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Nigeria

Governmental Framework

Government Institutions

Federal Ministry of Power

The Federal Ministry of Power develops and implements policies for the provision of adequate and reliable power supply in Nigeria. The policy influences generation, transmission and distribution projects in the sector, provides general direction and facilitates the emergence of a private sector towards a competitive and efficient electric power industry. The main goal of the FMP is directed at initiating, formulating, coordinating and implementing broad policies and programmes promoting the development of electricity generation from all sources of energy. The Honourable Minister of Power heads the Ministry, while the Honourable Minister of State is in charge of the operational activities, and the Permanent Secretary is the accounting officer.

http://www.power.gov.ng/

Energy Commission of Nigeria (ECN)

The Energy Commission of Nigeria was established in 1988 with the statutory mandate of strategic planning, co-ordination and evaluation of national policies in the energy sector. Its functions include among other things the collection of information on national energy policies in Nigeria, the analysis of the sector performance and advisory services on energy strategy to the government. The ECN is also responsible for preparing and disseminating energy related information. The commission is also involved in promoting research, development and training in the field of energy, as well as liaising with international energy-related organisations.

http://www.energy.gov.ng/

Nigerian Electricity Regulatory Commission (NERC)

The Nigerian Electricity Regulatory Commission (NERC) was established as an independent regulatory agency in 2005 under the EPSR Act 2005. It has a mandate to monitor and regulate Nigeria’s electricity industry, and ensure compliance with market rules and operating guidelines. NERC in its function as market regulator ensures fair pricing and competitive electricity trading. The commission is instrumental in providing the electricity retail and generation tariff structure. NERC is also responsible for assessing applications for licenses to operate independent power plants larger than 1MW, and mini-grids less than 1MW. It also approves eligibility of the companies to negotiate a power purchase agreement with the central off-taker; the Nigerian Bulk Electricity Trading Plc (NBET). The commission also plays a major role in consumer protection by developing customer service standards and fair pricing rules.

http://www.nercng.org/

Rural Electrification Agency of Nigeria (REA)

The Rural Electrification Agency is committed to providing access to reliable electric power supply for rural dwellers in the country, in a way that would allow for reasonable return on investment through appropriate tariff that is economically responsive and supportive of the average rural customer. The agency has a mandate to promote rural electrification in country, co-ordinate the rural electrification programmes in the country, and to administer the Rural Electrification Fund across the country for either on-grid or off-grid applications.

http://www.rea.gov.ng/

Nigerian Bulk Electricity Trading Plc (NBET)

The Nigerian Bulk Electricity Trading Plc (NBET) is a government owned public liability company. The Bureau of Public Enterprises and the Ministry of Finance are its two shareholders of record with 80% and 20% stakes, respectively. NBET was established in 2010 in line with provisions of the Electric Power Sector Reform Act (EPSRA). NBET purchases electricity from the generating companies through Power Purchase Agreements (PPAs) and sells to the distribution companies through Vesting Contracts. It has a mandate to implement a procurement process that is transparent and results in the economic procurement of needed power.

http://nbet.com.ng/

National Power Training Institute of Nigeria (NAPTIN)

As a response to the massive training needs in the power sector, the National Power Training Institute of Nigeria (NAPTIN) was established in March 2009. NAPTIN directly reports to the Federal Ministry of Power. NAPTIN mandate focusses on serving as a focal point for human resource development and workforce capacity building as well as research centre on matters relating to power in Nigeria.

http://www.naptin.org.ng/

Federal Ministry of Environment (FMENV)

The Federal Ministry of Environment (FMENV) was established in 1999 with the statutory responsibility of protecting the environment against pollution and degradation and to ensure the conservation of natural resources for sustainable development in Nigeria. The FMENV is also charged with coordinating Nigeria’s climate change matters and international climate negotiations. Through the Ministry’s department of climate change, it has an objective to foster renewable energy and energy efficiency across the country via different initiatives.

http://environment.gov.ng/

Nigerian Electricity Management Services Agency (NEMSA)

The Nigeria Electricity Management Services Agency was set up by the NEMSA Act No.6 of 2015 to carry out the functions of enforcement of technical standards and regulations, technical inspection, testing and certification of all categories of electrical installations, electricity meters and instruments for efficient production and delivery of safe, reliable and sustainable power supply in Nigeria.

http://www.nemsa.gov.ng/

Federal Ministry of Science and Technology (FMST)

The Federal Ministry of Science and Technology develops and implements strategies for science and technology development in Nigeria. The Renewable and Conventional Energy Technology Department in the ministry is responsible for energy issues in the FMST. The focus lies on nuclear, renewable and alternative energy sources as well as energy efficiency, and research and development activities addressing energy-related problems associated with environmental degradation, pollution and climate change. Furthermore, the ministry manages energy statistics in the country. The FMST also oversees the Energy Commission of Nigeria.

http://www.scienceandtech.gov.ng/

National Agency for Science and Engineering Infrastructure (NASENI)

The federal government established the National Agency for Science and Engineering Infrastructure (NASENI) in 1992 to promote local manufacturing of renewable energy technologies such as solar modules, small hydro turbines, pole mounted transformers, and wind turbine blades.

