A Review of the Nigerian Energy Industry

Nigeria to account for 60% power investment in W/Africa

10 March 2015, Lagos – Nigeria is expected to account for about 60 percent of the projected investments in power in the West African sub-region by 2040, the International Energy Agency, IEA, has said.

In its latest report, IEA said that bringing the electrification rate in sub-Saharan Africa up from 32 percent today to 70 percent in 2040 is estimated to cost about $205 billion in capital investment, less than one-fifth of total power sector investment in the region.

According to the report, projected investment flows largely mirror the split by the type of access. Most of the investments go towards providing on-grid access, with more than half of the total required for new transmission and distribution lines. Mini-grids and off-grid solutions that are less capital-intensive and require less investment in infrastructure account for about 30 percent of the total.

Broken by sub-region, the report said the largest share will go to West Africa with $75 billion over the projection period, 60 percent of which is in Nigeria. Southern Africa followed with about $65 billion, East Africa with $50 billion and Central Africa with $15 billion.

Averaged over the projection period, the report stated that this amounted to capital investment in energy access of about $7.5 billion per year, a figure not far from the current estimate of total annual power sector investment in sub-Saharan Africa.

It represents a significant increase in spending for this purpose over the coming decades, reflecting declared government intentions.

“Achieving this level of investment will require not only steady improvements in the investment conditions for electricity access-related projects, but also rapidly improving capacity and effective co-ordination among the various actors involved.

“Realism, clarity and consultation over the pace of grid extension allows the stakeholders, including local communities, to make an informed assessment about the best options for expanding access, whether through co-ordinated development of the grid, mini-grids or off-grid systems.

“Donor programmes likewise need to be managed carefully, both to ensure that the beneficiaries are fully involved from the outset, not least to guarantee adequate and ongoing maintenance, and to avoid undercutting fledgling commercial energy providers.”

The report also explained that grid extensions are set to remain largely within the domain of the public authorities and utilities. This will rely on a combination of self-financing from within the power sector (if the tariff structure allows for a degree of cross-subsidisation), government budgetary allocations and funding from international donors.


– Vanguard

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