Benin and Togo are exploring the possibility of purchasing power directly from Nigeria’s power generation companies (gencos) as the country grapples with a precarious power supply situation. Currently, Nigeria’s power supply fluctuates between 3,000 and 4,000 megawatts, despite an installed generation capacity of 14,000 megawatts.
The financial landscape for gencos is dire, with debts exceeding one trillion naira and a staggering ₦6.8 trillion owed to them. Joy Ogaji, from the Association of Power Generation Companies, noted, “Liquidity constraints continue to strain the generation companies. Gas supply limitations disrupt consistent power delivery, with end users struggling with unreliable electricity.”
International customers have a contracting capacity of 606 megawatts, but they receive an average of only 306 megawatts. This discrepancy highlights the ongoing challenges in meeting demand. Three generation companies have approached the Nigerian Independent System Operator to negotiate a power purchase agreement with Togo, indicating a potential shift in regional energy dynamics.
Gas supply issues further complicate the situation, as Nigeria’s power generation heavily relies on natural gas, with thermal plants contributing over 70% of the total electricity output. A representative from the sector remarked, “For every N100 invoiced by a thermal GenCo, between N60 and N70 goes directly to gas suppliers,” illustrating the financial pressures faced by these companies.
Additionally, the instability of the power grid exacerbates the challenges, with one expert stating, “The grid is not stable. Up and down — that consumes about 15 to 25 percent gas that nobody is paying for but must be paid by the GenCos.” This instability raises concerns about the ability of Nigeria’s infrastructure to meet both domestic and international demands.
Edmund Eje, a representative from the sector, explained the limitations, saying, “They have asked why we are not able to evacuate to them, and we have explained that our infrastructure cannot evacuate optimally to their demands, which can overstretch our grid if there’s an overload.” This highlights the complexities of energy distribution in the region.
Nigeria’s power sector has been privatized since 2013, but the ongoing financial struggles of gencos and the challenges in gas supply continue to hinder progress. Observers are closely monitoring the situation as Benin and Togo consider direct purchases, but details remain unconfirmed regarding the exact impact on costs and the feasibility of such arrangements.