The country’s power challenges is so evident to the fact that the minister of power, Adebayo Adelabu, to his ‘X’ account to publicly said, ‘As the minister of power, I am deeply concerned about the deteriorating electricity supply across the country.”
The minister said that it is disheartening to witness the decline in power supply despite the concerted efforts to improve the situation.
The ministry which he heads, he said has been exerting pressure on the Generating Companies (GENCOs) to enhance their performance, resulting in a recent increase in generation to over 4000MW.
He laments however, that despite this progress, certain distribution companies are failing to adequately distribute the power supplied by Transmission Company of Nigeria! TCN, while vandalism of power infrastructure exacerbates the problem in regions such as Abuja, Benin, Port Harcourt, and Ibadan.
“Moving forward, I am committed to holding all distribution companies accountable for their performance. Willful non-performance will not be tolerated, and severe consequences, including license revocation, may be imposed. Additionally, I have instructed TCN to prioritise repair works on damaged transmission towers and power lines to improve supply in affected regions.
“During recent supervisory visits to power generating plants, I have witnessed firsthand the challenges faced by the sector. Plans are underway to settle outstanding debts owed to power generation and gas supply companies, which will alleviate the financial strain and contribute to improved generation levels nationwide. I urge electricity consumers to remain patient as we work tirelessly to address these issues and provide better service to all Nigerians,” he declared.
In 2013, the Nigeria embarked on a comprehensive privatisation program, unbundling the state-owned Power Holding Company of Nigeria (PHCN) and selling majority stakes in generation and distribution companies to private investors. This move aimed to introduce competition, improve efficiency, and attract much-needed capital into the sector.
However, key attention has to be paid to the plethora of challenges and opportunities that continues to define this critical sector, such as revamping an underwhelmed infrastructure and retooling power generating and delivery vehicles with 21st century technology and management efficiency.
After more than a decade of reforms and continuous repositioning of Nigeria’s electricity sector to attract private investments, the outlook remains positive and bullish but not much traction has been gained and while it appears that investors are seeking footholds in the sector, efforts must be intensified by stakeholders to accelerate and accommodate these new potential investments.
As Nigeria pushes forward to consolidate its pride of place as Africa’s economic powerhouse, configuring its power supply architecture for optimum performance remains critical to realizing the lofty goal of an economic resurgence.
Nigeria’s electricity sector presents a significant untapped investment potential, given the country’s vast energy needs and the current supply deficit. While estimating the precise investment potential is challenging due to various factors, several reports and analyses provide insights into the magnitude of opportunities available.
According to the Nigerian Electricity Regulatory Commission (NERC), the country requires an estimated investment of $3.5 billion yearly over the next 20 years to achieve its desired power generation capacity.
This translates to a potential investment of $70 billion in the generation segment alone.
The International Energy Agency (IEA) estimates that Nigeria needs to invest approximately $10 billion in its transmission and distribution networks to improve the reliability and efficiency of the electricity supply chain.
Nigeria’s renewable energy potential, particularly in solar and hydropower, remains largely untapped. The Rural Electrification Agency (REA) estimates that the country’s solar potential alone is around 25,000 megawatts (MW), requiring an investment of $23 billion to harness this potential fully.
The Nigerian Electrification Project (NEP), supported by the World Bank, also aims to attract $350 million in investments for off-grid and mini-grid solutions, targeting the electrification of underserved communities and remote areas.
However, while the allure of renewable energy solutions is undeniable, the existing infrastructure needs more immediate attention, and optimising it offers a pragmatic and potentially more immediate pathway to improving the overall efficiency and reliability of the electricity sector.
According to the African Development Bank (AfDB), Nigeria’s overall power sector requires an estimated investment of $100 billion over the next decade to address the current supply deficit and meet the country’s growing energy demands.
While these estimates may vary based on different assumptions, scenarios, and timelines.
However, even with conservative estimates, the untapped investment potential in Nigeria’s electricity sector remains substantial, ranging from tens to hundreds of billions of dollars across various segments of the value chain.
