Today we turn our attention to Nigeria’s power sector which remains a front burner topic given its direct correlation to the country’s much-awaited industrial take-off. Industry sources suggest that businesses suffer an average monthly power outage of 239 hours (equivalent to two weeks). As such, self-generation and the associated cost are unavoidable, depleting profit margins of businesses. The FGN estimates national energy demand at 22,230 megawatts (MW). However, power generation capacity from the grid accounts for only 30% of the FGN’s estimated national energy demand.
- Based on recent data released by the Manufacturers’ Association of Nigeria (MAN), expenditure on alternative energy sources by the manufacturing sector stood at N43bn H1 2018, 16% lower than the N51bn recorded in the second half of 2017.
- MAN partly attributed the decline in alternative energy expenditure to low utilisation of energy during the period as a result of a general slowdown in economic activities. If the business climate improves and consumer confidence recovers strongly, these would result in relatively higher energy consumption.
- Alternative sources of energy (such as renewables) are attracting greater attention. Based on data from the TCN, power generation from the three hydropower generation companies (Kainji, Jebba and Shiroro) accounted for 27% of peak energy generation on 17 December.
Energy generation, 2018 (MW)
Federal Ministry of Power, Works and Housing; FBNQuest Capital Research
- Furthermore, the NNPC is also spearheading biodiesel projects in Kano and Cross River states. In Q3, the corporation announced a proposed 14 megawatt oil palm-biodiesel project in Cross River state.
- The manufacturing sector grew by 1.9% y/y in Q3 2018. A better energy mix would lessen the squeeze on household pockets, reduce operating costs for businesses and boost productivity.
