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As the executive chairman of the African Energy Chamber (AEC), it’s my honor
and my privilege to tell the world the story of Africa’s oil and gas industry
– to explain what this continent can do to help power the world and fuel its
own future. But it’s also my mission to talk about African energy poverty and
to explain why this continent needs better access to energy now in order to
illuminate its own potential and power forward.
To illustrate the issue of energy poverty in general, I’d like to focus on
energy poverty in Nigeria in particular.
Within Africa, Nigeria is an interesting subject. It’s the most heavily
populated country in Africa, with more than 200 million citizens. It
surpassed South Africa to become the continent’s largest economy about a
decade ago, and its GDP topped USD441.5 billion in 2021. It has the largest
crude oil reserves in sub-Saharan Africa and is typically the largest liquids
producer in the region, though output figures have slumped this year due to
problems with theft and sabotage. Likewise, it has sub-Saharan Africa’s
biggest reserves of natural and associated gas and is far and away the
region’s biggest gas producer.
Nigeria also experiences significant energy poverty, despite these
advantages. As noted in the AEC’s recently released report, “The State of
African Energy: 2023 Outlook,” consistent access to modern energy services –
that is, steady and reliable electricity supplies – is available to only 60%
of the country’s population on average, and access rates appear to be
significantly lower in rural areas than they are in urban areas. And
according to World Bank data, about 99.9 million people, or more than 47% of
Nigeria’s population, lived in rural areas as of the end of 2021. That means
nearly 100 million Nigerians are living without any true level of certainty
that the lights and the electric power that so many in the developed world
take for granted will stay on.
I, for one, think they deserve to have that certainty.
They deserve it on human grounds, and their country already has a significant
amount of what is needed to provide them with it. And by that, I mean that
Nigeria has gas that it could use to generate power.
What Nigeria Has
As I’ve already noted, the country’s gas resources are the largest in
sub-Saharan Africa. Nigeria has already been shown to have more than 200
trillion cubic feet (tcf) of gas in proven reserves, and government officials
believe that the figure could go even higher, perhaps reaching 600 trillion
cubic feet (tcf) following additional exploration.
If that prediction comes true, Nigeria will have the fourth largest gas
reserves in the world, behind only Russia, Iran, and Qatar. It will have more
than enough gas to meet current demand; it will have enough gas to produce
significant volumes of LNG for export while also supporting gasification
programs, both on the domestic and regional levels.
But it’s not enough just to have all that gas. Nigeria also needs the means
to make use of its gas. Without the proper infrastructure, it won’t be able
to put its resources to work and will merely have a scattered collection of
raw materials.
What Nigeria Needs
In practical terms, this means that Nigeria ought to have the following:
- Upstream
production facilities for gas.
- Midstream
gas transportation facilities such as pipelines, including field networks and
trunk lines.
- Downstream
gas-processing plants and production facilities for gas-derived fuels such as
liquefied natural gas (LNG), compressed natural gas (CNG), and liquid
petroleum gas (LPG).
- Downstream
gas distribution systems, including town gas networks.
- Downstream
gas storage depots.
- Gas-fired
thermal power plants (TPPs) – preferably co-generation plants, as they are
more efficient.
- Transmission,
distribution, and storage infrastructure for the electricity produced by
gas-fired TPPs.
- Smart
and secure operational technology (OT) systems that can optimize the flow of
data and resources between consumer markets and energy networks.
I’m not suggesting here
that it’s the Nigerian government’s job to provide all this infrastructure.
But I do believe that it’s Abuja’s responsibility to make sure that this
infrastructure becomes available. To this end, I think that Nigeria also
needs government bureaucracies that are competent and trustworthy enough to
ensure that oil-, gas-, and power-related contracts are only awarded to
companies capable of providing the goods and services required within the
acceptable parameters.
What Nigeria Envisions
Developing this infrastructure requires the right kind of vision, which
Nigeria already has in place: its “Decade of Gas” program is designed to make
the country entirely gas-powered by 2030.
When President Muhammadu Buhari rolled out this initiative in March 2021, he
indicated that it aimed to make the gas sector the cornerstone of Nigerian
economic activity. By the time the “Decade of Gas” comes to an end, he said,
the country will have done the following:
- Adopted
a new oil and gas law to facilitate investment.
- Carried
out new exploration projects, discovered new reserves, and brought new fields
onstream.
- Constructed
new gas-processing plants and production facilities for LPG and other
gas-derived fuels.
- Built
new export pipelines and constructed new production trains at gas liquefaction
plants such as Nigeria LNG (NLNG).
- Constructed
new domestic pipelines along routes to serve local customers plus gas-fired
thermal power plants (TPPs) to increase domestic electricity supplies.
- Expanded
domestic power transmission and distribution networks, especially in rural
areas.
Nigeria still has a
significant amount of ground to cover before it achieves all of these
targets. However, it has made progress. The biggest example of this is the
Petroleum Industry Act (PIA), which Buhari signed into law after it passed
both houses of the National Assembly. The Nigerian government is also
successfully promoting LPG, a gas-derived fuel, as a replacement for wood and
charcoal as cooking fuel. (According to NLNG, domestic LPG consumption has
climbed by around 1,000% over the last 14 years.)
