IEEJ：August 2016 © IEEJ2016

IEEJ:August 2016

A COUNTRY REPORT SUBMITTED TO JICA KNOWLEDGE COCREATION PROGRAM (GROUP & REGION FOCUS)
ENERGY POLICY (A)MAY 29 TO JUNE 25, 2016
ADENIYI A. OSOBA
THE FEDERAL REPUBLIC OF NIGERIAIEEJ：August 2016 © IEEJ2016

CHAPTER ONENIGERIA• 1.1 COUNTRY BACKGROUND• Located in the west coast of Africa, precisely, West Africa, Nigeria is bordered in the
North by Niger Republic (1497km) and Chad (87km), in the East by Cameroun (1690km),in the West by Benin Republic (773km) and in the South by the Atlantic Ocean. Nigeria’s
coastline is at least 853km in length. Situated between latitude 4o and 14oN, andlongitude 2o and 15oE, Nigeria has a total land mass of 923,768 km2 of which 1.4% iswater. Nigeria comprises of 36 States and the Federal Capital Territory, where the capital
Abuja is located. It is officially a democratic secular country with English as the official
language. While several languages thrive in Nigeria, the three major languages are
Hausa, Igbo and Yoruba.
• Nigeria gained independence from Great Britain on October 1, 1960 and was declared a
republic exactly three years after. It presently practices the Presidential system with
Muhammadu Buhari as the Head of Government. The President’s power is checked by a
Senate and a House of Representatives, which are combined in a bi-cameral body called
the National Assembly. This is the legislative arm of government.

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FIGURE 1: Political Map of Nigeria

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1.2 SOCIO-ECONOMIC• From the population census of Y2006, Nigeria’s population stood at 140,431,790
but estimates in Y2015 gave a figure of 182,202,000 indicating a population
density of about 190 persons per km2. Much of the population is concentrated in
the northern state of Kano and along the coastal lines of the country. Nigeria has
one of the world’s highest urbanization rates (est. 5.3% per year). The estimatednet migration rate in Y2008 was 0.25 migrants per 1,000 persons.
S/N DEMOGRAPHIC PARAMETER
1. Total Population (million)
2. Population Growth Rate (%)
3. Urban Population (million)
4. Urban Population share (%)
5. Potential Labour Force (million)
6. Actual Labour Force (million)
7. Number of persons per HouseholdY2005
137.49
3.16
55.00
40
92.94
74.35
5.8

Y2010 (Est.)
163.4
3.52
75.19
46
110.82
88.86
5.6

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1.3 ECONOMIC SECTOR• Nigeria is a middle income, mixed economy and emerging market with expanding
financial service, communications, technology and entertainment sectors. It is ranked as
the 21st largest economy in the world in terms of nominal GDP, and the 20th largest interms of purchasing power parity (PPP). The GDP of the country as recorded in Y2015 is
USD492.986 billion (nominal) and USD1.105 trillion (PPP) indicating a GDP per capita of
USD2,758 (nominal) and USD6,184 (PPP).It is the largest economy in Africa; its reemergent , though currently underperforming manufacturing sector is the third largest
on the continent, and produces a large proportion of the goods and services for the West
African sub-region. Nigeria recently changed its economic analysis to account for rapidly
growing contributors to its GDP. These include the Telecommunications, Banking and theFilm/music industry.
• Figure 2 shows the key economic sectors in Nigeria and their percentage contribution to
GDP in Y2010 and Y2011. In Y2011, the largest sectoral contributors were Agriculture(40.24%) followed by Wholesale & Retail (19.38%) and Crude oil & Natural Gas (14.71%).
The three sectors contributed 70% to Nigeria’s GDP in Y2011.

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1.4

POVERTY RATE

Whereas the economy grew at an average of about 6.2% annually
between 2002 and 2011, there is a general disconnect between
Nigeria’s economic growth and human development. Nigeria is ranked
156th out of 187 national economies worldwide (UNDP-HDR 2011). In
1988, the poverty level was 27.2% rising to 65.6% in 1999, an annual
increase of 8.83%. In 2004, out of the estimated population of over 130
million, 54.4% lived below poverty line. The situation worsened in 2011
when 69.1% of the population or approximately 100million people
lived in abject poverty. (NBS, 2011).

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TABLE 2: Poverty Rate(Source: NBS, 2011)
S/
N
1.
2.
3.
4.
5.
6.

YEAR

RURAL %URBAN %

1980
1985
1992
1996
2004
2011

28.3
51.4
46.0
69.3
63.3
80.1

17.2
37.8
37.5
58.2
43.2
50

NATIONAL
%
27.2
46.3
42.7
65.6
54.4
69.1

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1.5

ENERGY AND THE ECONOMY• Nigeria has vast primary energy resources ranging from light hydrocarbons
to heavy hydrocarbons and also renewable resources like water, sun, wind,biomass and fuel wood. Table 3 highlights these potentials.
• Prior to the 1960s, non-commercial energy sources like fuel wood,
charcoal, agricultural wastes and residues and solar radiation were theprimary energy sources in the country. Commercially, coal was used as theenergy source for power generation. The structure of energy supply in
Nigeria changed with the discovery of oil and since the late 1960s, theNigerian economy has been solely dependent on crude oil for sustenance.
By 2005, out of a total primary energy consumption of 62.5Mtoe, natural
gas accounted for 59.75%, followed by non-commercials (21.49%),
petroleum products (17.73%) and hydro (1.03%) while coal has declined to
an insignificant level. (See Figure 3)

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TABLE 3: Primary Energy Resources in Nigeria – Dec.,2010 (Source: ECN)S/NRESOURCE TYPERESERVES (NATURAL UNITS)

1.

Crude Oil

36.22 Billion barrels

PRODUCTION/CONSUMPTION
0.73 Billion barrels/yr

2.
3.
4.

