Chineme Okafor in Abuja
In its July 2016 status report on Nigeria’s power sector, which it titled ‘Powering Nigeria for the future’, the PricewaterhouseCoopers (PwC) Nigeria has said that the country needs to quickly improve on three key aspects of its electricity value chain to be able to achieve its planned stability of supply by 2025.
The report noted that stable electricity had the transformative power to turn around the economic fortunes of Nigeria, adding that the government was looking to attract investments worth $1 trillion by 2030 into fixing the sector.
The report however added that the sector needs to quickly adopt three key ‘leaps’ on which it can grow.
PwC listed the three leaps to include, steady improvements of installed capacities; utilisation of capacities; and cutting of transmission and distribution losses.
“The goal is to increase Nigeria’s annual per capita power consumption by 6.5 times in ten years, from 151 kilowatt hour (kWh) in 2015 to 982kWh per capita by 2025.
“This is an additional uplift of 125 per cent above the projected consumption of 433kWh per capita in 2025. We believe this can be achieved by driving improvements across a combination of three key variables: installed capacity; utilisation factor; and transmission and distribution (T&D) losses,” said the report.
PwC further explained these three variables, their impacts on the sector and how they could be fixed, saying: “For Nigeria to achieve the stretch target of an annual per capita power consumption of 982 kWh by 2025, the country will need to improve several aspects along its power value chain. These include scaling up generation, transmission and distribution capacity; as well as driving efficiencies in utilisation, and reducing transmission and distribution losses.”
On installed generation capacity, it explained: “We believe that Nigeria should target an increase in installed generation capacity by 40 to 45 gigawatts (GW) over a ten-year period. Given that 32.8GW of power generation projects are already in the pipeline, we consider the stretch target of a 40 to 45 GW increase in capacity (over ten years) to be realistic.”
Also, on capacity utilisation, the report said: “Here, we believe a target of 55 per cent by 2025 (from the current 31 per cent) will be a suitable stretch target. This will put Nigeria’s utilisation capacity on par with markets such as Brazil, Mexico and India, which have undertaken extensive efforts and investments in improving power diversity and modernising their power generation capabilities.”
For transmission and distribution losses, the report stated: “Here, a target of 13 per cent seems to be a realistic one for Nigeria, on par with that of Peru, where government participation and policy has a significant bearing on transmission and distribution, similar to Nigeria. Also Peru has effectively utilised Public-Private Partnerships (PPPs) to drive growth, which seems aligned to Nigeria’s direction towards encouraging private investments.”
The report noted that based on these three, Nigeria can improve its generation capacity by attracting investments through favourable policies; implement efficient power generation technologies; optimise execution lead time in power projects; maintain and overhaul failing infrastructure; as well as involve public private partnership in scaling up transmission network.
PwC also argued that blocking revenue leakages at the distribution end; aligning distribution expansion with transmission expansion; and reducing losses by improving distribution infrastructure were urgently needed.