Friday, November 03, 2017 9:48AM /FBNQuest Research
Power shortages remain a primary challenge for businesses as well as households across Nigeria. The cost of self-generation continues to erode household pockets and weighs heavily on operational costs for businesses. The Transmission Company of Nigeria (TCN) has recently estimated generation capability as high as 7,000 megawatts (MW). However, we understand from industry sources that the national energy wheeling capacity through the transmission grid is limited to a maximum of 6,000MW, which clearly dilutes the impact of the headline.
The TCN has been able to secure US$1.55bn in funding from multilateral donor agencies. This should assist with building transmission capacity. Over the next four years, the FGN targets a wheeling capacity of 20,000MW from the transmission grid.
Gas constraints also contribute to the epileptic power supply. Data from Nigerian Electricity Supply Industry (NESI) show that on one day in mid-October only 1,360MW were generated. The reported gas constraint was 410MW while management constraints resulted in a further loss of 1,994MW. The industry lost N1bn in consequence.
There has been some traction in ramping up alternative sources of energy. Power generation from the three hydropower generation companies (Kainji, Jebba and Shiroro) now account for 26% of Nigeria’s daily power generation.
Given the frequency of attacks on gas pipelines and assets last year, the FGN’s steps towards diversifying the country’s energy sources are laudable. We note that the FGN targets 30% of national energy to come from renewables by 2030.
The potential impact on industrialisation in Nigeria of increased and steady power supplies is immeasurable. The onus is on the FGN to attract private capital towards infrastructural financing to explore the renewable energy segment so as to accelerate the process of attaining power for all.
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