This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 8/13/2019

Overview

Unit: USD thousands

 

2015

2016

2017   

2018
  

2019
(estimated)  

Total Market Size

312,244

218,571

255,407

0

0

Total Local Production

9,844

6,891

8,867

0

0

Total Exports

1,698

1,189

898

0

0

Total Imports

302,400

211,680

151,320

0

0

Imports from the U.S.

51,348

49,807

20040

0

49,490

Exchange Rate: 1 USD

193

246

315.20

360.00

361.00


Total Market Size = (Total Local Production + Total Imports) – (Total Exports)

Data Sources:
Total Local Production: Independent Power Producers and other local sources such as Manufacturers Association of Nigeria.
Total Exports: Independent Power Producers and other local sources such as Manufacturers Association of Nigeria.
Total Imports: Independent Power Producers and other local sources such as Manufacturers Association of Nigeria.
Imports from U.S.: U.S. Census Bureau

The Nigeria’s power sector continues its ongoing reforms with the launch of the Nigerian Power Sector Program (NPSP) and the continuation of the Power Sector Recovery Program (PSRP). The PSRP was initiated by the government of Nigeria in collaboration with the World Bank in 2017 as an operational and financial intervention to review and address the power sector financial deficit.  According to the PSRP, Nigeria requires about US $7.5 billion funding to bail out the power sector and this figure is expected to grow by nearly $1.5B annually.

Fundamental disagreements in how to address this shortfall have stalled progress towards implementing the PSRP. It is important to note that Nigerian power sector will substantially require more investment to achieve reliable 24/7 power supply. Industry operators estimate that the country will require as much as $100 billion of investment over the next 20 years. The World Bank is financing a US $486 million International Development Association credit for the Nigerian Electricity Transmission Access Project (NETAP), part of the Transmission Rehabilitation and Expansion Program (TREP), to support the rehabilitation and upgrade of Nigeria’s electricity transmission substations and lines, to increase power transmission network and allow distribution companies improve supply to consumers.  Following the roll out of TREP I which is fully donor funded, the Government is currently sourcing for funds for TREP II, in hopes on further increasing transmission capacity. TCN has raised over $1.6 billion through TREP, which seeks to rehabilitate, stabilize, provide requisite flexibility, expand wheeling capacity of the grid and create ample redundancy in line with international standards n-I reliability.

Other ongoing programs include the Meter Assets Provider regulation which was rolled out in 2018. The Regulation aims to bring new money into the market to finance meter deployment to close metering gaps (currently only -50% of customers are metered), remove estimated billing and related issues, and begin to alleviate some collection related challenges faced by the electricity distribution companies (DISCOs). Government of Nigeria hopes that this will boost efficiency and resolve liquidity issues while increasing generation, promote transparency and accountability in collection and remittance of tariffs, provide incentives for DISCOs to encourage embedded power generation and attract investments into the Nigerian Electricity Supply Industry (NESI).

As at July 2019, the Independent System Operator indicated that the demand for electricity in Nigeria was an estimated at 25,770 MW, with supply at about 4,500 MW, which for a country of over 180 million means that demand far outstrips supply leading to widespread self-generation. The Government of Nigeria estimates that by 2020, 26.6 GW of additional supply will be required to meet demand, an investment of upwards of $4 billion. This is envisaged to require an energy mix comprising thermal, gas, coal, and renewable energy (solar, small hydro, wind, biomass).  Industry observers believe that the continuing trend of demand outstripping supply can only be mitigated with significant investment to upgrade existing infrastructure (grid modernization). This is expected to improve growth in the sector, which is stymied by several challenges, including inadequate capex investment in distribution expansion, and for rehabilitation, replacement projects to address the weak power transmission and distribution capacity.  Significant challenges remain, however, including the need to deregulate more fully, allowing electricity tariffs to reach a cost reflective level and to improve payments to natural gas suppliers to provide incentives to develop greater supply for domestic power generation.

In 2006, Government of Nigeria initiated the Renewable Energy Master Plan (REMP) aimed at increasing the supply of renewable electricity (wind, solar, biomass and small hydro) from 13% of total installed electricity generation capacity in 2015 to 23% in 2025 and 36% by 2030. The country also expects to add 30% capacity from coal with the objective to increase the country’s power generation capacity to 10,000 MW. This proposal received a boost with the signing in 2016 of power purchase agreements (PPAs) between the Nigeria Bulk Electricity Trader (NBET) and 14 firms for solar power projects, which would add about 1.1 GW of additional capacity to the country’s generation.  These projects have been stalled since 2016 because of the Nigerian government’s unwillingness to provide financial guarantees for the projects.