Natural Gas
Coal and Lignite
Tar Sands

187 Trillion SCF
2.175 Billion tonnes
31 Billion barrels of equivalent

2.4 TSCF/yr
Negligible
Negligible

5.
6.
7.
8.
9.

Large Hydropower
Small Hydropower
Solar radiation
Wind
Biomassa. Fuel Wood

11,500 MW
3, 500 MW
3.5 – 7.0 kWh/m2/day
2-4 m/s at 10m height

1,900 MW
30MW
2MW
Negligible

11 Million hectares of Forest andWoodland211 Million Assorted animals

1.2 Million Tonnes per
Year

10.

b. Animal Wastec. Energy Crops andAgric Residue
Nuclear72 Hectares of Agric Land
Not Yet Quantified

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Figure 3: Total Primary Energy Consumption in Nigeria (Y2013) {Source: ECN}
Total Primary Energy Consumption in Nigeria (2013)

BIOMASSCOAL

HYDROPOWERPETROLEUM PRODUCTNATURAL GAS

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%IEEJ：August 2016 © IEEJ2016

2.1

THE ENERGY SITUATION• Energy is central to sustainable development. It affects all aspects of development – social, economic,
environmental and even cultural. The energy sector is plays a strategic role in the Nigerian economy as it is amajor factor in the reduction of poverty, improvement of productivity and enhancement of the general
quality of lives of Nigerians. While on one hand, the energy sector contributes to a stable growth of the
Nigerian economy and the realization of social and political objectives of the nation, on the other hand, themodernization and expansion of energy supply system to meet future energy demand require a large
amount of human and financial resources. It is also noteworthy that the impact of energy supply can beused as an instrument of foreign policy in the promotion of international cooperation and development.
• Consequently, and in order to ensure optimal, adequate, reliable and secure supply of energy and its
effective utilization, a comprehensive Energy Policy was put in place to serve as a blue print for thesustainable development, supply and utilization of energy resources within the economy and for the use ofsuch resources in international trade and cooperation.
• Existing policies in the energy sector have been those of separate energy sub-sectors (electricity, oil & gas
and solid minerals). There were also energy related policies developed in sub-sectors whose activities arestrongly dependent on those in the energy sector. These include agriculture, the environment, science &technology and transportation, among others. These policies however only reflected the individual subsectoral perspectives. The new energy policy has therefore integrated these sub-sectoral issues and put
them in proper perspectives in order to avoid policy conflicts and ensure a sustainable development of the
Nigerian economy if well implemented.

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2.2

ENERGY SECURITY• The discovery of hydrocarbon and over-dependence of this resourcesby the past governments in Nigeria has slowed down thedevelopment of alternative fuels. Diversification to achieve a wider
energy supply mix will ensure greater energy security for the nation.
• Special attention needs to be paid to the diversification of energy
supply mix in the rural areas as there already exists an imbalance insupply/demand of fuel wood in some parts of the country; a situationthat threatens energy security in these areas. Inhabitants of ruralcommunities depend largely on traditional fuels like charcoal, fuelwood, animal and plant wastes/residues.

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2.3

PRIVATE SECTOR PARTICIPATION• Government has been largely responsible for the ownership and operation of energy sector
systems and institutions. Investments in these areas which are normally huge had been sourced
from public funds, An exception to this however is the upstream petroleum sub-sector, part of thedownstream sector and to a smaller extent the power sector.
• However, in the face of increasing demands on government for the funding of other critical areasof the economy, the Nigerian government has not been able to provide the requisite funds for theenergy sector. Although efficient and transparent management of the sector over the years havealso been major challenges to its growth. These have resulted in collapse and deterioration of
established facilities and infrastructure while new ones were not put in place even with thegrowing demand for energy supply. These have resulted in energy insecurity, inadequate andunreliable energy supply and massive loss of productivity of the Nigerian economy.
• In recent times, increased private sector participation in the energy sector is opening up thesector for improved infrastructure and a better future for the Nigerian economy if properly
managed. The greater proportion of investments required will be foreign capital mainly becauseof technological advancement while indigenous private sector participation is also encouraged.

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2.4

INSTITUTIONAL FRAMEWORK• A necessary condition for the optimal development of the energy
sector is the effective coordination of the various energy sub-sectors
because of their inter-relationships along with other energy related
activities of the non-energy sectors of the economy. In this wise,
appropriate coordination and cooperation by relevant government
institutions in order to increase the efficiency and effectiveness ofenergy delivery in Nigeria and developing capacities to cope present
and future challenges in the sector is very critical. Linkages should
also be created between the federal government and the local andstate governments to ensure that plans and programmes as
highlighted in the energy policy are well executed.

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3.0

THE NATIONAL ENERGY POLICY

3.1 THE NEED FOR A POLICY• In 1999, the Federal Government of Nigeria took a bold step to get the Nigerian economy to be
private sector driven. The strong nexus between energy and socio-economic development was
the basis of the approval in Y2003, of the National Energy Policy which is hinged on a private
sector led initiative in line with the national economic policy. The overall thrust of this policy is
the optimal utilization of the nation’s energy resources for sustainable development.
• The major objectives of the national energy policy include the following:i.
To ensure the development of the nation’s energy resources, with diversified
energy resources options for the achievement of national energy security and an efficientenergy delivery system with an optimal energy resource mix.
ii.
To guarantee adequate, reliable and sustainable supply of energy at appropriate costs andin an environmentally friendly manner to the various sectors of the economy for national
development.
iii.
To guarantee increased contribution of energy productive activities to national income.
iv.

To guarantee an efficient and cost effective consumption pattern of energy resources.

IEEJ：August 2016 © IEEJ2016• v.

To promote increased investments and development of the energy sector industries with
substantial private sector participation.

• vi.

To accelerate the process of acquisition and diffusion of technology and managerial
expertise in the energy sector industries for stability and self-reliance.

• vii.

