Federal Republic of Nigeria
Update & Investments Outlook
in the Nigeria Power Sector
Presented by
Prof Chidi Onyia
Chief of Staff to Hon. Minister of Power
Funding of Gas Infrastructure Required for Power
Federal Republic of Nigeria
At the
A PresentationNigerian
To
Development Finance Forum
Joint National Assembly New
Committee
on Gas
York, NY
30 May 2014
Federal Ministry of Power
Outline
 Nigeria on the World Stage
 Power Sector Reform
 Privatization Successes
 Power Growth plan
 Infrastructure Expansion & Investment Opportunities
 Conclusion
Federal Ministry of Power
1
Nigeria on the World Stage

Population is the seventh largest in the World, ~160 million people
and still growing at over 2% per annum

By United Nations’ statistics, Nigeria’s population will reach nearly 230
million within the next 20 years.

The largest of any country in Africa (accounts for nearly half the total
population of West Africa and more than 15% of the total population
of the entire African Continent).

More than 40% of Nigeria’s population is less than 20 years old,
functional literacy level is placed at between 30% - 40% over the
population and well over 65% on the (18 – 45 years) population
segment. Indicating strong, sufficient & modern labour market.

Nigeria represents over 65% of the effective West Africa market and
remains the most competitive destination for the establishment of
medium and large manufacturing industries.
Federal Ministry of Power
2
Energy Resources
Resource
Reserves
1Crude Oil
36.2 billion barrels
2Natural Gas
187 trillion scf
3Coal & Lignite
2.7 billion tons
Resource
1Large Hydropower
2Small Hydropower
3Solar
4Sun Shine
5Wind
6Biomass - Animal Waste
Potential
11,500MW
734MW
3.5 - 7.0 kW/m2/day
4 - 8 hrs/day
2 - 6m/s @ 10m height
61 million tons per year
Source: SERC - UDUS
Federal Ministry of Power
3
Power Sector Reform – Catalyst for Economic Growth
Vision 20:2020
1. Industrialization
2. Higher GDP
3. More jobs
Present
Power
Sector
2014
Reform
4. Increased
household income
& improved
standard of living
5. Improved youth
employment &
social security
Mr. President’s
Transformation
Agenda
Federal Ministry of Power
The Ultimate Objective of the Power Sector Reform

Social Return on Investment: 6x (over 12 months)
$12bn
Increased
Annual GDP
$2bn
(for each
additional
GW)
Notes:
As described in Appendix A of the Roadmap for Power Sector
Reform, the cost of unserved energy (CUE) in Nigeria is circa
N200/kWh if South Africa is used as the “role model country” for
GDP/kWh of electricity sold. The same figures are used for the
converse calculation depicted above which represents the
annual GDP benefit of each additional gigawatt.
The ultimate objective of the reform is to
ensure that the Nigerian Power Sector
becomes the engine for growth, for jobs, and
for improvements in social welfare.

Each additional 1,000 MW leads to an
additional $12bn in annual GDP.

An additional 1,000 MW requires roughly $2bn
of investment in generation, transmission and
distribution.

Hence the social return on investment is circa
6x (in just 1 year).

The capital required is enormous and the
Government cannot fund even a fraction of the
necessary investments


Only the private sector can do this.
Inability to conclude the reform will slow
economic growth and will jeopardise the
national security of the country.

