With Nigeria’s rising population, electricity demand continues to be on the rise, mounting pressure on the government and private operators whose duty it is to ramp up power generation and create adequate energy access for the millions of Nigerians living without electricity or limited power supply.
‘Band A’ became a buzzword in Nigeria last month when electricity customers receiving at least 20 hours of supply daily saw a jump in tariff – a development that highlighted the huge and growing unmet demand as well as investment opportunities in the power sector.
Less than 15 per cent of the total customers in the country are under this category, according to the regulator, while the rest – those without reliable supply – still have their tariffs being subsidised by the government.
The demand for electricity from the grid has continued to grow on the back of rising urbanisation and a surge in the cost of petrol and diesel used by many households and businesses to power generators.
Last year, the Enugu Electricity Distribution Company signed a Memorandum of Understanding with the Anambra State government to ensure 24-hour power supply daily in the state.
Several distribution companies such as the Eko Electricity Distribution Company have seen their revenue collection efficiency rise to over 90 percent.
Cost-reflective tariffs are crucial to encourage new investments across the value chain that will enable more customers to enjoy a constant power supply.
With the rising demand for electricity and recent measures by the government to boost private investments, the sector looks set to witness substantial growth in the coming years.
The country has seen a rapid increase in its population over the years, growing from less than 50 million in 1960 to an estimated 216 million in 2022, and is projected by the United Nations to reach 400 million by 2050.
Its share of the urban population jumped from 15.4 per cent in 1960 to 55.6 per cent in 2022 and is expected to hit 264 million in 2050.
However, a large chunk of the population lacks access to electricity from the national grid, with total generation usually hovering around 4,000 megawatts and 4,500MW.
The Nigeria Electricity System Operator put the country’s grid generation installed capacity and national peak demand forecast at 13,014.14MW and 19,798MW as of Wednesday.
The average available generation capacity of the 27 grid-connected power plants increased to 4,922.26MW in the fourth quarter of last year from 4,211.44MW in Q3, according to the Nigerian Electricity Regulatory Commission.
“Here in Nigeria, it is estimated that a whopping 92 million people are still suffering from energy poverty, which is over 40 per cent of our estimated population,” the Minister of Power, Adebayo Adelabu, said in March at the Nigeria International Energy Summit in Abuja.
The World Bank has described the lack of reliable power as a significant constraint for citizens and businesses, resulting in annual economic losses estimated at $26.2bn.
Nigeria’s electricity generation per capita was 147 kilowatt-hours (kWh) in 2022, compared with 3,566 kWh in South Africa, 2,041 kWh in Algeria, 1,875 kWh in Egypt, and 1,099 kWh in Morocco, PwC Nigeria said in its latest economic outlook for the country.
Citing data from the National Integrated Infrastructure Master Plan, the professional services firm said Nigeria would require an investment of about $1.87bn to increase power generation capacity to 350,000MW by 2043.
The Nigeria power market size is expected to grow from $391.69m in 2024 to $483m by 2029, at a compound average growth rate of 4.28 per cent, according to Mordor Intelligence, a market intelligence and advisory firm based in India.
“Over the medium term, the increasing energy demand due to increasing industrialisation and urbanisation activities and penetration of renewable energy is expected to drive the market,” the firm said in a recent report, adding that distributed power generation presents significant opportunities for the market.
It said rising energy demands and supportive government steps to secure natural gas from other trade routes are expected to drive power generation via thermal energy sources in the coming years.
SOURCE: PUNCHNG
