Molly Ayala
Despite having an unstable power supply, Nigeria exports electricity to several neighbouring countries, including Niger, Togo, and Benin. In May 2024, the Nigerian Electricity Regulatory Commission (NERC) issued an order to cap the power supply to these countries at 6% of the total grid electricity. This decision aimed to prioritize domestic customers in Nigeria, who have experienced frequent power cuts due to a shortage of electricity. The order also addressed concerns about sub-optimal grid dispatch practices and the impact on the ability of distribution companies to meet their service tariff commitments.
| Characteristics | Values |
|---|---|
| Does Nigeria supply electricity to other countries? | Yes, Nigeria supplies electricity to neighbouring countries including Benin, Niger, and Togo. |
| How much electricity does Nigeria supply to other countries? | Nigeria's electricity supply to its neighbours must not exceed 6% of its total grid electricity at any given time. |
| Why does Nigeria supply electricity to other countries? | Nigeria's power firms have contracts with neighbouring African countries to deliver energy, which gives them foreign currency to support revenue from sub-economic tariffs. |
| What is the impact of Nigeria supplying electricity to other countries? | Power cuts are common in Nigeria due to a shortage of electricity, and the current approach to managing supply has caused significant hardship for Nigerians as supply under bilateral contracts, including exports, takes priority over supply to domestic customers. |
| What is being done to address the impact of Nigeria's electricity supply to other countries? | The Nigerian Electricity Regulatory Commission (NERC) ordered a cap on electricity supply to cross-border customers in Benin, Niger, and Togo to improve electricity supply and financial sustainability for domestic customers. |
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What You'll Learn
Nigeria's electricity exports to neighbouring countries
Despite having an unstable power supply within the country, Nigeria exports electricity to neighbouring countries. This has been a source of irony and chagrin for many Nigerians. While Nigeria has an abundance of gas, infrastructural and financial constraints have led to difficulties in distributing power within the country.
Nigeria has bilateral contracts with neighbouring countries to deliver energy, which provides foreign currency to support revenue from sub-economic tariffs. However, these countries have not always paid their bills on time, with NERC reporting that international customers owed Nigerian power companies a combined $12.02 million in unpaid debt in the last quarter of 2023.
In May 2024, the Nigerian Electricity Regulatory Commission (NERC) ordered a cap on electricity exports to neighbouring countries to prioritise domestic supply. The order, which will be in place for six months, subject to review, stipulates that power delivery to Nigeria's neighbours must not exceed 6% of total grid electricity at any point in time. This is intended to improve electricity supply and the financial sustainability of the Nigerian Electricity Supply Industry (NESI) as the industry transitions to cost-reflective levels.
Nigeria supplies electricity to several neighbouring countries, including Benin Republic, Niger Republic, and Togo. There is also a belief among Nigerians that the country supplies stable electricity to Ghana. However, this has been disputed, with reports indicating that Ghana only sources 25% of the gas used for electricity generation from Nigeria.
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Nigeria's power supply to Ghana
Ghana has an energy requirement of 2,000 megawatts and a total generation output of 1,200 megawatts. 69% of the energy is generated from hydroelectric sources, with 912 megawatts from the Akosombo dam and 160 megawatts from the Kpong dam, and 30.4% is generated from fossil fuels. Ghana has abundant electricity and is an electricity exporter. In 2020, the country supplied more than 12 million metric tons of oil equivalent of energy, an all-time high compared to the five preceding years.
Nigeria, on the other hand, has the highest deficit in Africa, with 90 million people lacking access to electricity. The country has been unable to provide adequate electricity supply to its citizens due to infrastructural and financial constraints. However, it has been reported that Nigeria supplies electricity to some of its smaller neighbours, including Ghana. This claim has been refuted by some sources, which state that while Nigeria does play a role in Ghana's uninterrupted power supply, the country only sources 25% of the gas used in electricity generation from Nigeria. This gas is supplied through the West African Gas Pipeline (WAGP) and is converted to electricity by Ghana's power plants.
In 2019, Ghana faced an energy crisis, and Nigeria agreed to supply 80 megawatts of electricity to the country as part of a deal to help address this issue. This agreement, known as the Power Pool Agreement, was made between Ghana, Nigeria, and the Ivory Coast, and allowed the countries to combine their electricity generation into a pool, providing a safeguard in the event of an energy shortfall in any of the countries. Additionally, Nigeria took over the supply of power to Benin and Togo, which previously fell under Ghana's responsibility, to bring relief to the country.
Ghana has been working towards achieving "universal access to energy" by 2024 and exploring various energy sources, including grid electricity, mini-grids, and solar-dominated renewable energy. The country has also set financial sustainability and lower electricity prices as key goals for its power sector. Ghana's Head of the Generation and Transmission Unit at the Ministry of Energy, Mr. Hanson Monney, has stated that the country may soon export electricity to Nigeria once its power system has been fully developed.
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Nigeria's stable electricity supply to Benin Republic
Nigeria has long struggled to provide a stable electricity supply to its own citizens. In fact, it is one of the countries with the largest number of people without access to electricity. Despite this, Nigeria has been supplying electricity to some of its smaller neighbours, including the Benin Republic.
In 2007, the CEB-NEPA Power Interconnection was commissioned, allowing Benin to import some of its electricity from Nigeria. As of 2020, approximately 32% of Benin's population had access to electricity, with a significant disparity between urban and rural citizens. While 56% of the urban population had access to electricity, only about 11% of the rural population did.
