power supply estimated at around four hours.
In an attempt to solve the problem, many power reforms implemented since 2005 have focused on privatising the generator, instead of repairing and upgrading the country’s grid.
“We have generation of all sorts: Conventional power generation, renewable energy, we have transmission, we have distribution,” Joe Kaeser, Siemens CEO told
DW, a German newspaper. “We can help with oil and gas and we can even supply digital platforms. So, we have the whole value chain unlike any other company in the world, and that’s why I believe we are a perfect partner for the Nigerian people.”
Nigeria’s energy crisis is somewhat ironic considering the country has access to some of the world’s largest and most profitable oil and gas reserves. Poor policy, ongoing corruption and dilapidated infrastructure have all played a role.
Supplying electricity to all corners of a country is a difficult task in any case. Because of this, most countries decentralise authority of the energy sector, as well as sources of the generation.
However, Nigeria has done the opposite: In 2005, the Obasanjo administration established the National Electricity Regulatory Commission (NERC), to act as an independent regulatory body with authority over the regulation of Nigeria’s power industry. Some say this power structure has created conditions for corruption to thrive, hindering any attempts to solve the energy crisis.