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Amy.Offord_111 Aug 12



Gas, hydro and solar are all investment targets.

While Nigeria and Ghana hope to attract substantial foreign and private investment to ramp up their power sectors, some of the poorer West African countries are looking at more modest improvements centred on solar projects. 

A large part of Nigeria’s recent power-sector strategy has focused on securing Chinese investment for hydro projects and the private-sector development of gas-fi red capacity. But put-ting this into practice has not been a smooth process, with delays in bringing Beijing on board. Abuja’s energy policy is being undermined by the impact of the debt held by Nigerian power companies.

The Nigerian National Petroleum Corporation (NNPC) revealed at the end of 2018 that it and partner Black Rhino had delayed the construction of the planned 540MW Qua Iboe gas-fi red plant in Akwa Ibom state because Nigerian Bulk Electricity Trading (NBET) was reluctant to commit to buying electricity from new projects because it would increase its liabilities. “The continued delay relates to the current cash flow challenges at NBET, as highlighted by the Azura project,” an NNPC official told Reuters.

The 460MW Azura-Edo plant was the first privately financed independent power producer (IPP) facility to come on stream since the power companies were privatised in 2013, with financing backed by World Bank partial risk guarantees. It was intended to be a blueprint for future Nigerian IPPs, but has experienced difficulties in securing payments for its power from NBET. The World Bank only promised to give partial risk guarantees to the Qua Iboe project if the Nigerian government implements agreed power-sector reforms, which may take some time.


Despite massive Chinese investment in African power projects, the involvement of Chinese firms does not guarantee financing. For example, Abuja is still struggling to get the Mambilla hydro scheme in Taraba State, eastern Nigeria, built. It would be the country’s biggest power plant, with generating capacity of 3.05GW and involve the construction of four dams on the Donga River. The project has been under discussion since 1982.

The China Civil Engineering Construction Corporation was selected as the main contractor on the $5.8bn venture in 2017 and the Nigerian government said that China’s Exim Bank would provide 85% of the required funding, with the Nigerian federal government supplying the remaining 15%.

But progress has stalled, apparent-ly due to Nigeria’s failure to secure its share of the investment costs, although it is possible that Exim Bank’s participation is not yet guar-anteed. Chinese state organisations involved are giving few details of their position, while the Nigerian government is still assessing its involvement.

Ghana has revised its hydro strategy, with some projects being developed that might not be viable for power production alone. For example, in April the Volta River Authority began work in the north of the country on the Pwalugu Dam, which will not only provide 60MW of generation capacity but enough water to irrigate 20,000 hectares of agricultural land. It remains to be seen which purpose – power production or irrigation – takes priority when water levels are low. The project also has a third purpose: averting flooding in down-stream areas.


The countries of the Sahel do not have Nigeria’s bountiful hydrocarbon resources, but the governments there have decided to join the universal electrification bandwagon by committing more fully to developing solar energy. The generation capacities and electrification rates of these states are low, but steadily falling solar photovoltaic costs offer hope of improvement.

Burkina Faso, for example, had a connection rate of just 20% in 2016, with installed capacity running at 300MW, mostly comprising small diesel plants. Under the National Plan for Economic and Social Development, it hopes to boost these figures to 95% and 2GW by 2025, although a lack of domestic energy resources could hamper this effort.

 Burkina Faso, in common with other Sahelian states, has no oil, gas or coal reserves and limited wind re-sources, forcing it to import much of its power needs from Côte d’Ivoire. Its landlocked location makes the import of coal, oil and gas expensive, but solar power could be a viable option. The 33MW Zagtouli solar power plant on the edge of Ouagadougou was completed in 2017, with funding from the European Union and l’Agence Française de Développement.

In April, it was reported that the Burkinabe government had signed agreements with private-sector companies to develop six more solar power plants with a combined generating capacity of 155MW. Sonabel, the state power company, has offered 25-year power purchase agreements (PPAs) at a rate of CFA50/kWh ($0.09/kWh). Sonabel has also concluded tenders for two further solar projects: a 20MW facility in Boulkiemdé and a 10MW plant in Sanmatenga, and is currently assessing the bids.

While other African governments have generally set shorter-term goals for achieving universal electrification, Niger has opted for a more distant target of 2035, although this may still prove ambitious, given progress so far. The current electrification rate is 11.2% and just 0.4% in rural areas, one of the lowest rural rates in the world.

These figures are low even by Sahelian standards, with neighbouring Mali achieving a national electrification rate of 35% last year, including a rural rate of 18%. Mali’s rural electrification campaign has been boosted by the development of 70MW of off -grid capacity, out of total national installed capacity of 380MW.


Even given its hydro and gas priorities, the Nigerian government is also looking to small-scale solar projects to drive rural electrification. The Rural Electrification Agency was set up to manage the federal government’s activities in this area, including management of the Rural Electrification Fund. In late April, Abuja announced that it had secured $150m from the African Development Bank and another $50m from the Africa Grow Together Fund to finance rural electrification projects totalling 76.5MW. Much of Nigeria’s renewable energy investment is being made in micro- and mini-grids.

This article is an extract from the Africa Energy Yearbook 2019, a partnership between African Business and EnergyNet.