Econonomics of Energy and Environmental Policy

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Is Natural Gas a Viable Option to Promote Electrification in Nigeria?

Gifted with vast reserves of oil and natural gas, Nigeria is a country with low level of electrification but a rapidly rising demand. This invites the question of whether domestic natural gas can be leveraged to facilitate full electrification in Nigeria. We contend that while in principle natural gas is a solution to the problem of electrification, in practice, there are a set of gas industry specific and general power sector constraints to the use of gas for electrification in Nigeria. The specific constraints are the lack of an independent downstream regulatory regime for natural gas and poor geographical coverage of gas transportation pipelines. Even when gas sector constraints are resolved, and gas is readily available for use in power generation, electrification is inhibited by failure of power sector reform to encourage participation of private capital in financing new generation capacity, an unstable transmission network, and a liquidity crisis in the Nigerian power sector due to high energy loss, exacerbated by non-cost reflective tariffs and irregular bill collection regime.
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JEL Codes:Q35: Hydrocarbon Resources, O13: Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products, Q41: Energy: Demand and Supply; Prices

Keywords: gas-to-power, Nigeria, electrification, supply chain, system constraints

DOI: 10.5547/2160-5890.8.1.dpen

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Published in Volume 8, Number 1 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.


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