To ensure a comprehensive, integrated and well informed energy sector plans andprogrammes for effective development.

• viii.

To foster international cooperation in energy trade and projects development in both the
African region and the world at large.

• ix.

To successfully use the nation’s abundant energy resources to promote international
cooperation.

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3.2

ENERGY SOURCES

3.2.1 CRUDE OIL
POLICYThe nation shall engage
extensively inexplorationand production of crude
oil and associated liquid
petroleum

OBJECTIVE• To increase the reserve to
production ratio• To derive more economic
benefits from the nation’s
crude oil resources• To ensure that refining toEmphasis shall be placed
consumption ratio is greaterthan unity so as to ensure
on internal self-sufficiency
domestic self-reliance in thein processing and export
production of petroleumof petroleum products
products for domestic
consumption
The nation shallencourage the adoption of • To adequately protect thecountry from the vulnerability
environmentally friendlyof oil price fluctuations
oil exploration,
exploitation, handling and • To ensure adequate andreliable supply and distribution
storageof petroleum products to meetthe demand of the domestic
marketSTRATEGY• Investing in and intensifying hydrocarbon
exploration and production• Reviewing existing laws and regulations tocreate the enabling environment forincreased private sector participation in
the petroleum industry especially in thedownstream sub-sector• Maximizing and expanding the refining
capacity in the country to cater fully for
local consumption and exports ofpetroleum products• Ensuring adequate geographical coverageof oil refining and petroleum products
distribution• Expanding and promoting research anddevelopment activities in the country• Ensuring the use of locally available
materials such as bentonite and barytes•
Emphasizing the processing of crude oilfor export to withstand the adverse effectof crude oil price fluctuations

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The nation shall completely
deregulate and privatize thepetroleum industry.

•

The nation shall encourage
indigenous and foreign companies tofully participate in both upstream and •downstream activities of thepetroleum industry
The nation shall aggresively pursue R&D and human capacity development •to derive maximum benefits from its
oil resources•

To promote efficientmanagement andoperations of thepetroleum industry inline global bestpractices
To accelerate theprocess of technology
acquisition anddiffusion in the
petroleum industry
To enhance indigenous
capability in the interestof national security
To attract increased
private sector(indigenous and foreign)
capital inflow to thepetroleum industry••

Improving the living standards ofpeople in oil producing
communities through theprovision of socio-economic
infrastructure infrastructure• Providing appropriate fiscal
incentives to attract investments
and ensure reasonable returns• Encouraging local engineering
design and fabrication of equipment
and spares in Nigeria• Ensuring the availability ofadequate strategic reserves ofstorage capacity for refined
products for at least 90 days of
forward consumption• Taking appropriate measures toensure that Nigerians are put into
key decision making positions in
the petroleum industry

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3.2.2 NATURAL GASPOLICYOBJECTIVE
The nation’s gas resources shall • To eliminate the flaring of
be harnessed and optimallyassociated gas by 2008
integrated into the national• To determine the gas
economy, energy mix andreserves available to theindustrial processes
nation• To expand the utilization of
The nation shall put in placenatural gas as industrial anddomestic fuel, as well as fornecessary infrastructure andpower generation
incentives to encourage• To increase the use ofindigenous and foreign
natural gas as industrial
companies to invest in the
sectorfeedstock for petrochemical,
pharmaceutical and
The nation shall engage
fertilizer plants, etc.
• To use gas to diversify theextensively in gas exploration
foreign exchange earningand development with a view
base of the nation
to increasing the reserve base
• To encourage indigenous
to the highest level possible
entrepreneurial capabilities
in the gas industry including
the development of end-use
devices

STRATEGY• Encouraging the oil producing
companies to gather and utilize
associated gas in order to eliminate gas
flaring by 2008
• Imposing appropriate and effective
penalties to discourage gas flaring• Encouraging the establishment of thenecessary infrastructure for the effective
gathering, transmission and distributionof gas nationwide• Providing incentives to encourage
industrial and domestic consumers to
use gas or to convert to gas• Providing incentives to encourage theintroduction and use of LPG appliancesin areas not accessible to natural gas so
as to encourage the consumer’s
preference for gas• Establishing suitable infrastructure forthe export of natural gas• Expanding and promoting gas related R& D outfits in the country

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The nation shall put in placenecessary infrastructure andincentives to ensure adequate
geographical coverage of the gastransmission and distribution
network••To accelerate theprocess of technology
acquisition anddiffusion in the gas
industry

•
•

•

•

•

Formulating suitable urban andregional planning regulations
needed for the effective
distribution of natural gas and its
utilization by domestic andindustrial consumers
Providing necessary incentives toindigenous and foreign
entrepreneurs to facilitate their
participation in the gas industry
Ensuring that the price of natural
gas is cost effective while giving
due attention to the effect on
local consumption
Embarking on deliberate
exploration for gas deposits in allparts of the country

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3.2.3 TAR SANDSPOLICYThe nation shallencourage tar sands
exploration andexploitation
The exploitation oftar sands shall beprivate sector driven
while indigenous
participation shall be
actively promoted
The nation shallencourage theadoption ofenvironmentallyfriendly approach forthe exploration andexploitation of tar
sands

OBJECTIVE• To extract heavy oil from tar
sands for refineries• To conserve foreign exchange
used in importing heavy crude
oil and also produce heavy
crude for export• To acquire the technology fordeveloping and harnessing thetar sands• To ensure adequate financing,efficient operation andmanagement of the sub-sector• To encourage the local content
input in the sub-sector from theearly stages of its development• To minimize adverse
environmental impacts
associated with tar sands
exploration

