Nigeria has set ambitious objectives for the Energy sector.
For the power sub-sector the priorities identified are as follows:
- Increase power generation from the current 3.5MW to 20 GW by 2018 and to 350 GW by 2043, with focus on gas as the immediate priority and adding alternative sources after 2023.
- Strengthen and increase transmission capacity, with immediate focus on the national backbone.
- Increase distribution capacity, with priority placed on making power available for industrial users and reducing distribution losses.
- Finalise privatisation of power generation and distribution, and extend privatisation to include NIPP assets.
- Build capabilities, increasing human capacity 20 times by 2023 and 40 times by 2043.
- Increase rural electrification.
- Implementation of all power infrastructure projects shall comply with available international best practices.
Oil and Gas
For oil and gas, the priorities are to:
- provide gas distribution infrastructure to increase gas utilization;
- increase capacity in oil/gas production
- increase refining capacity to fully meet national demand;
- intensify exploration activities;
- increase the percentage of capital expenditure in-country;
- increase bulk storage capacity for oil and gas;
- increase the capacity of the pipeline network;
- increase the use of sustainable fuels; and
- establish links to the regional gas network (West African Gas Pipeline, Nigerian phase of the trans-Saharan gas pipeline).
For the power sub-sector, there are several targets for the period 2014-2043 [Figure 3.14]. The overarching goal is to increase average generation capacity from today’s about 7 GW to 350 GW by the end of the 2043, and to ensure sufficient transmission and distribution capacity for delivery of this energy output to end users. This will give Nigeria 80 per cent of the per capita generation capacity of the present day USA in 2043, and will require Nigeria to build in excess of 10,000 MW of capacity per annum for the next 30 years.
To achieve this Nigeria will need to develop national capabilities. This will be achieved through aggressive training and research and development activities. Currently, low local content in both technological and human resource input remains a major challenge in the sector.
Oil and Gas Sub-Sector Targets
The main goal in the oil and gas sub-sector is to advance “gas to power” in order to meet the rapidly growing energy demand of the country. The target is to increase oil production to 4 mbpd, and increase refining capacity to a level which would meet local demand and export potential, estimated at 4 mbpd by 2043, with the target of becoming premium motor spirit (PMS) self-sufficient by 2030. Similarly, Nigeria plans to increase its gas production capacity from 7,580 to 11,000 mcfpd by 2018, 15,000 mcfpd by 2023 and 30,000 mcfpd by 2043. The increase in gas production is necessary to supply the planned gas power stations and develop other gas-based industries, e.g., fertilizers, agro-processing and petrochemicals.
These are ambitious targets, especially against the backdrop of historical performance. For example, upstream oil production has been between 2.1 and 2.6 mbpd in the last 8 years as a result of security issues, crude theft, and long-term funding challenges of NNPC. Concerning midstream, there is a huge shortfall in refined products (about 12 billion litres), with the difference made up in very expensive subsidies. Current data suggests that Nigerian refineries run at a low capacity utilisation rate of below 35 per cent.
The corresponding manufacturing capacities of the gas-based industries are set to grow accordingly. In terms of exploration, the goal is to grow natural gas reserves from 187 Tcf to 191.5 Tcf in 2023 and 200 Tcf in 2043 (which translates into a need for finding 85 Tcf over the 30-year period).
Against the backdrop of these targets, it needs to be stressed that insecurity, especially in the Niger Delta, poses a substantial threat to growth in the oil and gas sector. Steps being taken to address the issues need to be vigorously pursued to stem the tide and foster a conducive environment for oil and gas activities. Poor Government funding, especially in the area of exploration will be urgently and strategically addressed. The menace of pilfering and theft of products need to be urgently addressed also in order to fully realize the targets set for oil and gas in general, and for oil in particular.