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Nigeria Power Report Q2 2011
Business Monitor International, April 2011, Pages: 58
Business Monitor International's Nigeria Power Report provides industry professionals and strategists, corporate analysts, power associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Nigeria's power industry.
In this new report, BMI forecasts that Nigeria will account for 2.14% of Middle East and Africa (MEA) regional power generation by 2015, with the country struggling to narrow the supply/demand gap. BMI’s MEA power generation assumption for 2010 is 1,222 terawatt hours (TWh), representing an increase of 4.0% over the previous year (where markets were depressed by the economic slowdown). This report is forecasting an increase in regional generation, to 1,508TWh by 2015, representing a rise of 18.5% between 2011 and the end of the period.
MEA thermal power generation in 2010 is estimated by BMI to have been 1,140TWh, accounting for 93.3% of the total electricity supplied in the region. Our forecast for 2015 is 1,370TWh, implying 16.1% growth in 2011-2015 that reduces slightly the market share of thermal generation to 90.8% – thanks in part to environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. Nigeria’s thermal generation in 2010 will have been an estimated 15.5TWh, or 1.36% of the regional total.
By 2015, the country is expected to account for 1.77% of regional thermal generation. Direct burning of wood and waste materials will have been the dominant energy source for Nigeria in 2010, accounting for an estimated 77.0% of primary energy demand (PED), followed by gas at 12.3% and oil with a 9.5% share of PED. Regional energy demand is forecast to reach 1,114mn tonnes of oil equivalent (toe) by 2015, representing 15.9% growth over the period since 2011. Nigeria’s estimated 2010 market share of 11.35% is set to rise to 12.03% by 2015.
Nigeria now shares sixth place with Kenya in BMI’s updated Power Business Environment Ratings. Its position should prove secure over the medium term, with Iran, six points below, posing little threat. Import dependency is average for the region, while the proportion of renewables is relatively high. However, the power sector is not particularly competitive, with limited progress towards privatisation.
BMI forecasts that Nigeria’s real GDP growth will average 7.73% a year between 2011 and 2015, with 2011 growth assumed to be 7.90%. The population is expected to expand from 158.3mn to 178.7mn over the period, with GDP per capita and electricity consumption per capita forecast to increase by 115% and 23% respectively. Power consumption is expected to increase from an estimated 20.4TWh in 2010 to 29.7TWh by 2015, providing little improvement in market coverage on the basis of 7.5% average annual growth (2011-2015) in electricity generation. Transmission losses and power industry usage of around 2.8TWh mean that the market is likely to remain tight for several years.
Between 2011 and 2020 BMI forecasts a 86.4% increase in Nigerian electricity generation, near the top of the MEA range. This equates to 40.2% in 2015-2020, up from 32.9% in 2011-2015. PED growth in 2015- 2020 is set be 27.6%, up from 21.6% for 2011-2015 and representing 55.1% for the entire forecast period. Hydro-power use is forecast to increase by 29% between 2011 and 2020, while thermal power generation is expected to rise 110% during the period, fuelled largely by natural gas. Details of the longer-term BMI power forecasts can be found later in this report.
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