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Electricity in Nigeria
Powering up the electricity sector
Nigeria’s economic development has been held back by the underdevelopment of the power sector. Despite being one of the world’s major exporters of petroleum, the country has been unable to produce enough electricity to meet domestic demand. But the new president, Goodluck Jonathan, took office vowing to use the remaining year of his term to alleviate the country’s electricity woes. With efforts to reform the sector under way, there is reason to hope that electricity supply will be improved in the coming years.
Reforming Electricity Generation
The Power Holding Company of Nigeria (PHCN) is responsible for Nigeria’s energy generation, while the Nigerian Electricity Regulatory Commission (NERC) is the regulator for the sector. At the moment, Nigeria is capable of generating around 3’500 MW of electricity, well below the country’s consumer and business needs, despite government investment of around USD1 billion annually in the sector. The government is aiming to increase capacity to 10’000 MW by 2011. To guide the redevelopment of the sector, President Jonathan in June 2010 announced the institution of a Presidential Action Committee on Power, to be chaired by the President, and a Presidential Task Force on Power. The Presidential Action Committee is to draw up new policy for the future of the power sector, and the Task Force is to set concrete goals to be achieved within the lifespan of the present government.
One solution under consideration is the concessioning of electricity generating infrastructure to investors. Under this proposal, PHCN would be broken up into 11 regional electricity distribution companies and six generating companies; the sale of PHCN’s infrastructure could bring the government up to USD7 billion in revenues. The government hopes to pass the distribution infrastructure on to state governments, while involving the private sector in generation. The first distribution companies, the Port Harcourt Distribution Company and the Eko and Ikeja Distribution Companies at Lagos, are to be sold by the end of 2010. The State Governments of Rivers, Bayelsa, Akwa Ibom and Cross Rivers have all expressed interest in acquiring the Port Harcourt facility.
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