Nigeria wastes gas enough to power 3m homes

Nigeria wasted an estimated 3,057 megawatts (MW) of electricity potential on the back of gas flaring over the past nine months of 2024.

BusinessDay’s findings show that the amount of gas flared in the first nine months of 2024 can provide electricity to power more than three million homes.

“The rule of thumb for an industrial nation is about 1MW for every thousand population,” PricewaterhouseCoopers alluded to this in a report entitled, ‘Privatisation in the Power Sector: Navigating the Transition.’

This waste, which continues to undermine the nation’s energy potential, highlights a major inefficiency in Nigeria’s energy sector and raises concerns about the environmental and economic impact of gas flaring.

The situation has persisted as Nigeria records multiple national grid collapses caused by infrastructural deficits and gas feedstock shortages.

Data from the Nigerian gas flare tracker of the National Oil Spill Detection and Response Agency (NOSDRA) show the country flared about 200.5 million standard cubic feet (Mscf) of gas in the first nine months of this year.

Despite an installed generation capacity of around 13,014 MW and an operational output closer to 4,000 MW, as per data from the Nigeria Electricity System Operator, power supply remains a serious challenge in Nigeria.

As Africa’s top oil producer, Nigeria has long struggled with energy issues, but recent power outages have underscored persistent inefficiencies within the sector.

Three major widespread blackouts occurred last month, when the national grid, managed from Osogbo, Osun State, experienced a collapse, leaving many Nigerians in the dark.

The blackout affected large portions of the country, halting daily routines and worsening living conditions for many. Businesses, households, and vital services were all impacted, adding to frustrations over the nation’s unstable power infrastructure.

Power distribution companies across Nigeria reported that their networks were down, leaving customers in all 36 states without electricity.

Since the power privatisation 10 years ago targeted at improving sector performance, the grid has collapsed more than 150 times.

Experts continue to stress the need for gas commercialisation, better regulation, investment in floating liquefied natural gas (FLNG), and updates to the Petroleum Industry Act to address the nation’s energy issues.

Atiku Jafar, an energy and infrastructure analyst, said Nigeria needs to prioritise investment in gas infrastructure, pipelines, and storage.

He said, “We need to create better market conditions for gas-to-power in Nigeria. So, natural gas product investment has got to be commercially viable.

“The country needs to ensure that the pricing structures for gas are commercially viable and those who supply natural gas to GenCos are being paid to avoid supply shortfalls. And you can only ensure that if you have a financially viable sector.

“The power sector has liquidity challenges and that is largely because electricity distribution companies (DisCos) are unable to collect the tariffs on the power they supply to consumers and that gives us a market shortfall.”

DisCos across Nigeria collected N168.7 billion in revenues in August 2024, achieving a collection efficiency rate of 80.91 percent.

The Nigeria Electricity Regulatory Commission (NERC) released a fact sheet detailing the performance of DisCos for the month, showing that customers were billed a total of N208.5 billion.

NOSDRA also revealed that the country incurred a staggering loss of $22.9 billion to gas flaring over the past decade, from 2011 to 2021.

Preye Orodu, lead engineer at KEOT Synergy, highlighted the importance of a practical push supported by a robust infrastructure network.

He said: “The Nigerian Gas Flare Commercialisation Programme of 2016 and the Gas Flaring, Venting, and Methane Emissions Regulation of 2023 are significant initiatives aimed at ensuring local gas availability in various forms to improve the standard of living in Nigeria and boost the country’s GDP.

“The new regulations, which render gas flaring uneconomic, combined with the 11 percent domestic gas price hike in April 2024—from $2.18/MMBtu to $2.42/MMBtu under the Gas Pricing & Domestic Demand Regulation, 2023—have the potential to enhance the return on investment for gas development projects.”

Orodu said that a portion of the liquefied petroleum gas (LPG) consumed domestically is imported, contributing to uncertainties in the supply chain.

“Moreover, the gas market is ripe, with a shortage of LPG for cooking, the potential for future CNG use for local consumption, and opportunities in gas-to-chemical conversion.

“These resources are near flare sites and can be accessed via virtual pipelines, reducing the need for extensive physical pipeline infrastructure.”

Earlier in the year, Iziaq Salako, minister of state for the environment, had announced that NOSDRA would initiate periodic reviews to ensure that both international and indigenous oil companies remain committed to ending routine gas flaring by 2030.

He said: “Collaborative efforts of government institutions have led to the development of methane guidelines. In addition, the Federal Ministry of Environment through the National Oil Spill Detection and Response Agency will be commencing the periodic review of the plans of international and indigenous oil companies to ensure they stay on course to end routine gas flaring by latest 2030.

“Furthermore, Nigeria is poised to embark on methane reduction projects that will enable Nigeria’s commitment to methane reduction and meeting net zero emissions by 2060. It is therefore reassuring to see initiatives such as the project methane mitigation and reduction in Nigeria’s oil and gas sector, which is being initiated with today’s event.”