And as recently as this November, Nigeria moved closer to building its
first floating liquified natural gas (FLNG) facility. Nigerian company UTM
Offshore signed a front-end engineering design (FEED) contract to design the
facility with JGC Corporation, Technip Energies, and KBR. Chief Timipre
Sylva, Minister of Petroleum Resources, Nigeria, described the project as a
step in the right direction for Nigeria to develop, exploit, and monetize its
natural gas.
During the African Energy Week in Cape Town, Amni International Petroleum
Development Company Limited, a Nigerian independent oil and gas exploration
and production company and the African Export–Import Bank (Afreximbank)
signed an agreement for the provision of a $600 million syndicated
reserve-based lending facility.
To a lesser extent, Abuja can also claim credit for the headway it has made
on the Ajaokuta-Kaduna-Kano (AKK) pipeline, which is being built to bring gas
to the northern part of the country. When finished, the pipeline will deliver
fuel to gas-powered industrial facilities and feedstock to TPPs with a
generating capacity of 3,600 MW. It may also serve eventually as the first
leg of the Trans-Saharan Gas Pipeline (TSGP) network, which will allow
Nigeria to export gas to Europe via Algeria. Unfortunately, though, the
project has been running behind schedule, and the heavy floods that began
hitting many parts of the country in mid-2022 have caused additional delays.
In the meantime, Abuja has also moved forward with plans for establishing
another gas export network – the Nigeria-Morocco Gas Pipeline (NMGP), a
5,600-km offshore network that would serve more than a dozen West African
states. This system would, like TSGP, pump Nigerian gas to Europe, but it would
also serve the purpose of delivering the gas to regional markets as well. As
such, it would establish Nigeria as a supplier of fuel to much of West
Africa.
Thus far, neither NMGP nor TSGP has been built. But Nigerian authorities are
working to hammer out agreements on these projects – and they see the ways
that European market conditions have changed since the beginning of 2022 as
an incentive to work harder and to work faster.
What Nigeria Could Achieve
If they succeed, they will create infrastructure that could do quite a bit to
alleviate energy poverty in Nigeria and beyond.
In the case of NMGP, the construction of this pipeline would provide multiple
countries beyond Nigeria with a steady source of gas. As such, it would serve
as an incentive for the construction of TPPs in places where millions of
people do not have access to reliable energy supplies. At the same time, the
pipeline’s access to European markets, where buyers are more likely to pay in
hard currency, would help ensure the profitability of the whole system.
Likewise, the TSGP network has the potential to benefit Nigeria by ensuring
that the country has enough access to hard-currency markets in Europe to
cover the costs of the domestic initiatives that depend on AKK – that is, the
gas-fired power and industrial projects in the northern part of the country.
Infrastructure Is Needed Throughout the Continent
Of course, energy poverty is not limited to Nigeria; more than 600 million
people in Africa lack access to electricity, and nearly 730 million use
hazardous and inefficient cooking fuels and technologies. Nevertheless, while
each African country is unique, I hope that this look at Nigeria helps shed
light on some of the common challenges facing our continent’s countries — a
higher rate of energy poverty in rural areas and the tremendous need for
infrastructure development.
As “The State of African Energy: 2023 Outlook” points out, even in the four
African countries with a universal electricity rate of more than 70% — Egypt,
South Africa, Kenya, and Algeria — access to electricity drops significantly
in rural areas, to an average of about 63% of the population, compared to an
average of 96% in urban areas.
The situation for rural Africans is even more dismal in other parts of the
continent. In the Democratic Republic of Congo, for example, only about 19%
of the overall population has access to electricity and in rural areas, only
1% of the population has electricity.
This will not change until we develop the necessary infrastructure to deliver
energy to Africans throughout the continent.
On the brighter side, Nigeria also gives us examples of measures African
countries can take to begin addressing these challenges. No, Nigeria has not
achieved its ultimate goal-eradicating energy poverty, but it has plans and
initiatives in place with real potential to make a difference — as long as
Nigeria continues pursuing them.
If they haven’t done it yet, governments throughout the continent should be
developing and implementing multipronged programs of their own to eradicate
energy poverty. They, like Nigeria, should be leveraging their natural gas
resources. They should be developing and executing gas utilization plans,
improving their approach to resource management, monetizing natural gas to help
pay for infrastructure projects, and launching more gas-to-power initiatives.
Instead of being daunted by the vast numbers of Africans without electricity,
shrugging our shoulders, and giving up, I hope that we will be steadfast in
our determination to make energy poverty history by the end of this decade.
For a complete look at our recommendations and “The State of African Energy:
2023 Outlook,” download our report here (https://bit.ly/3goAZzK).
OPINION
PIECE by By NJ Ayuk, Executive Chairman, African Energy Chamber
Distributed
by APO Group on behalf of African Energy Chamber.
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