Nigeria’s power grids supplying Niger, Benin and Togo could soon be subject to a blackout. Unpaid bills from Benin and Niger are pushing Africa’s leading supplier to consider this extreme. In addition, the Nigerian domestic sector is currently very fragile and indebted.
Will the power grids of Nigeria’s main customers soon be cut off?
Nigeria supplies its insolvent neighbors with electricity
Nigeria’s power grids extend right across the borders of its neighbors Benin, Niger and Togo. Each receiving approximately 300 MW.
But for several years, Nigeria has seen the viability of its system threatened by frequent foreign defaults. As a result, the country had already warned twice in 2018 and 2019 about the possibility of a potential distribution shutdown.
The last total invoice due from third countries was $13.4 million. But only about $5 million from the Compagnie Energie Électrique du Togo (CEET) has been paid.
Niger and Benin: $7 million in debt
Currently, the combined debt of Niger and Benin is estimated at nearly $7 million by the Nigerian Electricity Regulatory Commission (NERC).
This loss of revenue does not help a struggling Nigerian industry. Despite the fact that the country has the largest gas reserves on the African continent and is the third largest producer in its sub-region, its domestic energy sector is already heavily indebted. Consequently, the population suffers from a partial electrification of the territory.
Production already insufficient for the domestic market
Only 40% of Nigerians have access to electricity
Despite its considerable economic weight, Nigeria supplies only 40% of its population with electricity. In 2019, the theoretically installed capacity is 12.6 GW, but in reality only 5 GW would be efficient. Very low to cover the needs representing at least 20 GW for a population of over 200 million inhabitants.
As a result of this partial production, power cuts are recurrent. Last year, a widespread blackout plunged the country into darkness.
26 billion USD in losses per year
Since 2010, a privatization process has been initiated to make the system more profitable, but without success. The state is obliged to subsidize it, adding to the national debt.
The World Bank estimates the deficit of the Nigerian power sector at $8.1 billion. A degradation of 1 billion USD is envisaged for 2021. In February, the organization released $500 million in aid.
Every year, the Nigerian economy loses $26.2 billion due to dysfunctional transmission and distribution networks.
The problem of shortage accentuated by political instability
For the second quarter of 2020, NERC estimates a 1.4% increase in total energy produced. But the rate of utilization of available capacity has decreased by 8.16% recently. These figures are explained by gas supply shortages.
The situation is partly related to malicious acts on gas pipelines by dissident groups. In 2017, the Niger Delta Avengers (NDA) had sabotaged an infrastructure of the Nigerian National Petroleum Corporation (NNPC).
In sum, despite its strong economic weight, Nigeria is a giant with feet of clay. The fragility of its electricity network is a significant example, revealing the political and economic difficulties faced by the country.