In May 2024, the Nigerian Electricity Regulatory Commission (NERC) ordered the System Operator (SO), a department within the Transmission Company of Nigeria (TCN), to cap power supply to cross-border customers in the Benin Republic, Niger, and Togo. The directive, outlined in the "Interim Order on Transmission System Dispatch Operations, Cross-border Supply, and Related Matters," stipulated that power delivery to neighbouring countries must not exceed 6% of the total grid electricity at any given time. This order was implemented to improve the electricity supply and financial sustainability of the Nigerian Electricity Supply Industry (NESI) and to allow local electricity distribution companies (DisCos) to focus on local generation and tariffs.
The decision to cut back on electricity exports was also influenced by the priority given to international customers over domestic ones under bilateral contracts, as well as the inability of some international customers to settle their debts on time. The cap on overseas sales could create uncertainty in the sector and require power generation companies to adjust production and distribution while potentially modifying contracts on short notice.
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Nigeria's power sector requiring significant investment
Nigeria has an abundance of gas, oil, and hydrocarbons, yet it struggles to provide adequate electricity to its citizens. Despite this, Nigeria supplies electricity to some of its neighbours, including Togo, Benin, Niger Republic, and Ghana. However, the country faces challenges in the power sector due to infrastructural and financial constraints, regulatory uncertainty, inadequate infrastructure, and equipment vandalism.
The Nigerian power sector requires significant investment to achieve a reliable power supply. Industry operators estimate that Nigeria will need up to $100 billion in investment over the next 20 years to maintain its current service. The World Bank is financing a $486 million International Development Association credit for the Nigerian Electricity Transmission Access Project (NETAP) to support the rehabilitation and expansion of the country's electricity transmission infrastructure. Nigeria also aims to attract $15 billion in private investments to bridge a $23 billion funding gap in the power sector.
To improve the power sector, Nigeria has made significant strides in privatization, legislation, and market reforms. The Electric Power Sector Reform Act was enacted, and the National Electricity Regulatory Commission (NERC) was established to regulate the industry. The Power Holding Company of Nigeria (PHCN) broke the 33-year monopoly of NEPA in 2005, allowing various players to enter the energy sector. The Electricity Act established a state electricity market and enabled Power Purchase Agreements.
However, challenges remain, including poor maintenance of power equipment, low tariffs and billing, and inadequate pipeline infrastructure. Nigeria's power sector requires consistent policies, investor protection, and transparent dialogue to build trust with consumers. The absence of infrastructure in the power and mining sectors, coupled with a lack of skilled labour, may hinder the development of large-scale coal-fired power plants.
Overall, Nigeria's power sector requires significant investment and continued reform to improve the reliability of its power supply and meet the needs of its citizens and neighbouring countries.
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Nigeria's power sales to overseas customers
Nigeria has been facing an interesting dilemma regarding its electricity supply. Despite having the country with the most people without access to electricity, the country has been selling power to overseas customers. However, in May 2024, the Nigerian Electricity Regulatory Commission (NERC) issued a directive to cut back on these exports to boost domestic supply. The order stated that power delivery to Nigeria's neighbours must not exceed 6% of total grid electricity at any point in time. This decision was made to address the significant hardship faced by Nigerians due to power shortages, as well as the inability of international customers to settle their debts.
Nigeria has bilateral contracts with neighbouring countries, including Niger, Togo, and Benin, to supply them with electricity. These contracts provide foreign currency and support revenue for Nigerian power firms. However, power cuts are common in Nigeria, and the priority given to export contracts has exacerbated the issue. NERC's decision to cap exports aims to improve the reliability of the domestic supply and ensure that local customers receive the power they need.
The electricity sector in Nigeria faces significant challenges. Despite having abundant gas reserves, the country struggles with power distribution due to infrastructural and financial constraints. This has resulted in an inability to provide adequate electricity to its citizens, with frequent power cuts and many people lacking access to electricity altogether. The US International Trade Administration has stated that significant investment is required for the Nigerian power sector to achieve a reliable supply.
The decision to cut back on electricity exports has potential implications for the industry. Analysts have expressed concern about the impact on power generation and distribution companies, as well as the potential for increased financial challenges due to reduced revenue from overseas customers. The cap on exports may also create uncertainty in the sector, requiring companies to adjust their operations and modify contracts on short notice.
In summary, Nigeria's decision to cut back on electricity sales to overseas customers highlights the complexities of its power sector. While the country has been supplying electricity to its neighbours, it faces challenges in meeting the needs of its own citizens. The recent directive by NERC aims to address these issues by prioritising domestic supply and managing the export contracts more effectively. However, it remains to be seen how this decision will impact the industry and Nigeria's relations with its neighbouring countries.
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Frequently asked questions
Yes, Nigeria supplies electricity to neighbouring countries, including Benin, Niger, and Togo. In May 2024, the Nigerian Electricity Regulatory Commission (NERC) ordered that power delivery to these countries must not exceed 6% of the total grid electricity at any given time.
There are reports that Nigeria supplies electricity to Ghana. However, this claim has been disputed. While Nigeria does play a role in Ghana's power supply, it only sources 25% of the gas used to generate electricity in the country.
The NERC implemented the cap to improve electricity supply and financial sustainability in the country. The previous approach to managing supply caused hardship for Nigerians as supply to international customers took priority over supply to domestic customers. The cap will ensure that local electricity distribution companies (DisCos) can focus on local generation and tariffs.
The cap on overseas sales could create uncertainty in the sector. Power generation companies will need to adjust production and distribution and may have to modify contracts on short notice. The cap will also likely increase financial challenges by reducing revenue from overseas customers.
