The Economics of Electric Power Supply In Nigeria


Musa D. Abdullahi


Electric power supply is the most important commodity for national development. With electrical energy the people are empowered to work from the domestic level and the cottage industries, through the small-scale and medium industries to employment in the large-scale manufacturing complexes. In these days, depriving people of electric power is tantamount to castration. Electric power generation may be through one of the following sources of energy:


  1. Coal, oil or natural gas 

  2. Hydro power (water turbine)

  3. Nuclear power (steam turbine)

  4. Solar-wind or water-wave turbine

  5. Solar thermal generator

  6. Solar voltaic generator


Coal, oil, gas and hydro power are abundant in Nigeria. Presently Nigeria mostly employs gas-fired and hydroelectric turbines for bulk generation, oil being too expensive and coal-fired stations having gone moribund. Coal, the progenitor of the Industrial Revolution in Europe, is still the main source of energy in most of the industrialised countries of the world. However, coal-fired stations have the problem of pollution in the emission of carbon gases which deplete the ozone layer thereby causing global warming. Coal is likely to be overtaken by nuclear energy. Nuclear power stations have their problems of hazardous radiation and in disposal of radioactive wastes, not to mention sophistication in operation and maintenance.


The most abundant, cleanest and safest energy source is solar power, particularly in the tropical countries. The temperate countries, like France, Denmark and Japan, curiously enough, are most advanced in the utilization of solar energy. The tropical countries, like Nigeria, must invest heavily in research and development on the exploitation of solar energy, because herein lies their salvation. The viable option is a hybrid system combining wind power as fairly available at day and night, with solar thermal or solar voltaic generation which is available during the day.


The maximum solar radiation power reaching Nigeria’s land surface (area: 924,000 square kilometres) is about 600 Megawatts per square kilometre, peaking at noon and declining to zero at sunset. If only a small fraction of this power is captured, by way of wind turbine, solar thermal or voltaic generators, it would satisfy Nigeria’s needs for domestic consumption and industrialization. The Sahara desert, with a sparsely populated land area of about 9,100,000 square kilometres, receiving a maximum of about 700 Megawatts per square kilometre, is bound to be the power house for Africa if not of the world. The harnessing of solar energy by Africans is a do-or-die affair in this twenty-first century.


Maximum power consumption or peak demand depends on the population and industrialization of a country. If the maximum supply meets the peak demand, there is a surplus otherwise there is a shortfall. Supply, demand and losses are related by the equation:


 supply – demand = supply  – actual needs  –  losses = surplus


          losses = heat losses + wastages + diversions


In Nigeria, the power supply system is run with a shortfall where demand exceeds supply.


Power generation, transmission and distribution involve flow of currents with heat losses in conductors. Heat losses can be minimized through better design, construction and maintenance. Wastages, resulting from lack of control, misuse, abuse, negligence or ignorance, may be eliminated through effective education and public enlightenment. Diversions, as willful and fraudulent practices, like illegal connections and official thefts, may be stopped by legislation, regulation, supervision and prosecution offenders.

For the installations of Power Holding Company of Nigeria (PHCN), Independent Power Projects (IPP) of the States and the Rural Electrification Schemes, financial capital injection to increase power generation, should go hand-in-hand with campaigns aimed at checking wastages and diversions. By watching these losses, a shortfall may be reduced to zero or even turned into a surplus, without increasing supply. A surplus energy may be used for greater industrialization or sold to an external consumer at a profit. To the consumer, the advantages in eliminating wastages are reduction in electricity bill, increased longevity in the usage of electrical appliances and lessening of accidents and fire risks.   


Electrical power is generated in kilowatts (kW) and energy is supplied and sold to the consumer in unit of kilowatt-hour (kWh), with profit if:


cost per unit to the consumer – production cost per unit  = profit per kWh


The production costs include personnel and overhead costs plus depreciation. In Nigeria, the tendency is for the personnel and overhead costs to escalate. Failure to replace obsolete equipment and machinery will result in decrease of power generation. The cumulative effect is that production costs would increase in order to maintain supply and the costs to the consumer would also increase in order to break even. There may even be increase in tariff without any corresponding increase in power generation. No power supply system could be operated at a profit if the production costs are not kept under control.                             


Profit, in an enterprise, is the ingredient necessary for growth and economic development. Any enterprise, not operated at a profit, would dwindle and eventually fade away; external funding or privatization could only postpone the evil day. The profits from the sale of electrical energy may be ploughed back into the supply system to improve manpower and machinery, to enhance safety and security, create jobs and generate more power.


Government’s promise to generate 6,000 MW, or even more power, is achievable this year, given the installed capacity of PHCN and ability of staff of the Company to deliver. In fact, Nigeria, through the old Electricity Corporation of Nigeria, the former Niger Dams Authority and the defunct Nigerian Electric Power Authority, had the best trained technical and professional staff in Africa. Now, the PHCN is saddled with a plethora of non-technical staff and hampered by officialdom. Power generation, transmission and distribution should be a knowledge-based integrated and controlled system – a technical and economic undertaking - devoid of politics. Failure to use its human and material resources and to nurture and keep an efficient and dedicated work force, in the power sector, has turned Nigeria into the world’s biggest importer of generators.


Use of private generators to supplement external supply or cutting down demand (by load shedding or closing shop), to reduce shortfall, is not only inimical to social, economic and technological development but verging on criminality. The low distribution voltages and disruptions, due to frequent switching off and on, are deleterious to sensitive equipment, especially those with moving parts. That the Nigerian power sector has persistently been erratic and running with a shortfall, in spite of heavy funding and despite the availability of abundant coal, natural gas, hydro power and inexhaustible solar power, remains not only a challenge but a shame to the Nigerian scientists, engineers and technologists.   


Musa D. Abdullahi, FIET, FNSE, FAEng.