For serious and ready investors looking to tap into the Nigerian electricity sector, there are several “low-hanging fruits” or relatively low-risk, high-potential opportunities that can be explored. Beyond the core generation, transmission, and distribution activities, several ancillary services also offer investment opportunities.
With the persistent power supply challenges faced by industries and commercial establishments, there is a significant demand for embedded generation solutions. Investors can establish captive power plants or independent power projects (IPPs) specifically designed to cater to the energy needs of industrial clusters, estates, or large commercial complexes. This approach mitigates transmission and distribution risks while providing a dedicated and reliable power supply to customers.
The recently commissioned Geometric Power Plant in Aba, Abia State, serves as a compelling case study on how effective investment in power generation and distribution can buoy manufacturing and industrial hubs across Nigeria.
Aba, once the thriving commercial hub of south-eastern Nigeria, had suffered from a prolonged power crisis that crippled its once-vibrant industrial sector. However, the recent commissioning of the $142 million Geometric Power Plant, a 141MW integrated power project, has ushered in a new era of hope and economic revival for the city.
GE Vernova’s Intervention
GE Vernova, a purpose-built company driving electrification and decarbonisation, has overtly proved to be a worthy partner to Nigeria’s energy transition drive.
It has also restated its commitment to accelerating Nigeria’s sustainable energy transition journey through its key operating segments including power (gas, nuclear, hydro, steam), wind (onshore, offshore) and electrification (transmission, distribution, conversion, storage, and orchestration of electricity).
With a presence of over 100 years in Nigeria, GE Vernova supports the generation of more than half of Nigeria’s power supply, servicing utilities, independent power plants, the oil & gas industry, cement sector and many other segments across the country. Globally, the company helps to generate approximately 30 per cent of the world’s electricity.
Nigeria, one of Africa’s economic powerhouses, faces a dynamic energy landscape characterised by a growing population, industrialisation, and a rising demand for electricity.
The nation’s energy industry plays a significant role in supporting economic growth and improving the quality of life for its citizens.
To deliberate on the key aspects of the energy transition in the country, including generation, transmission, distribution and consumption, GE Vernova hosted the “Nigeria Energy Dialogue” event.
The forum brought together senior leaders from governments, financiers as well as key stakeholders and thought leaders from utilities and the private sector across the country to explore policy initiatives, technological advancements, and collaborations between the government and key players in the private sector, with a collective goal to address challenges and create a sustainable energy ecosystem.
“We have a long-term relationship with Nigeria, and we are committed to further strengthening it through creating localized solutions that will support Nigeria’s power infrastructure,” said Kenneth Oyakhire, Managing Director, Services – SSA, for GE Vernova’s Gas Power. “Through collaborative efforts with the government and industry stakeholders, we aim to ensure that power generation assets continue to play a role in a cleaner energy future while delivering reliable, affordable, and sustainable power. GE Vernova has a long history of innovation, and we look forward to utilising our global experience – leading with an installed base of 2,200 gigawatts – to make Nigeria’s energy transition a reality.
“The United States is a global leader in renewable energy,” U.S. Mission Commercial Counselor Julie LeBlanc said. “American companies, like GE Vernova, not only bring significant capital, innovation, and proven solutions, but they also adhere to the highest standards of transparency, quality, and social responsibility.”
GE Vernova has long supported the development of Nigeria’s power sector. Among its most recent projects is the August 2023 groundbreaking by President Bola Tinubu of the 1,350-megawatt (MW) Gwagwalada Independent Power Plant that will be fueled by Nigerian natural gas and will be built in three phases with GE Vernova’s E-class gas turbines.
Last year, the company also commissioned four 175 MW Francis hydropower turbines and generators for Nigeria’s second largest hydropower plant, the Zungeru hydropower project in Niger State. GE Vernova is also providing three LM6000 PD aeroderivative gas turbines for the 141 MW Aba Integrated Power Project which was recently commissioned in Abia State by the Vice President of the Federal Republic of Nigeria, H. E. Kashim Shettim.
Partnership With Geometric Power
Not much is known about GE Vernova’s support towards making then Geometric Power Plant, recently commissioned a success story.
