NIGERIA POWER MARKET OUTLOOK TO 2030, UPDATE MARKET TRENDS, REGULATIONS, AND COMPETITIVE LANDSCAPE

Transcription

1 REFERENCE CODE GDPE0742ICR PUBLICATION DATE OCTOBER 2014 NIGERIA POWER MARKET OUTLOOK TO 2030, UPDATE MARKET TRENDS, REGULATIONS, AND COMPETITIVE LANDSCAPE

2 Executive Summary Power Market Outlook of Nigeria Reforms in the power sector of Nigeria have been ongoing since Though delayed initially (the reforms were planned in 2009), they have been instrumental in the privatization of the power sector. The generation and distribution companies are now in private hands, and further changes to the energy sector are imminent. For example, further reforms will make it mandatory for gas production companies (which are part of the energy sector but not part of the power sector) and generation companies to abide strictly by their commitments as made out in the contracts they sign. The same would be true of generation and distribution companies. Such changes in the regulatory environment would positively impact power generation as the latter has been often affected by a lack of fuel supply, which is mainly gas. Natural gas-based capacity is the predominant form of power in Nigeria accounting for XX% of the total installed capacity in Hydropower is the next largest technology, accounting for XX% of the total installed capacity in Other power generation sources were oil (XX%) and renewable sources (XX%). Power Market, Nigeria, Cumulative Installed Capacity Breakdown by Fuel Type (%), 2013 Oil (thermal) Hydropower Renewables Gas (thermal) Source: GlobalData, Power Database [Accessed on September 22, 2014] Annual electricity consumption in Nigeria increased from XX Terawatt hours (TWh) in 2000 to XX TWh in 2013, at a Compound Annual Growth Rate (CAGR) of XX%. The growth in electricity consumption has mostly been due to the residential sector, which is the largest powerconsuming segment in the Nigerian power market, and a vibrant industrial sector, which has been driving Gross Domestic Product (GDP) growth at a CAGR of XX% over the same period. The trend is expected to continue in the foreseeable future. 2

3 Table of Contents 1 Table of Contents 1 Table of Contents List of Tables List of Figures Introduction GlobalData Report Guidance Nigeria, Power Market, Snapshot Nigeria, Power Market, Macroeconomic Factors Nigeria, Power Market, Supply Security Nigeria, Power Market, Generation Infrastructure Nigeria, Power Market, Transmission and Distribution Infrastructure Nigeria, Power Market, Opportunities Nigeria, Power Market, Challenges Nigeria, Power Market, Market Analysis Nigeria, Power Market, Supply Structure Nigeria, Power Market, Key Market Players Nigeria, Power Market, Financial Deals Deal Volume and Value Analysis, 2004 to September Deals, Split by Type, Nigeria, Power Market, Demand Structure Breakup of Consumption by Sector, Nigeria, Power Market, Regulatory Scenario

4 Table of Contents 5.1 Nigeria, Power Market, Key Electricity Policies Electric Power Sector Reform Act Renewable Electricity Policy Guidelines Privatization of Electricity Sector New Regulations Nigeria, Power Market, Foreign Investment Scenario Nigeria, Power Market, Capacity and Generation Overview Nigeria, Power Market, Cumulative Installed Capacity, Breakup by Type of Power Plant, Nigeria, Power Market, Cumulative Installed Capacity and Annual Power Generation, Cumulative Installed Thermal Capacity and Annual Thermal Power Generation, Cumulative Installed Hydro Capacity and Annual Hydropower Generation, Cumulative Installed Nuclear Capacity and Annual Nuclear Power Generation, Cumulative Installed Renewable Capacity and Annual Renewable Power Generation, Nigeria, Power Market, Transmission and Distribution Overview Nigeria, Power Market, Transmission Overview Nigeria, Power Market, Distribution Overview Nigeria, Power Market, Grid Interconnection Electricity Import and Export Trends, Nigeria, Power Market, Electricity Trading

5 Table of Contents 8 Nigeria, Power Market, Competitive Landscape: Snapshot of Leading Power Generating Companies Key Company in the Nigeria Power Market: Afam Power Plc Company Overview Key Company in the Nigeria Power Market: Sapele Power Plc Company Overview Key Company in the Nigeria Power Market: Ughelli Power Plc Company Overview Key Company in the Nigeria Power Market: Geregu Power Plc Company Overview Key Company in the Nigeria Power Market: Shiroro Hydro Power Plc Company Overview Key Company in the Nigeria Power Market: Kainji Hydro Electric Plc Company Overview Appendix Market Definitions Power Installed Capacity Electricity Generation Electricity Consumption Thermal Power Plant Hydropower Plant Nuclear Power

6 Table of Contents Renewable Energy Resources Abbreviations Bibliography GlobalData s Methodology Coverage Secondary Research and Analysis Primary Research and Analysis Disclaimer