STRATEGY• Undertaking exploration and exploitation
activities for tar sands deposits in the country• Establishing an appropriate regulatory
institution for the tar sands sub-sector• Putting in place necessary regulations andguidelines for the exploitation of tar sands• Establishing infrastructural facilities for theacquisition of the technology for harnessing
tar sands• Intensifying R &D in the production of
lubricants and other heavy oil products fromtar sands• Establishing heavy oil upgrading facilities near
the tar sands deposits• De-emphasizing the importation of heavy
crude oil as a way of encouraging theutilization of heavy oils from tar sands• Providing appropriate incentives to facilitate
investment in the exploration andexploitation of tar sands• Providing an appropriate financing facility tosupport indigenous investments in tar sands
development

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3.2.4 COAL
POLICYThe nation shall pursue vigorously acomprehensive programme ofresuscitation of the coal industry
Extensive exploration activities tomaintain a high level of coal reserves
shall be carried out
Private sector as well as indigenous
participation in the coal industry shallbe actively promoted
The exploitation and utilization of thecoal reserves shall be done in line with
global best practices

OBJECTIVE•
To promote production of coal for export anddomestic needs

STRATEGY•
Intensifying the drive for coal exploration andproduction activities•

To promote effective utilization of coal for•complementing the nation’s energy needs andas industrial feed stock•

To attract increased investments and promoteindigenous participation in the coal industry•

Providing adequate for large scale production of coalstoves at affordable prices•

To utilize coal in the form of coal briquettets••

To minimize environmental pollution arisingfrom the utilization of coal

Providing adequate incentives to indigenous and foreign
entrepreneurs for the establishment of coal basedindustries•

Developing adequate infrastructure for handling andtransportation of coal within and out of the country

The nation shall explore the techno•
economic feasibility of new coaltechnology such as coal gasification and•coal to liquid conversion
The nation shall ensure adequate supply
of coal to meet the energy requirementsof the country in a cot effective and•sustainable manner

To increase the contribution of coal by 30% to
the national energy mix by 2020

To support increased environmental
monitoring, including air quality monitoring for •existing and/or proposed mines and power
stations in the country•
To establish an emissions performancestandard that will guide the construction of•coal-fired power station in the country•

Providing adequate incentives to indigenous and foreign
entrepreneurs so as to attract investments in coal
exploration and production

Organizing awareness programmes for the use of
smokeless coal briquettes as an alternative to fuel wood
Encouraging R&D in the production, processing andutilization of coal
Introducing clean coal technologies into coal utilization
Re-introducing the use of coal for power generation

3.2.5 NUCLEAR

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POLICYThe nation shall promote the development of nuclear energy
and undertake all activities related to peaceful uses ofnuclear energy in its entire ramification

OBJECTIVE
STRATEGY•To promote nuclear energy as an important electricity •Strengthening the institutional framework for thecomponent in the nation’s energy mix
operational and regulatory aspects of the nuclear•
industry
To promote the development and application of
Developing all necessary legal/legislative frameworks
nuclear science and technology in industry, agriculture, •The nation shall pay adequate attention to safety, security andnecessary for the smooth operation of nuclear facilities
medicine and water resources management as well as
safeguard issues in the pursuit and operation of its nuclear•
Developing national capacity in all areas related to the seother socio-economic aspects
programmesof nuclear energy and attaining self-sufficiency in human•To pursue with commitment, the exploration of
capacity development
nuclear mineral resources in the country
The nation shall strengthen all institutional and legal/legislative ••Carrying out research into all areas of peaceful use of
To design and implement the strategy for theframeworks and ensues they are operational
nuclear energy
integration of nuclear energy into Nigeria’s programme
Ensuring that adequate sites are made available for theas contained in the approved nuclear power road map •The nation shall encourage and fund the development of theconstruction of nuclear facilities•
To institute the necessary nuclear safety, security andrequisite manpower and provide the enabling environment for•
Instituting adequate measures to ensure safety, security
safeguards in the exploitation of nuclear energy andthe acquisition of competencies and skills to develop theand safeguards
handling of radioactive materials
nuclear industry•
To promote the development of appropriate•
Making arrangements with institutions or individuals inframework necessary to attain self-sufficiency in
Nigeria for the conduct of research into all aspects of
The nation shall support research and infrastructural
nuclear matters in the long term and also ensure
nuclear energy
development necessary to enable rapid domestication andenvironmental protection and minimizing adverse•
Creating incentives for career progression in nuclear
encourage intellectual property righteffects of nuclear activities
research, nuclear industry or areas of associated spin-off
benefits•
To ensure that all nuclear facilities are operated in a
The nation shall cooperate with International Atomic Energy•
Developing appropriate framework and mechanism
transparent manner and in line with global best
Agency (IAEA)and other international organizations involved innecessary for environmental protection andpracticethe peaceful use of nuclear energy
management of radioactive wastes•
Developing appropriate mechanism that will ensure
The nation shall ensure that storage and disposal of nuclear
adequate compensation for victims of nuclear accidents
waste is done in an environmentally friendly and sustainable•
Undertaking public enlightenment campaigns on themannerapplications and benefits of the various nuclear
application programmes and how safety, security andsafeguard issues are addressed•
Collaborating with IAEA, other development partners
and friendly countries to develop nuclear energy forpeaceful benefits•
Prospecting for and mining radioactive minerals•
Establishing appropriate mechanisms for local
participation in the supply of nuclear energy equipment•
Constructing and maintaining nuclear facilities for the
purpose of generating electricity and for other peacefuluses•
Producing, acquiring, treating, storing, transporting anddisposing of any radioactive substanceIEEJ：August 2016 © IEEJ2016

3.2.6 HYDROPOWER
POLICYThe nation shall fully harness thehydropower potential in the country
for electricity generation
The nation shall pay particularattention to the development of thesmall, mini and micro hydropower
schemes for the growth of the rural
economyThe nation shall exploit hydropower
resources in an environmentally
sustainable manner
The nation shall actively promoteprivate sector and indigenous
participation in hydropower
development
The nation shall support R&D on
local adoption of hydropower planttechnologies