As noted earlier, industry sources indicate that the country will need an additional 26.6 GW generation capacity to meet demands through 2020. This will comprise 30 percent capacity from coal, about 2,200 MW from the NIPP projects (1,896 MW), IPPs (296 MW) and FGN legacy assets [installed - Thermals 5.6 GW, Hydro 1.3 GW and Wind {pilot} 10MW].  In addition, Government of Nigeria is also investing heavily to boost generation through the large, medium and small hydrostatic power plants with total capacity of over 6,024 MW. These include Mambilla - 3,050 MW; Zungeru -700 MW; Gurara 11 - 360 MW; Lokoja – 750 MW, Makurdi – 1,000 MW, Small hydropower - 84 MW; Itisi – 40 MW and Kashimbila - 40 MW. 
 
Other initiatives embarked by the government include:

  • Power China Corp’s over 20 GW 10,000km Transmission lines

  • Sale of NIPP (4,775 MW)

  • New IPPs in planning stage 2.6 GW

  • Coal/Renewables

  • Operation Electrify Nigeria


The understanding is that the power projection for 2015 to 2020 is underpinned by several MOU’s with the following organizations:

  • Power China:  to build 20,000 MW capacity thermal power plants and a 10,000km of transmission lines

  • General Electric (GE):  facilitating and promoting private sector investment up to 10,000 MW including proposed 2 GW of hydropower

  • Siemens AG:  facilitating and promoting private sector investment up to 10,000 MW.

  • Electrobras:  facilitating and promoting private sector investment up to 10,000 MW.

  • Daewoo E&C:  facilitating the development, financing, procurement, manufacture, commissioning and operations of 10,000 MW

  • EDF/ETDE:  promoting power sector investments by sponsoring feasibility studies for approved projects.

  • Multi-Lateral Government-to-Government (G-2-G) Agency Support:  promoting the development of small/medium hydro-power plants as embedded generation for rural communities


Each of these MOUs presents opportunities for new ventures by Nigerian-led power development consortiums. The MOUs are designed to make significant equity contribution in kind or cash, as well as provide credibility for IPPs seeking international financing.
 

Leading Sub Sectors

Despite the various challenges highlighted above, the decision of the Government of Nigeria to make the Nigerian power sector to be private sector driven provides opportunities for international and local investment.  Currently, Nigeria presents a huge trade opportunity to U.S. suppliers of gas turbines to tap into upcoming gas fired power plants expected from government’s proposed plans to increase domestic gas supply estimated to increase to 3 billion standard cubic feet per day (scf).  There continues to be demand for portable generating sets (20-500 KVA) and parts, renewable energy and solar systems. According to the United Nations Statistics Division, Nigeria between 2014 and 2015 imported electricity equipment and tools worth about $6.71 billion from China and other countries, ranging from generators, boilers, transformers, turbines, converters, switchboards, conductors, capacitors, meters, switchgears, storage devices, to voltage regulators, valves, circuit breakers, and distribution boards. However, data from United Nations COMTRADE data on international trade indicate that Nigeria’s imports of electrical, electronic equipment in 2017 was US $1.89 billion. Imports from the U.S. within the same period were valued at $51 million. Generator imports are projected to reach about $450 million by 2020 due to high demand from several sectors, including manufacturers (food, beverage, cement), telecommunication and banks, real estate and construction firms.  Trade and investment opportunity in developing off-grid micro power plants (1 MW to 20 MW) in strategic industrial cities/areas to sell directly to end-users.  The power reforms of Government of Nigeria allow off-grid sale of generated power.

Power Africa: Launched in 2013, Power Africa is a market-driven, U.S. Government-led public-private partnership to double access to electricity in sub-Saharan Africa. It also serves as a one-stop shop for private sector entities seeking tools and resources to facilitate doing business in Africa’s power sector. In 2016, the Electrify Africa Act unanimously passed both houses of Congress and was signed into law, institutionalizing Power Africa and establishing two goals; to add 20,000 MW of generation capacity and expand electricity access to 50 million people in sub-Saharan Africa by 2020. In bringing together more than 140 of the world’s top companies, development institutions, and financial entities, Power Africa employs a technical assistance-centered approach to directly address key constraints to project development and investment in the power sector. These interventions aim to de-risk investments and improve the overall enabling environment for private sector investment from facilitating project bankability with financing and risk mitigation, to providing technical and transaction support, to engaging with host-government counterparts. Learn more about the full Power Africa toolbox at https://www.usaid.gov/powerafrica/toolbox or other opportunities offered by Power Africa at https://www.usaid.gov/powerafrica.

