FOCUS AFRICA – Africa’s largest economy is not connected yet: energy supply and security challenges in Nigeria

Nigeria is Africa’s largest economy in terms of GDP and by far the most populous nation of the continent, but its emissions account only for 0.57 per cent on the global aggregate. Nigeria signed the Paris Agreement on September 22, 2016. To date, however, the country has not ratified the deal.

The country is currently suffering the internal fight between the government and Boko Haram terrorist groups, a conflict which has already caused thousands of civilian losses and resulted in over 2 million internally displaced people at the end of 2015. Up to 30 per cent of the population lives below the poverty line.

Among its 182 million citizens (population is growing at an almost stable 2.5-2.7 per cent rate since the mid-80s), only 55.6 per cent had access to electricity in 2012: Nigeria has one of the lowest energy consumption rates in Africa, and one of the lowest per capita consumption in the world (137 kWh in 2014).

The country suffers a huge energy supply gap. Rural communities (52 per cent of total population in 2015) usually live far from energy grids, in scarcely populated areas, with no reserves to be exploited for local energy initiatives. For people living in those areas (mainly located in the Northern area of the country) fuelwood still represents the main source of energy production, accounting for almost 90 per cent of rural households energy use. One of the main causes of energy underdevelopment is inefficiency: according to recent studies, around 30-35 per cent of electrical energy gets lost from generation to billing – a difference emerges between generation capacity and installed capacity. Most of the Nigerian electrical grid infrastructure is now aged between 50 and 30 years, and the lack of maintenance is leading to epileptic availability of supply. The country’s energy monopolist Power Holding Company of Nigeria (PHCN) suffers discrete losses and cash liquidity imbalances, which led the company itself to rely on fuel subsidies and state funding of capital projects, studies report. The country experienced its worst supply crisis in 2001, and power supply shortages continued over the decade.

Paradoxically, Nigeria is one of the richest countries in terms of energy resources. It has proven gas reserves of more than 5000 billion cubic meters (the 7th largest gas reserve in the world), and it is currently the 10th global oil producer. Oil provides about 85 per cent of the nation overall revenues, and accounts for more than 95 per cent of the export income. More than 97 per cent of crude oil produced was exported in 2014; no locally produced crude oil has been used to satisfy the national demand in the same year, instead the country imported 8405 ktoe of refined oil products from abroad. Since 1971, Nigeria is also a member of OPEC. The Nigerian oil sector has received mainstream media attention since the 90s following repeated oil spills in many parts of the country, leading to mass protests and serious environmental concern especially in the Niger Delta. According to Amnesty International, hundreds of oil spills occurred also in 2015, with the companies involved repeatedly blaming the locals for “sabotage” and manipulation of the pipelines.

Natural gas could play a pivotal role for the Nigerian economy as well, given the country’s large reserves. An underdeveloped extraction technology and a poor infrastructure kept the resource largely unexploited, so that the national production of natural gas in 2014 did not reach one third of the crude oil’s one. Gas flaring has been reduced over the years from high loss values to nearly 36 per cent of treated gas in 2012, however still representing a waste in the country’s energy potential and a major source of emissions: according to the World Bank, Nigeria is the second gas flarer in the world. The Nigerian Gas Company (NGC) was created in 1988 as a subsidiary company of the Nigerian National Petroleum Corporation (NNPC) and is responsible for all policies regarding the transport and trading of natural gas. The company retains the monopoly on transmission and receives the natural gas from foreign companies operating in Nigeria such as Shell, Chevron, ENI and ExxonMobil. Despite some improvements, the existing gas distribution infrastructure proves inadequate for the projected growth in energy demand.

As of 2014, however, the oil and gas sectors represented together only the 19 per cent of Nigeria’s TPES. Biofuels and waste, or biomass, accounted for 80.2 per cent and still represent the main energy source. In the same year, only 7.8 per cent of the total biomass production went into transformation; the remaining amount was predominantly absorbed by residential use (93.2 per cent of total final consumption). Despite biofuels and biomass use could represent a clean strategic asset, their current use is not connected to the grid and has a huge impact on deforestation; matching that potential with electricity grid developments and sustainable growth is a challenge for the Nigerian government for the years to come.

Coal is another available natural resource, but it has been kept out from the national energy mix since almost forty years. Over 95 per cent of the national production has been consumed locally from the 50s to date, mainly for railway transportation (60 per cent) and electricity generation (30 per cent). Those shares decreased rapidly as the railways steered towards diesel engines, and after the 1967-1970 civil war put the only coal-fired electricity generation plant (owned by PHCN) out of service.

Renewable energy is estimated to have a discrete potential in Nigeria. Solar energy and wind energy could be developed both in the Southern and in the Northern part of the country. Northern regions prove more favorable in terms of sun peak hours and wind intensity, yet they are the less connected to the current national energy grid.


Nigerian national electricity grid. Source: Global energy network institute 2016 and Solar radiation map of Nigeria. Source: Ohunakin et al. 2014.

In this sense, Nigeria acted as pioneer by installing a first set of stand-alone wind power plants in the Sokoto state in the early 60s, yet without further implementing this technology. As of 2014, Nigeria produced no energy from solar or wind power plants. Nigerian hydropower potential, on the other hand, is high and exploited – hydro plants are currently sustaining nearly 17.6 per cent of the national electricity generation. Given the geography of the country, with several rivers and water basins, micro-hydro plants could represent a solution to fill the electricity gap at local level.

In 2003, the Nigerian government launched the National Energy Policy, which was intended to cover all energy sectors and sources, and was aimed at addressing rural energy needs, energy efficiency, energy financing, and energy security. A Renewable Energy Master Plan (REMP), based on the first document and drafted together with UNDP, followed in 2005. Four years later the Nigerian government further enhanced its ambitions with the release of the Nigeria Vision 20:2020 Agenda. The three-fold document includes a series of strategic interventions in the energy sector to guarantee the country a sustainable development while assuring energy security. Little space had been given to REs, and according to specific enquiries, weak government motivation, lack of economic incentives and excessive taxations impeded the renewable energy sector to be developed at all as of 2013.

Nevertheless Nigeria participated the Paris Agreement talks and presented an ambitious INDC. The document outlines an unconditional reduction in emissions from a business as usual scenario of 20 per cent by 2030, taking the 2010-2014 period as baseline. An additional 25 per cent reduction could be reached, provided for international support. Some key measures are envisioned: the government commits to rule out gas flaring practices by 2030; pledged the construction of an off-grid solar infrastructure for an overall capacity of 13 GW; more efficient gas generators; improvements in the electricity grid; a 30 per cent improvement in energy efficiency by 2030, and an effort in reforestation. The development of RE generation is aimed at providing off-grid energy to rural areas through a fully decentralized approach. Adaptation and resilience policies are also presented, as Nigeria is strongly vulnerable to climate change related effects. In the INDC document it is estimated that, with no adaptation policy at all, between 2 and 11 per cent of Nigerian GDP could be lost by 2020. For example, it is said that the 2012 flood had an impact on real GDP growth of nearly 1.4 per cent in that year. Nigeria plans adaptation measures in many sectors such as agriculture, water, soil erosion, energy, tourism, industry, transports and communications.

(Image: An aerial view of the city of Lagos, Nigeria. Photo credit: Robert / Flickr)