OBJECTIVE•
To increase the contribution ofhydropower to the total
electricity supply mix•
To extend electricity to rural andremote areas through the use ofsmall, mini and microhydropower schemes•
To pursue hydropower
production in anenvironmentally friendly andsustainable manner thatminimizes the adverse impacts
on the environment, ecosystemand population•
To attract private sector
investments into thehydropower sub-sector•
To develop local manufacturing
capabilities for hydropower
technologies

STRATEGY•
Promoting and supporting R&D activities on hydropower exploitation for increased
indigenous participation in the planning, design and construction of hydropower
facilities•
Establishing more hydro-meteorological stations across river basins•
Generating and updating data on all rivers, identifying possible locations forhydropower projects and facilitating detailed survey of the potential SHP sites•
Organizing sensitization workshops, seminars and enlightenment programmes on theroles of SHP in rural development•
Introducing tax reduction, soft loans, grants. Bilateral concessional funding toencourage private investments and public-private partnerships in the development ofhydropower projects•
Putting in place a framework for power purchase agreement between owners of SHP,
the grid and users•
Exploiting the multi-functional use of hydropower infrastructure (e.g flood control,
water supply, recreation, electricity generation, etc.)•
Ensuring that State Rural Electricity Boards incorporate small scale hydropower
projects to support socio-economic development programmes in the states•
Supporting cutting-edge R&D of mitigation techniques and technologies to reduce or
eliminate adverse impacts of hydropower development and operation on theecosystem•
Establishing local training institutions to produce skilled manpower in hydropower
technology•
Integrating capacity building in the procurement of hydropower projects toencourage technology transfer to indigenous personnel•
Encouraging the establishment of indigenous manufacturing industries forhydropower equipment and accessories

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3.2.7 SOLAR
POLICYThe nation shall aggressively pursue theintegration of solar energy into thenation’s energy mix based on theestablished potentials and available
technologies

OBJECTIVE•
To develop the nation’s capability
and capacity in the utilization ofsolar energy•
To use solar energy as the mainenergy option in the rural andperi-urban areas with higher
The nation shall keep abreast ofsolar energy potential
worldwide developments in solar energy •To develop the market for solar
technology and utilization to adopt
energy technologies and services
global best practices•
To develop local manufacture
capabilities for solar energy
The nation shall utilize solar energy
conversion technologies
resources where it is more cost effective
and advantageous
The nation shall support theestablishment of local manufacturingindustries for solar energy conversion
technologies and applications

STRATEGY•
Intensifying R&D in solar energy technology andapplications•
Intensifying human and institutional capacity building insolar energy technologies and applications•
Providing adequate incentives to suppliers of solar
energy products and services•
Providing adequate incentives to local manufacturers
for the production of solar energy systems andaccessories•
Introducing measures to fast-track the local solar energy
industry•
Setting up extension programmes to popularize solar
energy technology and solutions to the rural and periurban communities•
Providing fiscal incentives for the installation of solar
energy systems•
Pursuing aggressive mass campaign and advocacy on
the use of renewable energy as alternative energy
source•Setting up and maintaining a comprehensive
information system on available solar energy resources
and technologies•
Developing and enforcing standards for solar energy
technologies, products, services and processes•
Putting in place measures to leverage funding frominternational agencies and countries that promote theuse of solar energy

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3.2.8 WIND
POLICYThe nation shall commerciallydevelop its wind energy
resource and integrate thiswith other energy resources
into a balanced energy mix
The nation shall takenecessary measures to ensurethat this form of energy isharnessed at sustainable costs
to both suppliers andconsumers in the rural areas
The nation shall apply global
best practices in the
exploitation of wind energy
resources

OBJECTIVE•
To develop windenergy as analternative
energy resource•
To develop local
capability in windenergytechnology•
To use windenergy forprovision of
power to rural
areas andremotecommunities far
removed fromthe national grid•To apply windenergytechnology inareas where it istechnically andeconomicallyfeasible

STRATEGY•
Encouraging R&D in wind energy
utilization•
Developing skilled manpower forprovision of basic engineering
infrastructure for the local production ofcomponents and spare parts of wind
power systems•
Intensifying work in wind data acquisitionand development of wind maps•
Training of skilled local craftsmen to
ensure the operation and maintenance ofwind energy systems•
Providing appropriate incentives to
producers, developers and consumers ofwind power systems•
Developing extension programmes tofacilitate the general use of wind energy
technology•
Developing local capacity through theestablishment of local manufacturing ofwind energy systems

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3.2.8 HYDROGENPOLICYThe nation shall integratehydrogen as an energy
source in the energy mix ofthe country

OBJECTIVE• To keep abreast ofinternational trends inhydrogen production andapplication• To develop local
production capacity forhydrogen• To ensure hydrogenutilization as a preferredenergy source, where
possible, on account of its
high environmental
friendliness

STRATEGY• Encouraging R&D in hydrogen energy
related technologies• Developing domestic capacity inhydrogen production and application
technologies• Providing incentives to popularize theuse of hydrogen as an energy source

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3.2.9 OTHER RENEWABLES (GEOTHERMALS, OCEAN, TIDAL, WAVE, ETC.)
S/N POLICY1.

OBJECTIVE

The nation shall maintain •an interest in otheremerging sources ofrenewable energy••

STRATEGY•To develop a
database on thepotentials of theseemerging energy•
resources
To keep abreast ofinternational trends
in energy•
technology
development
To ensureincorporation of any
new proven costeffective energy
resource into theenergy mix

Gathering and disseminating
information on the developmentof these emerging technologies
Encouraging R&D in thetechnologies of the exploitationof these emerging energy
resources
Prioritizing the level of need,level of technologicaldevelopment and viability ofemerging renewable energy
resources.