7 Table of Contents 1.1 List of Tables Table 1: Power Market, Nigeria, Gross Domestic Product ($bn), Population (million) and Annual Electricity Consumption (TWh), Table 2: Power Market, Nigeria, Successor Generation Companies of Power Holding Company of Nigeria and their Investors, Table 3: Power Market, Nigeria, Successor Distribution Companies of Power Holding Company of Nigeria and their Investors, Table 4: Power Market, Nigeria, Deal Value ($bn) and Deal Volume (Units), 2004 to September Table 5: Power Market, Nigeria, Annual Electricity Consumption (TWh), Table 6: Power Market, Nigeria, Electricity Consumption by Sector (%), Table 7: Power Market, Nigeria, Cumulative Installed Capacity Breakdown by Generation Source (%), Table 8: Power Market, Nigeria, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Table 9: Power Market, Nigeria, Leading Active Thermal Power Units (MW), Table 10: Power Market, Nigeria, Leading Upcoming Thermal Power Units (MW), Table 11: Power Market, Nigeria, Cumulative Installed Thermal Capacity (GW) and Annual Thermal Power Generation (TWh), Table 12: Power Market, Nigeria, Active Hydropower Projects (MW), Table 13: Power Market, Nigeria, Cumulative Installed Hydropower Capacity (GW) and Annual Hydropower Generation (TWh), Table 14: Power Market, Nigeria, Cumulative Installed Renewable Capacity (GW) and Annual Renewable Power Generation (TWh), Table 15: Power Market, Nigeria, Growth in Transmission Line Length (Ckm), Table 16: Power Market, Nigeria, Electricity Distribution Companies, Table 17: Power Market, Nigeria, Growth in Distribution Line Length (Ckm),

8 Table of Contents Table 18: Power Market, Nigeria, Annual Electricity Exports (GWh), Table 19: Abbreviations List of Figures Figure 1: Power Market, Nigeria, Gross Domestic Product ($bn) and Population (million), Figure 2: Power Market, Nigeria, Gross Domestic Product ($bn) and Annual Power Consumption (TWh), Figure 3: Power Market, Nigeria, Deal Value ($bn) and Number of Deals, 2004 to September Figure 4: Power Market, Nigeria, Annual Electricity Consumption (TWh), Figure 5: Power Market, Nigeria, Electricity Consumption by Sector (%), Figure 6: Power Market, Nigeria, Cumulative Installed Capacity Breakdown by Fuel Type (%), Figure 7: Figure 8: Figure 9: Power Market, Nigeria, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Power Market, Nigeria, Cumulative Installed Thermal Capacity (GW) and Annual Thermal Power Generation (TWh), Power Market, Nigeria, Cumulative Installed Hydropower Capacity (GW) and Annual Hydropower Generation (TWh), Figure 10: Power Market, Nigeria, Cumulative Installed Renewable Capacity (MW) and Annual Renewable Power Generation (GWh), Figure 11: Power Market, Nigeria, Annual Electricity Exports (GWh),

9 Introduction 2 Introduction Nigeria is a federal republic, and a member of the African Union (AU), the Economic Community of West African States (ECOWAS), the Non-Aligned Movement (NAM), the Commonwealth of Nations (also known as the British Commonwealth), and the UN. It is also a member of the Organization of the Petroleum Exporting Countries (OPEC) and the Organization of African Trade Union Unity. Nigeria is in the process of making the transition from a socialist economy to a market-based economy. In 2006, under the ECOWAS Common External Tariff, it removed some textile items from its list of prohibited imports, and in 2008 the number of items listed under prohibited imports was reduced from XX to XX. However, the country s implementation of non-tariff barriers remains uneven and arbitrary and continues to violate the World Trade Organization (WTO) s prohibitions against trade bans, which is hindering complete liberalization. Despite a weak regulatory environment and a lack of adequate infrastructure, the country has a positive investment outlook in areas such as energy and telecommunications, due to government-initiated reforms. The slow but steady macroeconomic reforms being initiated by the government, along with high international oil prices, have led to reduced inflation and strong Gross Domestic Product (GDP) growth in recent years. In 2013, the nominal growth rate for GDP was XX%, compared with XX% in However, in terms of constant prices, the growth rate, actually fell from XX% in 2012 to XX% in In terms of constant prices, Nigeria s total GDP rose from an estimated $XX billion in 2012 to an estimated $XX billion in 2013 (IMF, 2014). In 2013, the share of the manufacturing sector, the biggest contributor to national GDP, was estimated at XX%. The respective shares of the agricultural and service sectors were estimated to be XX% and XX%, in The inflation rate fell to XX% in 2013, from XX% in Exports decreased from $XX billion in 2012 to $XX billion in 2013 while imports increased from $XX billion in 2012 to $XX billion in 2013 (CIA, 2014). Nigeria possesses sizable reserves of both oil and gas. Its oil reserves were five billion tons, and its gas reserves were XX trillion cubic meters (tcm), at the end of 2013 (BP Statistics, 2014). Petroleum and petroleum byproducts constitute XX% of the country s exports, the revenues from which have been instrumental in enabling the country to overcome many of its financial problems. The oil sector accounts for around XX% of foreign exchange earnings and XX% of budgetary revenues. Other major products exported by Nigeria include cocoa and rubber. 10