Power Africa Support: Power Africa has provided significant transaction assistance to the Government of Nigeria and private sector entities in accelerating landmark power projects, including Nigeria’s first IPP which reached financial close in 2015 and will add 450 MW to the grid by 2018. Power Africa also played a key role in assisting the Government of Nigeria in unbundling the electricity sector into six generation companies, eleven distribution companies, and the Transmission Company of Nigeria. Critical to this support has been the role of the Overseas Private Investment Corporation (OPIC) in providing much needed investment funding for IPPs and USTDA in modernizing distribution networks, while reducing technical and commercial losses. Without more generating capacity, it will be difficult to connect additional customers to the grid, thus Power Africa is supporting the growth of off-grid options as well through technical assistance and an innovative grant program for off-grid entrepreneurs. As an example, Lumos Inc. is deploying rooftop solar panel kits to approximately 70,000 residential and small commercial customers in Nigeria as a result of Power Africa support. Learn more about how Power Africa is partnering to address key challenges in Nigeria’s electricity sector and supporting private sector investment in electrical power equipment at: https://www.usaid.gov/powerafrica/nigeria.

Solar: Nigeria signed Power Purchase Agreement (PPA) with 14 solar firms for solar power plants across the country expected to add about 1.1 GW of power to the grid.  There have been concerns on the capacity of the current transmission infrastructure to accommodate these additional power generations. Industry watchers believe smaller solar plants are viable for rural communities, especially in the Northern parts of Nigeria, which is estimated to hold the most potential for solar energy especially the rural communities that are off grid and can benefit from small micro grid projects and solar plants. Power Africa has been instrumental in supporting suppliers of solar home systems to better understand and enter the Nigerian market.

Hydro:  Nigeria is estimated to have total exploitable large-scale hydro power potential of over 14,120 MW capable of producing 50, 832 GWh of electricity annually.  Its potential for small hydro power is estimated at 3,500 MW of which only 60.58 MW (about 1.7%) has been developed. The country’s hydroelectric energy is about 20% of installed capacity. Studies estimates that there is potential for 11,500 MW in large hydro power plants and up to 730 MW in small hydro-power projects.

Large Hydro Power Development

  • 3,050 MW Mambilla Hydro Power Plant Project

  • 1,000 MW Markudi Hydro Power Plant Project

  • 750 MW Lokoja Hydro Power Plant Project

  • 700 MW Zungeru Hydro Power Plant Project

  • 360 MW Gurara II Hydro Power Plant Project

  • 40 MW Kashimbilla Hydro Power Plant Project

  • 40 MW Itisi Hydro Power Plant Project

  • 38 MW Dadinkowa Hydro Power Plant Project


Small & Medium Hydro Power Projects – Nationwide


Wind:  Nigeria has great potential for onshore power generation and already, a 100 MW wind power project is under development, while offshore wind resources are being evaluated and mapped out. 

Biomass: Nigeria government through the national oil company the Nigerian National Petroleum Corporation (NNPC) has a renewable energy division which has mapped out biomass and has mandate to expand the automotive biofuels industry. The project which will be executed on a Public-Private-Partnership (PPP) with NNPC as minority shareholder will use sugarcane and cassava as key biomass raw materials. However, this has been stalled due to a lack of appropriate legislative framework, appropriate equity financing and biofuels policy
 

Opportunities

There continues to be widespread self-generation which significantly impacts cost of doing business, however, various opportunities, including transmission and distribution (T&D) network upgrades, and expansion of backbone infrastructure, metering, billing and collection software systems and solutions in addition to theft and loss prevention systems are available for investors. Nigeria presents a significant trade opportunity to U.S. manufacturers and suppliers of diesel-operated generating sets (20-500 KVA).  Until service is improved, corporate offices, service providers and individuals have to generate their power needs that range between 20 KVA and 500 KVA and U.S. diesel-operated power equipment are preferred.

U.S. firms interested in the electric power sectors are encouraged to explore opportunities existing in the following areas:

 

  • Building of transmission and distribution of infrastructure - construction of a transmission infrastructure to wheel increased power generated by GENCOs and sold to DISCOs. This is expected to enhance Nigeria’s national grid and enable independent power plants interconnect and sell their power.