IEEJ：August 2016 © IEEJ2016

3.2.10 BIOMASSPOLICYOBJECTIVE

STRATEGY

The nation shall effectively harness non-fuelwood biomass energy resources and integratethem with other energy resources••

The nation shall promote the use of efficientbiomass conversion technologies
The nation shall improve measures required tosupport initiatives aimed at reducing forest
thinning and to enhance collection and use offorest residue
The nation shall enhance the demand side
measures that support the use of biomass forthe production of renewable energy
The nation shall set a limit on the amount ofbiomass used for energy to ensure that theoverall demand can be accommodated
alongside other demands for land
The nation shall undertake a comprehensive
mapping of agro-ecological suitability forenergy crops for the purpose of obtaining a
regional view of production potentials andcontribute to decision making on support forhandling and/or processing facilities
The nation shall incorporate waste-to-energy
strategy in its overall waste management
framework•••

To promote biomass as an alternative
energy resource especially in the ruralareas
To promote efficient use of agriculturalresidues, animal and human wastes asenergy sources
To reduce health hazards arising fromcombustion of biomass fuelTo focus biomass utilization close to
production for community heating
schemes and domestic heating,particularly off the national grid

•
•
•
•
•

•
•

Developing extension programmes to facilitate the generaluse of new biomass energy technologies
Promoting R&D in biomass energy technology
Establishing pilot projects for the production of biomassenergy conversion devices and systems
Providing adequate incentives to local entrepreneurs forthe production of biomass energy conversion systems
Training of skilled manpower for the maintenance of
biomass energy conversion systems
Developing skilled manpower and providing basic
engineering infrastructure for the local production ofcomponents and spare parts for biomass systems
Promoting electricity and heat generation from biomass
waste
Mainstreaming waste-to-energy strategy in the overall
waste management frameworkIEEJ：August 2016 © IEEJ2016

3.3 ELECTRICITY

Availability of electricity is key to socio-economic development of Nigeria. Its supply is
however still inadequate in the country. In Nigeria, commercial electricity is generated
primarily from gas turbines, hydro-stations and steam plants. The installed capacity forelectricity generating plant in Nigeria, which is 98% owned by the Federal Government
increased by a factor of 6 over the period 1968 to 1991 and stood at 5881.6MW until 2006
when it rose to 6000MW. Functionability of these generating plants however had a total
installed capacity of about 4,680MW which is about 70% of the total installed capacity.
About 72% of the total generation capacity comes from conventional thermal sources(mostly gas fired plants) with the remaining coming from large hydroelectricity. This implies
that renewable sources still play almost a negligible role in the nation’s power generation.
Over the years, access to the national grid by across the country has been inadequate as
only few towns were fully connected. In bridging this gap and ensuring electricity for all,especially those residing in the rural areas, the Federal Government established a Rural
Electrification Agency (REA) under the on-going reform in the power sector of the country.
This reform is aimed at ensuring that electricity supply can meet the demands of Nigeriansin 21st century while also modernizing and expanding the network in order to supportsocio-economic development. This reform gave birth to the development of a competitiveelectricity market,

IEEJ：August 2016 © IEEJ2016

the establishment of National Electricity Regulation Commission (NERC)
and unbundling of the power sector, which has several generation anddistribution companies. These include:•
Ten new gas plants•
Ten new NIPP gas plants in the Niger Delta•
Two new Hydro Plants (Zungeru and Mambila)
25-year Power Development Plan reported an electricity demand
projection for a 10% annual growth of the GDP was given as
16,000MW, 30,000MW and 192,000MW for the years 2010, 2015 and2030 respectively. Achieving these require an energy mix of Coal (11%),
Hydro (7%), Natural Gas (70%), Nuclear (2%) and Renewables (10%).
Electricity supply in Nigeria involves transmission and distribution andachieving this requires infrastructure as highlighted below and overleaf:

IEEJ：August 2016 © IEEJ2016

TABLE 14: Electricity Transmission Network in Nigeria (2005) {Source: ECN}
S/N LINE

LENGTH (Km) SUB-STATIONSCAPACITY (MVA)

1.

330KV

5000

23 (330/132kV)

6,000 (4,600 @0.8 utilization factor)

2.

132KV

600

91(132/33kV)

7,800 (5,800 @ 0.75 utilization factor)

IEEJ：August 2016 © IEEJ2016

TABLE 15: Electricity Distribution Grid in Nigeria (2005) {Source: ECN}LINE

LENGTH(Km)

SUB-STATIONSCAPACITY (MVA)

33kV

23,753679 (33/11kV)

6,000 (4,600 @0.8 utilization
factor)11kV

19,226

20,543 (33/0.415kV,
11/0.415kV)

7,800 (5,800 @ 0.75 utilization
factor)IEEJ：August 2016 © IEEJ2016

Additionally, 1,790 Distribution transformers and 680 Injection
Transformers exist.
Characterised by obsolete equipment, overloaded transformers,
inefficient dispatch of electricity and uncoordinated system planning,
the Transmission Reinforcement Programme as proposed a massive
upgrade of electricity transmission infrastructure in Nigeria. Table 16
overleaf gives a policy on the electricity sub-sector.