The successful transfer of ownership and
control will catapult Nigeria onto the same
growth trajectory as the BRICs and will
transform the living standards of all Nigerians
Federal Ministry of Power
5
Privatization Successes
The reform which has been adjudged as audacious and transparent has recorded major
achievements since its launch in 2010
Year
Major Developments
2010
President Jonathan choose Power as one of his cardinal programmes
President Jonathan inaugurated the Presidential Action Committee on
Power
2011
President Jonathan launched the Nigeria Power Sector Reform Roadmap
NERC effectively re-established
Bulk Trader, NELMCO, NAPTIN established and operationalized
2013
Management Contract at TCN operationalized. SODA issued. Supervisory
board inaugurated
PHCN Wind Down in process
Aug 21
Nov 01
Commencement of sale of NIPP generation assets
Short & medium term funding mechanism of TCN in place
Receipt of balance payment from the preferred bidders
Payment of severance packages to PHCN staff
Physical handover of 4 GenCos & 10 DisCos to new owners
Commencement of Pre-TEM period
Fulfillment of most of the conditions precedent to declaration of TEM
Federal Ministry of Power
6
September 30, 2013 – Highpoint of the Power Sector Reform
Official handover of Share Purchase Agreements and Licences to the new owners by His
Excellency, Dr. Goodluck Ebele Jonathan GCFR at the Presidentila Villa, Abuja on
September 30, 2013.
Federal Ministry of Power
7
The Reform Strategy: Changes in ownership and Control
Legacy Configuration
Gas
Production
Gas
Transmission
Power
Production
Power
Transmission
Power
Distribution
Ownership
Mixed
FGN
Largely
FGN
FGN
FGN
Operational
Control
Largely
Private
FGN
Largely
FGN
FGN
FGN
New
Configuration
Gas
Production
Gas
Transmission
Power
Production
Power
Transmission
Power
Distribution
Ownership
Mixed
Mixed
Largely
Private
FGN
Fully
Private
Operational
Control
Largely
Private
Largely
Private
Fully
Private
Fully Private
Fully
Private
Long Term
Goals
(2016 and beyond)

The Nigerian power market to have reached stability for willingbuyer, willing-seller mode

To ensure that all aspects and stakeholders of the NESI are
working together to deliver quality, reliable and efficient
electricity to consumers at reasonable prices
Federal Ministry of Power
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Next Steps
 Declaration of the Transition Electricity Market (TEM)
on advice from NERC
 Commencement of aggressive recovery of
redundant generation & distribution capacities &
expansion by new owners (brownfield)
 Handover of the outstanding DisCo (Kaduna) and
GenCos (Afam & Sapele). Preferred bidders
emerged.
 Conclusion of the sale of the 10 (ten) NIPP
generation plants (Preferred bidders announced
2013)
 Aggressive implementation of the Transmission
expansion blueprint.
 Completion of on-going critical gas infrastructure
projects
 Facilitate new IPPs(greenfield)
Federal Ministry of Power
9
Current Development on Power
We need to continue increasing our available capacity
Projected energy mix by 2020
Projected generation capacity 2013-2020
4%
GW
GW
40.0
8.7
2013
2014
12.1
Hydro
Renewables
21.2
10.5
Coal
17%
10%
15.6
Thermal
69%
2015
2016
2018
2020
 Our average generation is below 4000MW out of an available capacity in excess of
6000MW
 Transmission and Gas constraints continue to hinder generation
Source: PTFP
Federal Ministry of Power
10
Power Growth Plan
The aspiration of 40 GW by 2020 will move Nigeria to a much more stable
socio-economic position
Nigeria power consumption1
KWh/Capita (2012-2020)
Other emerging markets consumption
KWh/Capita2
4.523
Nigeria in
2020
153
2012
2.206
447
711
948
1.159
596
147
2014
2016
2018
2020
Kenya
India
Brazil
South
Africa
1 Assumes 2.6% population growth per annum; 80% load factor on plants; approx 4.3 GW of new capacity per annum to achieve 40 GW by 2020
2 As of 2009
SOURCE: NERC; McKinsey analysis
Federal Ministry of Power
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Major challenges facing the power development agenda in Nigeria
1.
Inadequate gas to fire existing and proposed power plants.
2.
Incessant vandalization of gas pipelines
3.
Huge and often unreasonable request for compensation by communities
along transmission rights of way amounting to billions of Naira which in
some cases more than double the cost of the projects .
4.
Increasing cases of vandalisation & theft of high tension transmission
cables from ongoing transmission projects .
5.
Proliferation of illegal connections by consumers amounting to huge sums
lost to energy theft on a monthly basis.
6.
Widening technical manpower gaps across the power value chain which
requires urgent action since the projected power growth will require an
equal growth in the technical manpower profile.
Federal Ministry of Power
12
Infrastructure Expansion & the Investment Opportunities
Current Assets
Generation
Legacy Assets (installed)
 Thermals
5.6GW
 Hydro
1.3GW
 Wind (pilot) 10MW
New Initiatives
On-going projects




Mambilla Hydro
3.1GW
Zungeru Hydro
0.7GW
S&MH (pilot)