http://www.naseni.org/

Nigerian Investment Promotion Commission (NIPC)

The Nigerian Investment Promotion Commission (NIPC) was established to promote, coordinate and monitor all investments in Nigeria. It functions to: co-ordinate, monitor, encourage and provide necessary assistance and guidance for the establishment and operation of enterprises in Nigeria; initiate and support measures which enhance the investment climate in Nigeria for both Nigerian and non-Nigerian investors; promote investments in and outside Nigeria through effective promotional means, and; facilitate the registration of foreign businesses in Nigeria over the One Stop investment centre.

http://www.nipc.gov.ng/

ECOWAS Centre for Renewable Energy and Energy Efficiency (ECREEE)

Nigeria participates in the ECOWAS Centre for Renewable Energy and Energy Efficiency (ECREEE).

http://www.ecowas.int/

Strategies, Policies, Acts, and Regulations Governing Renewable Energy

The Nigerian government sees renewable energy as an important part of diversifying the country’s energy mix beyond fossil fuel-based generation. A number of policies have been developed over the years which has enhanced the government’s pursuit of renewable energy sources as an additional instrument to solve the electricity challenge the country faces. Through the completion of the privatisation process, independent power producers are allowed to feed electricity into the grid after an approved license from NERC and a signed Power Purchase Agreement (PPA) with NBET. Some of the policies and regulations governing renewable energy are as follows:

Electric Power Sector Reform (EPSR) Act 2005

The Electric Power Sector Reform can be seen as the turning point in the national energy policy, as it determined the framework upon which private actors were allowed to participate in the generation, transmission and distribution of electricity. Furthermore it established the Nigeria Electricity Regulatory Commission, which provides for the development of a competitive electricity market and serves as the basis for determination of tariffs, customer rights and obligations, and other related matters.

Roadmap for Power Sector Reform 2013

The Roadmap’s targets for renewable energy technologies by 2025 which contribute to the overall target to achieve 18% of electricity generated from renewables and 20% by 2030 are: Small-hydro: 2,000 MW (600 MW in 2015), Solar PV: 500 MW, Biomass-based power plants: 400MW (50MW in 2015) Wind: 40 MW and electrification level of 75% in 2025 (60% in2015).

Renewable Electricity Policy Guidelines (REPG), 2006

The renewable energy policy guideline issued by the Federal Ministry of Power and Steel stipulated that the federal government would expand the market for renewable electricity to at least 5% of total electricity generation and a minimum of 5 TWh of electric power production by 2016. The Policy Guidelines on Renewable Electricity sets out the federal government’s vision, policies and objectives for promoting renewable energy in the power sector. In the document, renewable energy is clearly regarded as a means to extend electricity services to those not yet connected to supply sources (e.g. new settlements in urban areas) and to run electrification campaigns in rural areas. The policy recognised the advantages renewable energy can bring to the system such as adding additional generation to the constrained system, enhancing the stability by mitigating local disruptions in supply and reduction of emission.

National Renewable Energy Master Plan (REMP) 2006, new draft 2011/2012

The REMP, first put into action in 2006, provides a comprehensive framework through which the development and exploitation of renewable energy resources was to be achieved. It was reviewed in 2012. The programme supported:

  • Expanding access to energy services to Nigerians (75% by 2025);
  • Raising the standard of living, especially in the rural areas;
  • Stimulating economic growth, employment and empowerment;
  • Reducing environmental degradation and health risks.

Targets for the REMP

  2013-2015 2016-2020 2021-2030
Large Hydro 1,930 MW 5,930 MW 48,000 MW
Small Hydro 100 MW 734 MW 19,000 MW
Solar PV 5 MW 120 MW 500 MW
Solar Thermal 1 MW 5 MW
Biomass 100 MW 800 MW
Wind 1 MW 20 MW 40 MW
% Renewables 13% 23% 36%

Source: Area-net

National Renewable Energy and Energy Efficiency Policy (NREEEP), 2015

The National Renewable Energy and Energy Efficiency Policy NREEEP was developed by the Federal Ministry of Power in 2013/14 and was approved by the Federal Executive Council in May 2015. NREEEP seeks to bring to the attention of policymakers the economic, political and social potential of renewable energy. It recommends that an appropriate strategy should be developed to harness these potentials in order to add value to the ongoing changes in Nigeria’s power sector. The document also stipulates that existing policies lack a coherent and all-encompassing framework that drives the sector and therefore calls for an integrated renewable energy and energy efficiency policy which will serve as a useful vehicle that limits conflicts in the future and promotes development of renewable energy technologies in Nigeria. It can be regarded as an umbrella document consolidating the various other afore-mentioned policies and strategies in one document. This policy encourages the development of a national renewable energy action plan and a national energy efficiency action plan which will facilitate the overall achievement of the objectives it sets out. The overall focus of the policy is on optimal utilisation of the nation’s energy resources for sustainable development.