The plant is a collaborative effort between the Abia State Government and private investors, has provided a reliable and cost-effective power supply to the Aba industrial cluster. This has had a profound impact on the region’s manufacturing sector, addressing one of the critical bottlenecks that had stifled its growth for decades.
Key turbines and technology that is making Geometric Power a modern plant is from GE Vernova which was confirmed by Prof. Barth Nnaji, former power Minister who runs the facility.
The Nigerian Electricity Regulatory Commission (NERC) has also introduced a distribution franchising model that allows private investors to operate and manage specific distribution areas within the existing Distribution Companies’ (DisCos) networks. This model presents an opportunity for investors to focus on improving service delivery, reducing losses, and enhancing revenue collection in targeted areas, potentially leading to better returns on investment.
Promoting energy efficiency and demand-side management can help reduce the strain on Nigeria’s electricity supply chain. Investors can partner with utilities or technology providers to implement energy efficiency programs, deploy energy-efficient technologies, or offer demand response services to industrial and commercial customers. These projects can generate revenue streams while contributing to the overall sustainability of the electricity sector.
The integration of smart grid technologies, such as advanced metering infrastructure (AMI), grid automation, and outage management systems, can significantly improve the efficiency and reliability of the electricity supply chain.
Investors can partner with utilities or technology providers to deploy these solutions, leveraging the growing demand for modernization and digitalization in the sector.
In remote areas or underserved communities where grid extension is challenging, investors can explore the development of mini-grid systems or off-grid solutions powered by renewable energy sources. These projects not only provide access to electricity but also contribute to rural electrification and economic development.
To capitalize on these investment opportunities, investors must carefully assess the regulatory environment, market dynamics, and risk factors associated with each value chain. Partnering with experienced local firms, engaging with relevant stakeholders, and leveraging available government incentives and development finance can further enhance the viability and success of investments in Nigeria’s electricity sector.
Hope In The Horizon
Meanwhile the Federal Government is notching up plans to Increase electricity generation in a bid to improve efficiency in the system.
While this is being perfected, it has sent a warning to Distribution Companies, DisCos, to stop power rejection allocated to them by the Transmission Company of Nigeria TCN, or be sanctioned.
The Government said that in the next three to six months, it would Increase power generation and supply to between 6,000 and 6,500 megawatts.
The Minister of Power, Chief Adebayo Adelabu, who disclosed this also said that the Federal Government was subsidising the electricity bills of consumers nationwide by about 65 per cent.
“I am holding this meeting with all the directors in the Ministry of Power and the CEOs of our agencies in order to address the lingering crisis in the power sector,” Adelabu stated
According to him, what the country is witnessing currently with respect to power supply is not acceptable, adding that “the situation is getting worse, and in the last two, three weeks the level of power supply to Nigerians has not been good enough.”
Commenting on the performances of power distribution companies, the minister stated that the Discos would be dealt with severely for power load rejection.
He said, “We must address the issues of distribution, and I’ve said before now that the non-performance of Discos in terms of epileptic power supply qualifies as a basis for the revocation of licence.
“Any Disco that is found wanting will be severely dealt with; I’ve had discussions with the chairman of NERC. Their (Discos) actions or inactions directly affect the performance of the sector, and we must take it seriously.
“If we ramp up generation to 6,000MW as planned in three to six months, and ramp up our infrastructure in transmission to get power to the Discos within the next couple of days, if the Discos are not picking this power, it amounts to nothing.
“So the refusal to take up and supply power by the Discos is a qualified basis for the revocation of licence. Therefore the Discos should not frustrate our efforts in generation and transmission.”
The Minister said he had discussed with NERC to come up with adequate performance measurement standards for Discos, stressing that laggards should be fished out and sanctioned.
“We should not be toothless bulldogs, barking and barking without biting. We should bite, for by the time we sanction two, three Discos heavily, others will sit up, and it will serve as a deterrent to others that we mean business.
“Their actions and inactions are causing us damage as a country. So they must know that it is no longer business as usual. We should have performance information, for example, last week, a number of the Discos did not pick up the power provided by TCN, throwing a number of communities into darkness,” he stated.