 

  • Joint Venture partnerships to build off-grid captive power plants (5 – 19 MW) for resale to manufacturing industries in strategic cities – Government of Nigeria Power Reforms allow off-grid sales of generated power

  • Partnerships to offer technical services to newly privatized GENCOs – upgrade of existing equipment (turbines, turbines, generators, and ancillary systems)

  • Renewable Energy (RE) systems – solar, wind, biomass technologies

  • Technical services to DISCOs for proper metering and billing systems

  • Supply of Prepaid Meters to DISCOs

  • Training of GENCOs and DISCOs technical personnel for maintenance of equipment

  • Sale of Heavy-duty Power Plants (100 KW to 1 MW) – most companies operating in Nigeria provide their own reliable source of power such as diesel-operated heavy-duty generating sets.  U.S. and European-origin equipment are preferred in view of their reliability and serviceability.  U.S. manufacturers of power equipment may utilize the guarantees provided by Ex-Im Bank and OPIC as incentives to purchasing plants from the U.S.  Ex-Im Bank has put forth a plan to provide up to $1.5 billion in financing and guarantees in the Nigerian power sector.


Support Services:

  • Provision of specialized training for electricity industry technicians and managers.

  • Assembly Plants for intermediary power equipment & accessories including meters

  • Consultancies in Regulatory & Consumer education initiatives

  • Provision of Power Sector specific equipment testing, calibration & logistics services


Investment Opportunities – Transmission:

  • Nigeria Transmission network needs an injection of about $5billion within the next 5years

  • Plan for a 765KV Super Grid (conceptual)

  • New, greenfield IPPs

  • Funding options include:

  • International Development Banks

  • Multilateral Funding Sources

  • Public Private Partnership.

  • Local Capital Market

  • Smart metering devices – manufacturing & servicing

  • Manufacturing of electricity generation, transmission & distribution equipment & spare parts


Investment Opportunities – Remote, Off-Grid & Renewable Energy:

  • Pre-feasibility & Feasibility Studies for Remote and off-grid locations.

  • Load profiles & forecasts for Remote and off-grid locations.

  • Development of commercial framework for implementation of remote and off-grid power.

  • Funding and Technical support for pilot project implementation.

  • Staff training & capacity building for the Nigeria Electricity Supply Industry (NESI)

  • Selected pilot projects in off-grid, solar–powered electricity supply to rural communities.


Trade Events

  • Power Nigeria Exhibition & Conference (https://www.power-nigeria.com/)

  • Nigerian International Power Expo & Conference (www.nigeria-power.com)


Key Agencies in the Nigeria Power Sector

  • Federal Ministry of Power, Works and Housing – Policy formulation and consistency

  • Nigeria Electricity Regulatory Commission – Issuance of licenses & Regulation

  • Nigeria Bulk Electricity Trading Company Plc – Power Purchase Agreements

  • Nigeria Electricity Liability Management Company – Take over and management of all liabilities and from the legacy generation and distribution companies

  • Bureau of Public Enterprise -Support privatizations of legacy Nigeria assets

  • Gas Aggregation Company of Nigeria – Allocation of gas for domestic use

  • Transmission Company of Nigeria – Management of the National Grid

  • Nigeria National Petroleum Company – Gas Infrastructure and Transportation

  • Rural Electrification Agency – Remote & Off grid projects

  • Nigerian Electricity Management Services Agencies – Testing & Certification of electrical components for quality & suitability

  • Advisory Power Team (Vice President’s Office) – Facilitating cross - sectoral solution


 

Local Event:

  • USA FAIR 2020: ACCESS NIGERIA (April 28-30, 2020 - TBC)

Eko Convention Center, Victoria Island, Lagos.
Organized by the US Commercial Service exclusively for American exhibitors to meet thousands of prospective Nigerian businesses.
(Please contact Benedicta.Nkwoh@trade.gov for more information)

Web Resources

http://www.power.gov.ng/
http://www.nercng.org/
http://www.energy.gov.ng/
http://nbet.com.ng/
http://renewableenergy.gov.ng/
http://www.nsong.org/
http://www.nigeriapowerreform.org/

Email Benedicta Nkwoh, Senior Commercial Specialist: Benedicta.Nkwoh@trade.gov

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.


More Information

Nigeria Electricity Infrastructure Trade Development and Promotion