The energy sector was effected by numerous problems, despite the wind recorded. Impacts such as the oil and gas challenge where oil production dropped to an almost all-time low, is predicted to spill over and have an adverse effect on the new year. Although there has been a reduction in the recurrence of system collapse, the seven times that the power grid witnessed immense effect on the year 2022, as it closely threw the country into a state of crisis. For instance, one of the grip collapses crashed the power generation in the country from over 3,700 MW to a low 38MW.
These collapsed occurred despite the billions invested in the Transmission Company of Nigeria by the Federal Government, and assurance by the sector’s regulator, the Nigerian Electricity Regulatory Commission, to ramp up the generation and distribution of over 5,000 MW. The first phase of the Federal Government’s free metering programme which was set to commence in August was also suspended as a result of the allegations of embezzlement and corrupt practices leveled against the distributors of meters. At least, six out of eleven electricity distribution companies in Abuja, Kano, Kaduna, Benin, Ibadan and Port-Harcourt also witnessed Discos reforms due to their inability to meet the financial requirements. They were handed over to banks for administrative running and recently, the Federal Government ordered the sale of these Discos’ shares so as to recover their loans.
Oil prices and fuel scarcity also ravaged the energy sector.
Organized oil thefts and pipeline vandalism were major events that shook the energy sector. These illegal activities had been going on consistently for over 10 years and this year, the activities got so rampant that the country lost 700,000 barrels daily to oil theft. In October, Nigeria also recorded its lowest output of 900,000 barrels per day. This occurrence, according to experts, was a major reason for the mass exit of international oil companies in Nigeria. The demise of Mohammed Barkindo, the Secretary General of the Organization of the Petroleum Exporting Countries further affected the sector. The incessant hike in oil prices and fuel scarcity also ravaged the energy sector in the last quarter of the year.
In 2022, the country’s debt in the ongoing case against Process and Industrial Development Limited for their alleged failed gas contract increased to N5 trillion. This case started as a result of the fallout of a gas project contract awarded to P&ID by the Federal Government. However, the gas processing facility was never enacted as a result of the irreconcilable differences between both parties involved. The compensation to P&ID had been accruing on a pre and post judgement interest of 7 percent since 2013, causing the debt to grow from $6 billion to $11 billion, a $5 billion increase as at 2022, about 30 percent of the country’s foreign exchange reserve which was $36 billion as of November.
EKEDC lost over N1.2 billion in assets to vandalism in 2022.
Eko Electricity Distribution Company revealed that in 2022, it lost over N1.2 billion of its assets and electrical installation to energy vandalism. Godwin Idemudia, the General Manager, Corporate Communications, EKEDC noted that vandalism of electrical cables and other facilities were posing immense threats to the company’s distribution infrastructure. On the positives witnessed in the sector however, the annual capacity payment losses was reduced to N88 billion from 2021’s N1060 billion. Also, the signing of the Petroleum Industry Act into law was another monumental development.
Importantly, some of 2022’s activities are expected to leak into 2023 such as the $1.3 billion Zungeru hydro power, which is projected to commence its operations during the second quarter of this new year. At least, 91 percent of the total capital expenditure in the Ministry of Power was allocated to the Zungeru hydro, as well as other power sector recovery operations proposed in the 2023 budget by the Federal Government. Reportedly, figures from the government indicated about N162 billion budgeted for the project, where Zungeru hydro would receive about N76 billion and multi and bilateral project tied loans for the PRSO would also receive N71 billion. The 700 megawatt power plant is expected to cost about $1.3 billion, with the Nigerian Government funding only 25 percent of the cost and 75 percent from the Chinese government.
Use of Solar energy set to increase during the course of the year.
Also, the Federal Government is presently sourcing for N4 trillion to enhance the gas expansion plan for the next decade. Reports stated that the money would be implemented for increased investment from 2021-2060, to reach net zero by 2060. The use of Solar energy is also predicted to increase during the course of this new year. The African Energy Chamber as well projected an increase in Nigeria’s oil production, from 1.65 million barrels per day to 1.75 million.
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