Nigeria Energy and Climatic Change (NECC)

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Nigeria’s energy generation is still 50 percent below its installed capacity of 6,000 mega-watts (MW). According to the World Bank, inadequate access to energy is the single largest obstacle to economic growth in Nigeria. Further, limited access to clean and modern energy services has forced the poor to resort to using unsustainable energy sources, such as wood, for their cooking, lighting, and heating. As a result, uncontrolled timber harvesting has led to significant environmental challenges, including desertification and the loss of carbon sinks, which have increased the amount of carbon dioxide (CO2) emissions.

Nigeria holds an estimated 184 trillion cubic feet of natural gas reserves, the largest in Africa, and the seventh largest in the world. In 2007, the Nigerian National Petroleum Corporation calculated that approximately 40 percent of the country’s gas production was flared, resulting in about 45 million tons of CO2 emissions, one of the principal greenhouse gases (GHG) that causes global climate change. Annually, an estimated $1.46 billion is lost in oil and gas revenues because of flaring. Although Nigeria lacks an adequate supply of gas for its thermal power stations, it flares more gas than any other country except Russia.

NECC Strategy

In 2008, USAID developed the NECC project to support the Government of Nigeria (GON) to increase the generation of clean energy using flared natural gas. The objectives of NECC were to: 1) build the GON’s energy generation, distribution, transmission, financing, and liberalization capacity; 2) build the capacity of the electricity regulator; and 3) disseminate energy-efficient cook-stoves to communities in selected Nigerian states. 
With an emphasis on increasing private sector participation in the energy market, in FY 2011, USAID will support the GON to liberalize the power sector by promoting competition and private sector participation; conduct a voltage management study; and strengthen the capacity of the Nigerian Electricity Regulatory Commission enabling it to establish a regulatory framework for renewable sources of energy. USAID will also assist the GON’s Accelerated Gas Development Project (AGDP) in its effort to end gas flaring in 31 gas flare sites in the Niger Delta. 
Gas flaring leads to significant carbon emissions, which increases the amount of greenhouse gases in the atmosphere that trap heat and contribute to global warming. Therefore, assistance to the AGDP will make flared gas available for electricity generation, increase private sector participation in this endeavor, and assist Nigeria in mitigating climate change.

NECC will encourage new private sector entrants into the energy market, reduce gas flaring and channel it into commercial use, and improve regulation of the power sector. These results will contribute to the U.S. Government’s long-term goal of growing the Nigerian economy through the availability of clean, reliable, and affordable electricity. This support will also assist in increasing electricity generation from the current capacity of 3,700 MW to the GON target of 11,540 MW.

Activities Include:

Africa Infrastructure Project (AIP)
 
Life of Project:                      2009-2012
Funding:                                                $3,000,000
Implementing Partner:       Nexant Inc.
Geographic Focus:              Nationwide
 
Enhancing Sustainable Utility Regulation (ENSURE)
 
Life of Project:                      2009- 2012
Funding:                                $500,000
Implementing Partner:       NARUC
Geographic Focus:              Nationwide

Results

  • Independent Power Providers (IPP) roadmap guiding IPP development created
  • Gas Sales and Aggregation Agreements (GSAA) negotiated and signed with Shell and Chevron
  • Financial, Legal, and Power System Senior International Advisors provided to the Bureau of Public Enterprises (BPE)
  • Generation and distribution company valuation models developed
  • Financial Analysis and Accounts Office established in the Nigeria Electricity Regulatory Commission