National Renewable Energy Action Plan (2015 -2030)

The National Action Plan presents the expected development and expansion of renewable energies in Nigeria in order to achieve the national target under ECOWAS Renewable Energy Policy (EREP), and thus Nigeria’s contribution to the overall ECOWAS target of 23% and 31% renewable energy in 2020 and 2030 respectively. It contains existing and currently planned measures, with which the national target is to be achieved. It also outlines the expected percentage of homes to be connected to off-grid renewable energy supply by 2020 and 2030. The plans set a target of the renewable energy share (hydro power inclusive) of total installed power capacity by 2020 to 52% and 49% in 2030. Renewable energy share in the electricity mix (including medium and large hydro) is planned to be 38% and 29% in 2020 and 2030, respectively.

Draft Regulation for Mini Grid

The objective of the mini grid regulation is to accelerate electrification in areas without an existing distribution network and areas with an existing but poorly electrified or non-functional distribution grid by attracting the participation of the private sector, communities, non-governmental organizations  in achieving nationwide electrification. The regulation seeks to minimize major risks associated with Mini-Grid (< 1MW) investments such as: Sudden tariff changes, (tariffs would have been agreed in advance by the relevant parties; and Stranded Mini-Grid Operator investments), that occur during the extension of main grid to cover the mini-grid area. The regulation also provides for permit and tariff approval procedures which will ease the administrative burden on the Mini-Grid Operator and ensure the process of obtaining the mini-grid permits in a timely manner.

Investment Considerations

Tax Incentives

The Nigerian Government through the Nigerian Investment Promotion Commission (NIPC) grants tax holidays to qualified or (eligible) industries anywhere in the country and seven-year tax holiday in respect of industries located in economically disadvantaged local government areas in Nigeria. At the moment, there is a list of 71 approved industries declared pioneer industries, which can benefit from tax holiday. The Government encourages investors in industries related to renewable energy with tax holiday of 5–7 years, applying a “pioneer status” measure.

Feed-in Tariff

Feed-In Tariffs (FIT) are developed by NERC and paid by NBET in Naira. Potential suppliers of electricity from renewable energies can apply to the NBET. The FIT is developed based on NERCs Multi-Year-Tariff Order (MYTO). Feed-in tariffs in the MYTO are set in order to ensure clear rules in the interim market for energy. In January 2015, the MYTO 2.1 was initiated that sets feed-in tariffs for; new entrance gas power plants, coal power plants, small hydropower plants, land-mounted wind power plants and solar power plants. To date, the feed-in tariffs laid down in MYTO 2.1 do not give priority access to electricity for renewable energies. There is no compensation for electricity that is produced but cannot be sold. For embedded generation (connection to the distribution network), FITs must be negotiated between the independent renewable energy generation company and the DisCo directly.

 

MYTO 2.1 feed-in tariffs – wholesale contract prices (n/kWh)

 

Source 2014 2015 2016
Hydropower plants, small up to 30 MW 27.46 29.64 32.01
Land-mounted wind power plants 28.64 30.94 33.43
Solar PV plants, ground mounted, fixed 79.12 85.40 92.19
Biomass power plants 32 34.57 37.36

Green Bonds

Nigeria plans to launch the country’s flagship 20 billion naira (about $64 million) green bond in April 2017, with proceeds targeted to fund projects aimed at reducing carbon emissions, and renewable energy development in the Country. The issuance of a Green Bond enables the country to achieve commitments made in the nationally determined contributions (NDC) at COP21. Broadly, the green bond issuance, which is the second of its kind in Africa, is aimed at developing and sustaining a long-term approach to green project financing in the country.

Key figures

Available statistics:
Capital
Abuja
Official language
English
Population (2016 est.)
186.0m
Population growth (2016 est.), %
2.44
Median age (2016 est.), years
18.3
Urbanization rate (2010 - 2015), % p.a.
4.66
Urban population (2015), % of total
47.8
Rural population (2015), % of total
52
Population density (2015), per km2
200
HDI (2014)
152 of 188
National Currency
Naira, NGN
Exchange rate (April 2017), USD
1 USD = 305.75 NGN
GDP (2015), USD million current
481,066
GDP growth (2016), %
-1.51
GDP annual growth rate forecast (2020), %
3.7
GNI per capita (2015), PPP current intl USD
5,810
Inflation (Dec. 2016), % y-o-y
18.55
Inflation Rate Forecast (2020), %
8.4
Foreign Direct Investment, net inflows (2015), BOP current USD millions
3,129
Net official development assistance (2014), current USD millions
2,476
Budget deficit (2016), % of GDP
2.4
Ease of Doing Business (2016), rank of 190
169
TI Corruption Index (2016), rank of 176
136
Installed Generation Capacity (2016), MW
12,500
Installed Fossil Fuel Capacity (2016), % of total installed capacity
87.5
Hydro Capacity (2015), % of total installed capacity
12.5
Other RE Capacity (2015), % of total installed capacity
~0
Renewable electricity output as % of total electricity output excl. hydro (2015)
~0
Avg. distribution and transmission losses as % of output (2015)
~20
Net electricity imports (2012), %
7.6
Electrification rate, total (2014) %
45
Electrification rate, urban (2014) %
55
Electrification rate, rural (2014) %
36
Peak demand (2015), MW
~12,500
Per capita electricity consumption (2016), kWh
150
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