10 Introduction The Energy Commission of Nigeria (ECN) is the main government body responsible for the strategic planning and co-ordination of national policies on energy. The federal ministry of power is the main authority for electricity in Nigeria. The Nigerian Electricity Regulatory Commission (NERC), an independent entity, is responsible for monitoring, regulating, and issuing licenses in the country s power market. The Rural Electrification Agency (REA) oversees electrification in rural and semi-urban areas of the country. The Power Holding Company of Nigeria (PHCN), a state-owned company, which was the most important utility involved in electricity generation, transmission, and distribution, has now been dissolved and unbundled into XX successor companies, XX of which are being privatized. The power sector of the country has also been marked by the presence of some Independent Power Producers (IPP). 2.1 GlobalData Report Guidance The executive summary captures the key growth trends in the Nigerian power market. Chapter three provides a snapshot of the key parameters that impact Nigeria s power sector, as well as key points about the power market. Chapter four provides an analysis of Nigeria s power market, such as market shares of the leading power generation companies, ratio analysis of the leading power utilities, and an analysis of electricity consumption. Chapter five details the regulatory structure of the power market and the inward foreign investment scenario. Chapter six provides information on Nigeria s cumulative installed capacity and annual generation trends, by individual generation source. Chapter seven describes the power transmission and distribution infrastructure in Nigeria and provides information on interconnectors with neighboring countries. The section also covers electricity imports and exports and upcoming grid-related projects in Nigeria. Note: From 2013 onwards the report provides actual or estimated data depending upon the availability of information at the time of writing the report. 11

11 Market Analysis 4.4 Nigeria, Power Market, Demand Structure Annual electricity consumption in Nigeria increased from XX TWh in 2000 to XX Terawatt hours (TWh) in 2012, at a CAGR of XX%. From 2014 to 2030, it is expected to rise from XX TWh to XX TWh, at a CAGR of XX%. Electricity consumption in the country has been low due to a low rate of industrialization. Additionally, the power supply itself has been very poor and the electricity access rate in the country is also very low (around XX% and XX% in rural areas). GlobalData expects the consumption rate in the country to increase due to increased electricity access rates and better T&D infrastructure, leading to better supply. Figure 4: Power Market, Nigeria, Annual Electricity Consumption (TWh), Annual power consumption (TWh) Source: GlobalData, Power Database [Accessed on September 19, 2014] 23

12 Market Analysis Table 5: Power Market, Nigeria, Annual Electricity Consumption (TWh), Year Source: GlobalData, Power Database [Accessed on September 19, 2014] Annual consumption 24

13 Market Analysis Breakup of Consumption by Sector, 2013 The residential sector was estimated to be the largest electricity consuming sector in Nigeria in 2013, with a share of XX%. It was followed by the industrial sector with an estimated share of XX% and the commercial sector with a share of XX% in Other smaller sectors are estimated to have contributed the remaining XX% of total electricity consumption in Figure 5: Power Market, Nigeria, Electricity Consumption by Sector (%), 2013 Trade, commerce, and other services Other Industrial Residential Source: GlobalData Table 6: Power Market, Nigeria, Electricity Consumption by Sector (%), 2013 Sector Residential Industrial Commercial Others Source: GlobalData Share 25

14 Appendix 9 Appendix 9.1 Market Definitions Power Power refers to the rate of production, transfer or energy use, usually related to electricity. It is measured in Watts (W) and often expressed in kilowatts (kw) or Megawatts (MW). It is also known as real power or active power Installed Capacity Installed capacity refers to the generator s nameplate capacity as stated by the manufacturer, or the maximum rated output of a generator under given conditions. It is given in Megawatts (MW) on a nameplate affixed to the generator Electricity Generation Electricity generation refers to the process of generating electricity from other forms of energy. It also refers to the amount of electricity produced, expressed in Gigawatt hours (GWh) Electricity Consumption Electricity consumption is the sum of electricity generated, plus imports, minus exports and transmission and distribution losses. It is measured in Gigawatt hours (GWh) Thermal Power Plant A thermal power plant is a plant in which turbine generators are driven by burning fossil fuels Hydropower Plant A hydropower plant is a plant in which the turbine generators are driven by falling water Nuclear Power Nuclear power is the energy released from the fission of nuclear fuel in a reactor. 55

