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Nigeria arrived at 2009 unable to realize a four year old vision: to get its public power utility and private suppliers, to put 10,000Megawatts (MW) of electricity into the national grid, every day.
President Umar Yar’adua, now two years in office, elected to moderate the vision of his predecessor. He wants to get the nation plugged in to 6,000MW of electricity by December 2009 and increase the wattage to 10,000MW by 2011, when his current mandate ends.
Even the original vision of 10,000MW appears extremely modest, placed against the electricity generation capacities of the Egypt Electricity Holding Company’s 23,000MW and of South Africa’s Eskom (42,000MW), the two African regional powers with which Nigeria competes for influence on the continent.

But Nigeria is an opportunity waiting to be unleashed and unlike these two countries, it has enacted a comprehensive electricity reform law that allows the private sector unfettered access to generate electricity. Egypt has granted private companies to build and operate generating plants, but the law is limited. South Africa’s Eskom is so huge that many private sector generation companies are uncomfortable with it as a competitor.
Since the new electricity law in Nigeria was enacted in 2005, several companies have been licenced to build power plants and those among them who are constructing gas fired plants, have been signing gas sale agreements, either with oil companies or the Nigerian Gas Company, the gas transport subsidiary of the state hydrocarbon company NNPC.
As Nigeria only currently generates about 3,000MW effectively, some 3,000MW new capacity must be added to meet the president’s 6,000MW target by year end. Some of that extra requirement is being procured by refurbishing old units of the existing plants of the PHCN, the state utility. But even with that, at least 2,000MW must be generated from brand new power plants to meet the deadline.
Some 80% of the new power plants under construction by the central government, oil companies, state governments and private generating companies, are gas fired plants. The Nigerian electricity supply industry has in the last 15 years, transformed from a net hydropower fed system to a largely gas-to-wire market. A Lagos businessman put this change in a joke: “Official explanations of power outage used to be centred on low level of water in Kainji dam; now the blame has shifted to inadequate gas supply at Egbin Power station”. With a name plate capacity of 1,320MW, the Egbin power plant is the country’s largest single power station.
Nigeria’s central government has resumed construction on some of the seven gas fired plants which constitute the National Integrated Independent Power Project. These projects were stalled for two years, during which a heated national debate raged over propriety of contract awards and money spent. Meanwhile, two oil companies are at various stages of completion of power plants they were urged by the government to build. One state government has just completed a power plant and one private company claims it has nearly completed a plant it was licenced to build.
Seven exploration and production companies, five of them multinational, are expected to supply the gas for these 11 plants(See Box 1). The volume of gas meant to be supplied for this purpose is part of the quota that each company is meant to supply for use within the Nigerian economy. It is when companies have met this quota, called the Domestic Supply Obligation(DSO), that they can export gas. In 2009, the total domestic gas obligation from these seven companies runs to about 2.8billion standard cubic feet of gas per day (2.8bcf/d). But this volume is not going to electricity alone; it is meant ....................................

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