Fuel to
power
Transmission
Support
Services







Gas to Power average
daily consumption of
650mmscfd
Grid Stability Projects
Grid Capability 4.3GWE






ELPS-C Pipeline
SPDC(NPDC) 50mmscfd
Oben Gas plant 30mmscfd
OB3 Pipeline 120km (48”)
Grid Expansion
Projects
10.4GWE by Q4 2013
Power China Corp”s
20GW+ 10,000km
Transmission lines
Sale of NIPP (4775MW)
New IPPs in planning
stage 2.6GW
Coal/Renewables
Operation Electrify
Nigeria




SPDC/CNL 100mmscfd
SPDC SS
180mmscfd
CNL Okan 300mmscfd
Bosi/Erha
300mmscfd


SuperGrid ( Conceptual)
40GW by 2020
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
Energy Efficiency Initiatives & products .
Federal Ministry of Power
13
Infrastructure Expansion & the Investment Opportunities
The 2015- 17 power projection is underpinned by several MOU’s with the following
organizations
Power China

General Electric
▪ Facilitating and promoting private sector investment up
To build 20,000MW capacity thermal power plants
and 10,000km of transmission lines
to 10,000MW.
Siemens AG
▪ Facilitating and promoting private sector investment up
Electrobras
▪ Facilitating and promoting private sector investment up
to 10,000MW.
to 10,000MW.
▪ Facilitating the development, financing, procurement,
Daewoo E&C
EDF/ETDE
manufacture, commissioning and operations of
10,000MW
▪ Promoting power sector investments by sponsoring
feasibility studies for approved projects.
Multi-Lateral G-to-G
Agency Support

Promoting the development of small / medium hydropower plants as embedded generation for rural
communities
 Each of these MOUs present opportunities for new ventures by serious 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.
Federal Ministry of Power
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Investment Opportunities – Hydro Power Development
 Large Hydro Power Development
 3,050MW Mambilla Hydro Power Plant Project
 700MW Zungeru Hydro Power Plant Project
 360MW Gurara II Hydro Power Plant Project
 40MW Kashimbilla Hydro Power Plant Project
 40MW Itisi Hydro power Plant Project
 Small & Medium Hydro Power Projects - Nationwide
DAM
STATE
CAPACITY (MW)
ESTIMATED
COST
(US$)
Oyan
Ikere Gorge
Bakolori
Challawa
Tiga
Kampe
Owena
Doma
Zobe
Jibia
Ogun
Oyo
Zamfara
Kano
Kano
Kogi
Ondo
Nasarawa
Katsina
Katsina
10
6
3
7.5
10
3
0.45
1
0.30
4
Federal Ministry of Power
7,500,000.00
11,000,000.00
4,275,000.00
33,500,000.00
44,562,500.00
8,125,000.00
1,287,500.00
4,900,000.00
1,531,250.00
91,250,000.00
15
Investment Opportunities - Transmission
 Our Transmission network needs an injection of about $5b within the next 5 years
 Plan for a 765KV Super Grid
 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
Federal Ministry of Power
16
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 e.g.
 Durumi
 Shape
 Waru
Federal Ministry of Power
17
Conclusion
 The Power Sector Reform has recorded major achievements and milestones due
to the unflinching support of President Goodluck E. Jonathan
 The milestones achieved so far are beginning to impact on service delivery and
market structure
 Nigeria is poised to meet its demands and contribute more to the West Africa
power pool.
 Huge investment opportunities exist in the Nigeria Electricity Supply Industry
 Local and international investors are encouraged to take advantage of the ongoing power sector reform
 The Federal Government will continue to ensure a conducive environment and
level playing field for all investors.
Federal Ministry of Power
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Key Agencies in the Nigeria Power Sector
 Federal Ministry of Power – 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
 Gas Aggregation Company of Nigeria – Allocation of gas for domestic use
 Transmission Company of Nigeria – Management of the National Grid
 Nigeria Gas Company – Gas Infrastructure and Transportation
 Rural Electrification Agency – Remote & Off grid projects
 Electricity Management Services – Testing & Certification of electrical components for
quality & suitability
 Presidential Task Force on Power – Facilitating cross - sectoral solutions
Federal Ministry of Power
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Thank You
www.power.gov.ng
Federal Ministry of Power