A report by Agusto & Co, has predicted growth in Nigerian Electricity Supply Industry in the short term.
It attributed the development to the current Nigerian Electricity Grid Maintenance Expansion and Rehabilitation Program (NEGMERP), which aims to expand the country’s grid network through the diligent execution of network expansion projects funded by both the Federal Government and donor
This is in addition to the Presidential Power Initiative signed with Siemens AG, which is expected to result in an additional 25,000MW of operational capacity from the national grid.
It said the completion of such projects will assure prospective power generation companies that the Transmission Company of Nigeria, has ample capacity to receive generated electricity.
It added that, with a more efficient TCN, Nigeria can achieve self-sufficiency in power supply, making electricity exports easier through the West African Power Pool’s (WAPP) future Regional Electricity Market (REM).
The report noted that NESI is currently in the second stage – the transitional electricity market (TEM) – on its evolutionary path, where the state-owned special purpose vehicle , the Nigerian Bulk Electricity Trading Plc – ‘NBET’, buys electricity in bulk from the generating companies and independent power producers (IPPs) and resells to the distribution companies (DisCos) under vesting contracts.
It identified some lapses in the Electricity Devolution Bill recently signed by President Muhammadu Buhari.
It added that the development could constrain the business environments in these States, thereby eroding investor confidence, discouraging investment, and limiting economic growth and development.
According to the report, the bill also raises concerns about the potential for fragmentation of the power sector, as different States may have different priorities and approaches to power generation and distribution, leading some, to possibly bypass the national grid entirely.
On the positive note, the report said the bill has significant implications for the country’s struggling power sector, as it could lead to increased investment in power generation and distribution infrastructure, as well as increased competition among power providers.
It added: “By devolving power to the states, Agusto & Co. believes the bill could also lead to more efficient and effective management of the power sector, as states will have greater control over their power supply.This could lead to more targeted investment in power infrastructure and more responsive management of power supply and demand”
The report lamented that the domestic gas market in Nigeria has been plagued by chronic underinvestment in generating and distribution infrastructure.
“At the same time, under the domestic supply obligation framework within the Gas Master Plan (GMP), all gas companies are required to supply an assigned quota of gas to critical sectors (including electric power) at prices ($2.18mscf) lower than what is obtainable in international markets (average of $7.52mscf in the US market in 2022)
“As a result, operators of thermal plants struggle to secure viable gas contracts at the approved price. As at the end of 2022, 25 of the country’s 29 GenCos were gas-powered, underscoring the urgency of finding a long-term solution to gas supply constraints.