IEEJ：August 2016 © IEEJ2016

POLICYThe nation shall make steady and reliable electric
power available at all times, at economic rates forindustrial, economic and social activities of thecountry

OBJECTIVE
STRATEGY
Strengthening the institutional framework for the operational and regulatory aspects of the electricity•
To provide electricity to all State capitals, local •sub-sector
governments as well as other towns by the year
2020.
•
Establishing a viable cost reflective tariff that will encourage the electricity sector•
To stimulate industrialization in the rural areas •Rehabilitating existing power plants in order to derive optimum power from the installed capacity
in order to reduce rural to urban migration•
Completing on-going projects designed to enable Nigerian Electricity Supply Industry satisfy the national
The nation shall continue to engage intensively in •demandTo provide reliable and stable electricity supply
the development of the electricity sub-sector andReinforcing the transmission network and supporting the development of the distribution network
to all Nigerians, especially for industrial growth •ensure availability of local capacities along the
expansion necessary to allow consumers enjoy steady and reliable electricity supply•
To broaden the energy options for generating
value chain•
Encourage R&D in the generation, transmission and distribution of electricity
electricity•
To attract adequate investment capital for the •Regulating import duties to be paid on generation, transmission and distribution materials/equipment
The nation shall continue to promote private sector
used in the in the whole electricity value chain to encourage investment and local production of power
development of the sub-sector
participation in the sector while ensuring broad•
To maximize access by Nigerians to investment
components
based participation of Nigerian investors
opportunities in the sub-sector•
Encouraging onshore training facilities as a primary source of human capital capacity development in the•
To ensure electric power security
sector
The nation shall pursue measures to to diversify•
To make reliable electricity available to 75% of •Ensuring participation and involvement of indigenous Engineers and research groups in the execution ofenergy sources for electricity generation
the population by Y2020 and 100% by Y2030
on-going and future projects right from feasibility studies with the aim of establishing local capacity in•
To provide enabling environment for the local
the long term
The nation shall encourage the State and Local
manufacture of electrical components within•
Developing a bankable feasibility studies for development of renewable, coal, nuclear and large
Governments to provide access to the rural areashydropower for power generation
the country
through off-grid and other rural electrification•
Creating environment such as Feed - in –Tariff and Model PPP that will encourage power system
programmes
development in renewable, coal, nuclear and large hydropower sources for power generation•
Intensifying national effort in training, R&D in using nuclear, solar, wind and other renewable resources
The nation shall continue to engage intensively infor electricity generation
the development of the sub-sector alignment along•
Taking effective measures to ensure security of electricity supply components within the value chain
the electricity supply chain•
Providing appropriate incentives and support to entrepreneurs to ensure adequate returns on
investment
The nation shall ensure a sustainable supply of gas•
Providing enabling environment and encouraging financial institutions to support indigenous
for electricity generation
investments in the electricity sub-sector•
Encouraging off-grid generation and supply of power in remote or isolated areas•
Operating the Rural Electrification Fund to facilitate electrification in the rural areas•
Establishing a reduced tariff regime for low income and especially physically challenged electricity
consumers and a mechanism for funding the subsidy within the cost reflective tariff structure•
Carrying out as necessary, the National Electricity Demand Study to cover 20 – 25 years and to be
updated every 5years•
Ensuring a balanced electricity supply mix•
Establishing commercial bankable agreement within the value chain•
Establishing and strengthening basic engineering infrastructure for the local manufacture of powersystems components

IEEJ：August 2016 © IEEJ2016

3.4

ENERGY UTILIZATION

Energy utilization in Nigeria has been grossly inadequate owing to its erratic and epileptic supply for various applications in the socioeconomic activities of the nation. Energy utilization is predominantly from sources earlier highlighted and they find applications in thefollowing sectors:•

Agriculture•

Transportation•

Manufacturing•

Households•

Commerce

The traditional fuels like fuel wood, charcoal, etc. are utilized largely for cooking and water heating in rural and sub-urbanhouseholds with small quantities used in the in the services sector also for cooking while some cottage industries like bakeries alsofind use for them. In order to increase energy utilization in the country, the following measures are been adapted:•

developing a database on energy supply, demand and consumption for all sectors of the economy•
putting in place a legal/institutional framework that mandates all relevant organisations to supply energy supply, demandand consumption annually to Energy Commission of Nigeria•

Promoting energy conservation and efficiency•
Encouraging industry, agriculture and transport sectors to switch over to more appropriate and environmentally friendly
energy sources•

Promoting human capacity building to fill gaps created by dearth of skilled manpower•

Establishing a national 90-day strategic reserve of petroleum products in each of the six geopolitical zones in the country.

IEEJ：August 2016 © IEEJ2016

3.5

ENERGY EFFICIENCY AND CONSERVATION

Energy efficiency is the goal to reduce the amount of energy required to provide products
and services. Reducing energy use reduces energy costs and may result in financial costsavings to consumers. In Nigeria, the limited is wasted through the use of aged obsolete
and inefficient appliances as well as wasteful lifestyles if Nigerians on energy use.
Consequently, the cost of energy savings become high especially in the four major demand
sectors, namely; household, transportation, industry and public sector services. This is as aresult of inadequate human capacity, lack of public awareness/sensitization, lack of
uncoordinated research and absence of energy efficiency testing laboratories. Other
factors include absence of Minimum Energy Performance Standards for appliances, lack ofcomprehensive energy efficiency roadmap, cost of energy efficient appliances andproducts, low institutional capacity and lack of funding.
Energy efficiency and conservation best practices have many benefits which could reducethe imbalance between energy supply and demand and thus measures have provided
through the National Energy Policy to guarantee an efficient and cost effective
consumption of energy resources. It will also ensure the importation and manufacture of
the most energy efficient equipment and machinery as well as promoting public awarenesson the benefits on improved energy efficiency and conservation in Nigeria.