15 Appendix Renewable Energy Resources Renewable energy resources are those that provide energy that is naturally replenished but limited in the amount of energy available per unit of time. Biomass, geothermal, solar, small hydropower and wind are examples of renewable resources. 56

16 Appendix 9.2 Abbreviations Table 19: Abbreviations AU African Union CAGR Compound Annual Growth Rate CCGT Combined-Cycle Gas Turbine Ckm Circuit kilometer ECN Energy Commission of Nigeria ECOWAS Economic Community of West African States FDI Foreign Direct Investment GDP Gross Domestic Product GW Gigawatt GWh Gigawatt hours IPP Independent Power Producer kv kilovolt kwh kilowatt hour MVA Megavolt Ampere MW Megawatt NAM Non-Aligned Movement NBET Nigerian Bulk Electricity Trading Company NEPA National Electric Power Authority NERC Nigerian Electricity Regulatory Commission OPEC Organization of the Petroleum Exporting Countries PHCN Power Holding Company of Nigeria REA Rural Electrification Agency T&D Transmission and Distribution tcm trillion cubic meters TEM Transitional Electricity Market TCN Transmission Company of Nigeria TWh Terawatt Hour V Volts WTO World Trade Organization Source: GlobalData 57

17 Appendix 9.3 Bibliography Ajulo L (2013). Nigeria has 15,000 MW hydropower potential ECN, WorldStage Group, September 17, Available from: d=26 [Accessed on September 18, 2014]. AllAfrica (2014). Nigeria: FG Targets 2,483 MW Renewable Energy by 2015, AllAfrica, September 11, Available from: [Accessed on September 18, 2014]. Amanze-Nwachuku C and Alike E (2013). Nigeria s Electricity Crisis: From Bad to Worse, This Day Live, July 9, Available from: [Accessed on September 18, 2014]. BP Statistics, BP Statistical Review of World Energy, June 2014 [database]. Available at: Statistical_Review_of_world_energy_2014_workbook.xlsx [Accessed on September 19, 2014]. CIA (2014). Nigeria: The World Factbook. Central Intelligence Agency. Available from: [Accessed on September 19, 2014]. ECN (2012). Renewable Energy Master Plan: Revised Edition. Energy Commission of Nigeria, Available from: mid=49 [Accessed on: September 18, 2014]. EIA (2014). Total Electricity Exports [database]. Available from: yid=2000&eyid=2013&form=&defaultid=0&typeofunit=stdunit&unit=bkwh&products= [Accessed on September 18, 2014]. FUAS (2012). Nigeria and Renewable Energy: Country at-a-glance. Federation of Universities of Applied Sciences. Available from: 58

18 Appendix 9.4 GlobalData s Methodology GlobalData s dedicated research and analysis teams consist of experienced professionals with advanced statistical expertise and marketing, market research and consulting backgrounds in the energy industry. GlobalData adheres to the codes of practice of the Market Research Society ( and Strategic and Competitive Intelligence Professionals ( All of GlobalData s databases are continuously updated and revised. The following methodology has been followed for the collection and analysis of data presented in this report Coverage This report covers the Nigerian power market, examining the market structure and providing historical generation, capacity and consumption forecasts up to It also looks at the market s regulatory structure, import and export trends, competitive landscape and leading active and upcoming power projects Secondary Research and Analysis The capacity, generation and consumption data are collected and validated using a number of secondary resources including but not limited to: Government agencies, ministry websites, industry associations, the World Bank, IMF, and statistical databases Company websites, annual reports, financial reports, analyst reports and investor presentations Industry trade journals, market reports and other literature GlobalData s proprietary databases such as the Capacity and Generation Database, Power Plant Database and Transmission and Distribution Database Further to this, the following secondary information is collected and analyzed to project Nigeria s power market scenario to 2030: Macro-economic scenario Government regulations, policies and targets 60

19 Appendix Government and private sector investment Contract and deal announcements Utility expansion plans The sector s historic track record Other qualitative insights built through secondary research and analysis of company websites, annual reports, investor presentations, industry and trade journals, and data from industry associations Primary Research and Analysis Secondary research is further complemented through primary interviews with industry participants to verify the market numbers obtained through secondary research and obtain first-hand information on industry trends. A typical research interview fulfills the following functions: Obtains the interviewee s perspective on the market size, growth trends, competitive landscape and future outlook Validates secondary research findings Further develop the analysis team s expertise and market understanding The participants are drawn from a diverse set of backgrounds, including power producers, equipment manufacturers, industry associations, government bodies, utilities, distributors, and academia. The participants include, but are not limited to, C-level executives, industry consultants, academic experts, business development and sales managers, purchasing managers, plant managers, government officials and industry spokespersons. 9.5 Disclaimer All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, GlobalData. 61