It took Nigeria 11 years to add just 760 megawatts to the national grid, but the Dangote Refinery doubled its output, generating 1,500 megawatts in a short space of time.
The country has suffered from chronic power shortages for decades, and repeated promises to solve the problem have long dominated election campaigns. According to data from the Nigerian Electricity System Operator, supplies from generating companies (Gencos) to distribution companies (Discos) through the Transmission Company of Nigeria (TCN) increased 22% in the year to November 2013, from an average of 3,400 MW in November 2014.
The Dangote refinery was completed in 2018 and will produce 1,500MW of electricity, surpassing the combined national grid expansion achieved in over a decade. “We don’t put pressure on the grid. We produce about 1,500 megawatts of power for self-consumption,” Aliko Dangote said at the Afreximbank and Africa Caribbean Trade and Investment Forum annual meeting in Nassau, Bahamas.
The development has raised concerns over the snail’s pace of growth in Nigeria’s energy sector despite billions of dollars of investment and an 11-year long privatisation process.
“The government and some operators in the sector may be saying there has been some form of growth since 2013, but how many people are actually benefiting from a privatised energy sector? Most of the conglomerates generate their own electricity,” said Charles Akinbobola, senior energy analyst at Sofidom Capital.
He added: “The challenge in the energy sector is not just a lack of funding, trillions of naira have been pumped into the industry. The industry is plagued by poor management.
Nigeria has a generating capacity of 13,000 MW, compared with over 58,095 MW in South Africa, a similar economy with a quarter of the population. But Nigeria’s aging grid only provides around 4,000 MW of electricity to its 200 million-plus citizens, roughly the same as the city of Edinburgh supplies to its 548,000 residents.
Analysis by Reporters reveals that the latest global statistics show that Nigeria’s transmission capacity has increased 20% since 2013 to an average of 4,200 MW, while Nigeria’s population has grown 57% from 131 million to 206 million in the same period.
For instance, Egypt, a country with a population of 114 million inhabitants, added a total of 28,229mw to its national grid between December 2015 and December 2018, resulting in a total installed capacity of 58,818mw.
According to the United States Department of Commerce, International Trade Administration, this has been achieved through a fast-track project that worked on installing 3,636mw of electricity in 8.5 months and is worth $2.7 billion.
Egypt also signed another project with Siemens in March 2015, which added 14,400mw in 2.5 years by building three mega combined power cycle stations.
“By converting old simple cycle power plants to combined cycle, another 1,850mw were installed,” the US report said.
In Ghana, between 2000 and 2020, electricity generation capacity increased at a rate of 6.4 percent a year from 1,358mw to 4,695mw, according to data from the country’s energy agency.
“While other countries seem to be getting it right in terms of power; Nigeria’s power sector issue has become a major conundrum in the economy. There is a major funding and liquidity crisis which is posing significant risk to investments in the electricity value chain,” Muda Yusuf, the chief executive officer, the Centre for the Promotion of Private Enterprise said.
He added, “Some fundamental issues need to be addressed in the electricity value chain. There are issues of technical and commercial losses which are yet to be addressed. These are inefficiencies costs that consumers are compelled or expected to pay for as part of the cost recovery argument. And these costs are in billions of naira”.
Reporters’ findings showed that rising energy costs are disrupting productive activities in Africa’s most populous nation as factories self-generate more than 14,000 megawatts of electricity due to poor supply from power distribution companies.
According to documents compiled by the Manufacturers Association of Nigeria, member companies spent N639 billion on alternative energy sources between 2014 and 2021. Manufacturers spent N25 billion in 2014, N59 billion in 2015 and N129.95 billion in 2016. Moreover, they spent N117.38 billion in 2017; N93.11 billion in 2018; N61.38 billion in 2019; N81.91 billion in 2020, and N71.22 billion in 2021.
Findings showed the figures have varied over the years due to the effects of inflation and the number of member companies in the association, among other factors.
