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Nigeria

Governmental Framework

Governmental 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/

 

Market/Energy Efficiency and Renewable Energy Unit (MEER)

MEER was set up in 2013 and carries out cross-sector monitoring of fulfilment of the energy efficiency and renewable energy targets set out in the Roadmap for the Power Sector Reform Revision 1. It also provides rural and off-grid communities with advice on accessing electricity by developing RE, identifies areas of generation, transmission and distribution losses, monitors sectoral performance and facilitates collaboration with other stakeholders in the sector.

 

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/

 

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/

 

Rural Electrification Agency (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/

 

Power Holding Company of Nigeria (PHCN) (formerly National Electric Power Authority [NEPA])

State-owned PHCN was formed by the merger of Electricity Corporation of Nigeria (ECN), which controlled all existing diesel-/coal-fired power plants, and the Niger Dams Authority (NDA), which focuses on the development of hydropower. It was later unbundled and divided into autonomous companies.

 

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 a 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/

 

Regulatory framework – act, policies and regulations

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 Act (EPSRA) 2005

The EPSRA can be seen as the turning point in Nigerian energy policy and the subsequent restructuring, as it set out the framework under which private investors were allowed to participate in electricity generation, transmission and distribution. It also established the Nigerian Electricity Regulatory Commission, provides for the development of a competitive electricity market and serves as the basis for determining tariffs, customer rights and obligations, and other related matters.

 

National Renewable Energy and Energy Efficiency Policy (NREEEP)

The National Renewable Energy and Energy Efficiency Policy NREEEP was developed by the Federal Ministry of Power in 2013/2014 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 the 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. The table below listing targets for renewable energy is based on a 7% growth scenario.

 

List of Renewable Electricity Targets

S/NResource2012Short Term (2015)Medium Term (2020)Long Term (2030)
1Hydro (LHP)1,938.002,121.004,549.004,626.96
2Hydro (SHP)60.181401,607.228,173.81
3Solar151171,343.176,830.97
4Biomass55631.413,211.14
5Wind105057.4291.92
All Renewables plus LHP1,985.182,438.008,188.2023,134.80
All Energy Resources(Ongrid power plus 12,500MW of self-generated power)21200**24,380**45,490**115,674**
% of Renewables plus LHP23%10%18%20%
% RE Less LHP0.80%1.30%8%16%

 

**Supply projections are based on the addition of on-grid power, and a base capacity of 12,500MW of self-generation (i.e. power generated for own use) including off-grid generation from year 2012 to 2030.

Source: National Renewable Energy and Energy Efficiency Policy (NREEEP)

 

Roadmap for Power Sector Reform (2013)

The roadmap’s targets for renewable energy technologies, aimed at achieving the overall objective of 18% of electricity from renewables by 2025 and 20% by 2030 are:

Small-hydro: 2,000 MW (600 MW in 2015), solar PV: 500 MW, biomass-based power plants: 400 MW (50 MW in 2015), wind: 40 MW, and electrification level of 75% in 2025 (60% in 2015).

 

Renewable Energy Programme

The Renewable Energy Programme was initiated by the Federal Ministry of Environment to enable Nigeria to play a part in the African strategy for voluntary emission reductions under the United Nations Framework Convention on Climate Change (UNFCCC). It includes:

  • Commitments to emission reduction targets and mitigating action by developing countries by 2020
  • Short-term funding for immediate action and long-term financing
  • Mechanisms to support technology transfer

 

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 were 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.

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.

 

Feed-in tariff

The Nigerian Electricity Regulatory Commission has approved a new feed-in tariff regulation for electricity from renewable energy sources. Aiming to make use of Nigeria`s vast and mostly untapped potential for renewable energy, the Commission announced its intent to stimulate investment in the sector. By 2020, a total of 2,000 MW shall be generated through renewables like biomass, small hydro, wind and solar.

According to the new regulation, the electricity distribution companies (Discos) will be obliged to source at least 50% of their total procurement from renewables. The remaining 50% was set to be sourced from the Nigerian Bulk Electricity Trading Company. Moreover, a distinction was made between small and large generation plants. While electricity procured from small plants (between 1 MW and 30 MW) will automatically be integrated as renewable energy, the Commission will initiate a competitive bid process for larger renewable energy projects (more than 30 MW). Furthermore, the new feed-in tariff regulation already determines the procedure for auctions for the larger Projects.

Supply regulations determine the application of the distribution code for the embedded generation class, while others using the transmission network for electricity transit fall in the grid code.

The Commission declared that investors in the renewable energy plants would be given an operating period of 20 years, within which they should be able to recover their investments for the entire life span of the plants.

 

Standardised power purchase agreements

Special conditions set by the Nigerian government need to be met in order to sign a power purchase agreement with Nigerian Bulk Electricity Trading. The Minister of Power published a handbook entitled Understanding Power Purchase Agreements in order facilitate the process.

 

Electricity licensing regulations

Anyone wishing to purchase, sell or trade more than 1 MW of electricity must obtain a trading licence from the NERC. The terms and conditions of the trading licence, and the procedure for obtaining it, are governed by NERC Regulation No. NERC-R-0110A.

 

Regulations for Independent Electricity Distribution Networks

The Nigerian Electricity Regulation Commission published the Regulations for Independent Electricity Distribution Networks in 2012, explaining in detail the procedures and regulations that have to be followed while entering the Nigerian electricity market.

 

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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