IEEJ：August 2016 © IEEJ2016

4.0

ENERGY DEMAND AND SUPPLY

There exists a great imbalance between energy supply and demand in Nigeria.
Continued losses of energy through electricity transmission and other unstable useof energy in industrial and domestic activities will continue to challenge energy
delivery. It therefore implies that new infrastructure need to be developed while
old and obsolete ones are revamped and upgraded while generation can beincreased through the deployment of other sources in the energy mix.
Nigeria has envisioned to grow its economy at a rate of 11% to 13% by the year
2020, energy demand and supply studies conducted by ECN under various growthscenarios and taking into consideration the economic vision, demography, available
energy resources and modern development path have indicated that huge amountof energy is required in the form of electricity, fuel and heat to meet this vision.
In being optimistic and using Y2009 as the base year, three growth scenarios wereconsidered as highlighted in the tables below and overleaf:

IEEJ：August 2016 © IEEJ2016

TABLE 17 : Total Energy Demand by Sector (Source: ECN)
Scenario/
Sector

Year

2009

2010

2015

Growthrate,%

2020

Share, %

2025

2030

2009 2030

201
200 0
9

2015 2020

2025

2030

138.
84

190.
99

8.27

100 100

100

100

100

100

Reference
Growth
(7%)

36.0
2

37.1
2

Industry

1.15

0.47

23.34

46.7
2

73.8

105. 24.01
52

3.
20

1. 30 3. 80 49.6

53.2

55.3

Transport

7.65

9.26

11.6

15.5

21.1

28.5

6.46

21. 24. 9 18. 9 16.5
2

15.2

14.9

24.6
8

23.4

27.2
8

36.4
6

46.2
9

3.16

66.
90

66.
50

38.
10

28.9

26.3

24.2

2.71

3.055

4.76

7.46

10.6
7

6.01

8.
70

7. 30 5. 0

5. 0

5.3

5.6

61.43

Household
24.0
9Services

3.13

94.2
9

IEEJ：August 2016 © IEEJ2016

Table 17(Contd.).: Total Energy Demand by Sector (Source: ECN)
75.25

11.39

100

100

100

100

100

100

233.
12

28.78

3.2

4.6

40.5

50.1

57.4

67.2

24.0
2

34.8
8

7.49

21.2 19.6 14..7 13.3

11.9

10. 0

30.44 39.5
3

52.1
6

65.1
5

4.85

66.9 72.7 40.4

31.8

26. 0 18.8

3.305 5.93

9.49

13.7
5

7. 30

8.7

4.8

4.7

High
GrowthScenario
(10%)

36.0
2

37.5
6

124.
2

200.
9

346.
9

Industry

1.15

1.73

30.46 62.2
1

115
.30

Transport

7.65

7.36 11.04 16.4
9Household 24.0
9

27.3
2

Services

1.15

3.13

3.1

4.4

4. 0

IEEJ：August 2016 © IEEJ2016

Table 17(Contd.).: Total Energy Demand by Sector (Source: ECN)
Optimistic
GrowthScenario

36.0
2

40.6
6

77.15

143
.75

278.
46

541.
4

13.78

100

100

100

100

100

100

Industry

1.15

6.92

34.97

81.6
6

190.
01

420.
74

32.45

3.2

17.
0

45.3

56.8

68.2

77.7

Transport

7.65

5.56

11.11

16.5
1

24.7
1

37.6
3

7.88

21.2

13.7 14.4

11.5

8.9

7. 0

Household

24.0
9

24.7
2

26.37

36.
60

49.7
5

62.9
7

4.68

66.9

60.8 34.2

25.5

17.9

11.6

Services

3.13

3.46

4. 70

8.98

13.9
9

20.0
8

9.25

8.7

8.5

6.2

5. 0

3.7

6.1

IEEJ：August 2016 © IEEJ2016

TABLE 18: Total Energy Demand for Petroleum Products (Projected) {Source: ECN}Year

PMS(Million Litres)

DPK (Million Litres)

AGO (Million
Litres)FUEL OIL (Million
Litres)LPG (Million Litres)

7%

13%

7%

13%

7%

13%

7%

13%

7%

13%

2009

5096.945096.94356.06356.06565.64565.64120.01120.01

74.16

74.16

2010

6180.00

8890.00

464.00902.00791.681177.85

160.00270.0093.20

132.902015

14460.00

19510.00

3788.00

7039.00

2301.863651.101800.00

3380.00

1107.00

1870.202020

28170.37

35587.13

9038.7122704.49

4176.7
66270.844632.079277.932862.505733.512025

39769.4455459.38

15984.94

44285.43

6231.8411408.4
27806.1020797.424823.9612852.25

2030

56457.15

88369.15

22064.9377255.68

8902.4321349.7
311374.6
445443.40

7029.2222903.70

IEEJ：August 2016 © IEEJ2016

5.0

CHALLENGES FACED IN THE FORMULATION OF ENERGY POLICIES

5.1 CHALLENGES
In view of optimally utilizing the nation’s viable energy resources for sustainable national development and for
fostering regional and international cooperation the National Energy Policy was approved by the Federal
Government of Nigeria in Y2003. This document, which had inputs from various stakeholders from theacademia, public service, business world and development partners went through several reviews in order toaddress the energy challenges of Nigeria. However, various bottlenecks in its implementation has made thepolicy another piece of document occupying a space on the shelf. Such bottlenecks include the following:•
Lack of adequate and reliable data on energy use and related issues•
Lack of skilled human capital•
Inadequate institutional framework to enforce standards in the energy sector•
Inadequate funding•
Inefficiency in the use of foreign technologies•
Political will•Wrongful allocation or deployment of resources
These are some of the factors militating against the implementation of the National Energy Policy in Nigeria

IEEJ：August 2016 © IEEJ2016

6.0

CAPACITY BUILDING

6.0 TRAINING NEEDS
In view of the enormity of the challenges of the energy sector and the need to enhance thesocio-economic development of Nigeria, issues of human capacity development on energy
development matters should be given necessary attention.
Lagos State Government, the economic, financial and commercial nerve center of Nigeria
and ECOWAS has identified Power as key to sustainable economic and thus a state energy
policy that would promote and develop sustainable strategies for energy planning, security
and sufficiency for all sectors in Lagos State.
Consequently, as a representative of the Lagos State Government on the Energy Policy (A)program, I am interested in developing my capacity in the following key areas;
1.
Energy Policy Development and Planning
2.
Energy Auditing
3.
Energy Demand Forecasting4.
Development of Renewable Energy sources with particular attention to solar
systems and waste-to-energy systems
Contact : report@tky.ieej.or.jp