Over the last five years, the Nigerian Power Industry has recorded moderate growth in private investments, albeit below expectations.
Over 80 independent power producers (IPPs) have been licensed and 10 National Independent Power Projects (NIPPs) have been commissioned. At present, PHCN successor companies dominate the grid-connected electricity generation market and with a combined installed capacity of 6,199 MW and available capacity of 3,220 MW, they account for 75 per cent of electricity supplied to the national grid.
The weak contribution from the IPPs could be linked to factors such as the uncertainties regarding payments from the TCN for electricity sold to the national grid, as well as constraints with gas supply. Nigeria is estimated to have over 160 trillion cubic feet in natural gas reserves, the seventh largest in the world, yet gas remains one of the Industry’s biggest challenges. This is due in part to regulatory obstacles (artificially low price of gas), which distort the economic viability of domestic gas production as well as gas pipeline vandalism.
Gas pipeline vandalism has spiked in the last three years. According to the Nigerian Gas Company (NGC), the country lost about 8.04 billion or 1,500 MW of electricity due to gas pipeline vandalism between January and March 2015 alone. The Trans–Forcados gas pipeline was attacked four times between January and February 2015, while the Escravos-Lagos gas pipeline was vandalized with four breaks between 1st and 2nd of February 2015. These pipeline attacks led to power generation of below 2,000 MW between January and April. The country’s generation has since improved with a peak generation of 4,545 MW as at 13 July 2015, largely attributable to improved gas supply following on-going repairs of existing pipelines and respite from vandalism in the last month.