Dangote refinery has generated 1,500MW of power for self-consumption, reducing pressure on Nigeria’s national grid, highlighted the importance of having dedicated power generation for industrial activities.
While it took Nigeria eleven years to add just 760 megawatts of power
to the national grid, the Dangote refinery outpace that output,
generating 1,500mw in a shorter time.
For decades, the country has suffered from chronic power
shortages, and repeated promises to fix the problem have long dominated
election campaigns.
Data sourced from the Nigeria Electricity System Operator
showed Generation Companies (Gencos)’ delivery to the Distribution Companies
(Discos) via the Transmission Company of Nigeria (TCN) has increased by 22
percent from an average of 3,400mw in November 2013 to an average generation of
4,160mw, as at 12 June 2024.
However, Dangote’s oil refinery produced 1,500mw of power
after construction in 2018, surpassing the total national grid expansion
achieved in over a decade.
“We don’t put pressure on the grid. We produce about 1,500
megawatts of power for self-consumption,” Aliko Dangote said at the Afreximbank
Annual Meetings and AfriCaribbean Trade & Investment Forum in Nassau, The
Bahamas.
This development has raised concerns about the snail pace of
growth in Nigeria’s power sector despite billions of dollars in investment and
an 11-year-old privatisation exercise.
“The government and some operators in the sector may say
there has been some form of growth since 2013, but in actual terms, how many
people are benefiting from the privatised power sector? most conglomerates are
generating their power,” Charles Akinbobola, a senior energy analyst at Sofidam
Capital said.
He added, “The challenge of the power sector has not
entirely been the scarcity of funds, several trillions of naira have been
pumped into that industry. The sector has been plagued by the shortcomings of
its managers”.
Nigeria can produce 13,000mw of power compared with more
than 58,095mw for South Africa, which has a similar-sized economy and a quarter
of the population.
Nigeria’s ageing grid however delivers only about 4,000mw of
power to its over 200 million citizens — roughly what the city of Edinburgh
provides for 548,000 residents.
Analysis shows that although Nigeria’s transmission capacity
has increased by 20 percent to an average of 4,200mw since 2013, Nigeria’s
population has soared by 57 percent within the same period from 131 million
people to 206 million, according to the latest World Bank estimates.
While Nigeria seems to be moving at a snail pace, other
African countries are racing ahead.
For instance, Egypt, a country with a population of 114
million inhabitants, added a total of 28,229mw to its national grid between
December 2015 and December 2018, resulting in a total installed capacity of
58,818mw.
According to the United States Department of Commerce,
International Trade Administration, this has been achieved through a fast-track
project that worked on installing 3,636mw of electricity in 8.5 months and is
worth $2.7 billion.
Egypt also signed another project with Siemens in March
2015, which added 14,400mw in 2.5 years by building three mega combined power
cycle stations.
“By converting old simple cycle power plants to combined
cycle, another 1,850mw were installed,” the US report said.
In Ghana, between 2000 and 2020, electricity generation
capacity increased at a rate of 6.4 percent a year from 1,358mw to 4,695mw,
according to data from the country’s energy agency.
“While other countries seem to be getting it right in terms
of power; Nigeria’s power sector issue has become a major conundrum in the
economy. There is a major funding and liquidity crisis which is posing
significant risk to investments in the electricity value chain,” Muda Yusuf,
the chief executive officer, the Centre for the Promotion of Private Enterprise
said.
He added, “Some fundamental issues need to be addressed in
the electricity value chain. There are issues of technical and commercial
losses which are yet to be addressed. These are inefficiencies costs that
consumers are compelled or expected to pay for as part of the cost recovery
argument. And these costs are in billions of naira”.
Findings showed that rising energy costs are disrupting
productive activities in Africa’s most populous nation as factories
self-generate more than 14,000 megawatts of electricity due to poor supply from
power distribution companies.
According to documents compiled by the Manufacturers
Association of Nigeria, member companies spent N639 billion on alternative
energy sources between 2014 and 2021.
Manufacturers spent N25 billion in 2014, N59 billion in 2015
and N129.95 billion in 2016.
Moreover, they spent N117.38 billion in 2017; N93.11 billion
in 2018; N61.38 billion in 2019; N81.91 billion in 2020, and N71.22 billion in
2021.
Findings showed the figures have varied over the years due
to the effects of inflation and the number of member companies in the
association, among other factors.