Azura-Edo Independent Power Plant Environmental Impact ... - IFC

2 PROJECT JUSTIFICATION
2.1 NEED FOR THE PROJECT
Addressing Nigeria’s electricity demand is becoming increasingly urgent not
only to bridge the current enormous gap between supply and demand but
also to match the expected growth of the country’s population. Nigeria’s
population (at circa 160 million people) is already the seventh largest in the
world and accounts for nearly 15 percent of Africa’s total. It is also a young
population with 40 percent of its citizens below the age of 15 and has a
population growth rate of 2.5 percent per annum. On the current estimates
produced by the United Nations, Nigeria’s population will reach nearly 230
million within the next 20 years.
Although the first electricity was produced in Nigeria in Lagos in 1896, there
has been very little investment in the Nigerian power sector. This was
particularly true of the twenty years between 1979 and 1999, during which
capacity expansion crawled to a halt and there was limited maintenance of
existing power stations. Since the return of the country to civilian rule in 1999,
the Government has attempted to increase the country’s power generation,
transmission and distribution capacity but (as noted below) the impact of
these efforts has been slow and the gap between supply and demand has
further grown. In turn, the impact on Nigeria’s economic growth and the
living standards of its citizens has been devastating.
By way of example, small scale self-generation of electricity from diesel and
petrol generators in Nigeria is currently estimated at more than 6,000 MW,
constituting more than twice the average generation of electricity from the
grid during 2009 (according to the Government’s “Roadmap for Power Sector
Reform” published in 2010). The majority of the Nigerian population (and
most notably the country’s poor) are not connected to the national grid.
In 2005, the Government launched an ambitious capital investment program
under the title of the NIPP. The NIPP projects comprise both gas-fired power
plants and transmission lines and, when completed, are intended to add
nearly 5,000 MW to the country’s electricity capacity. Unfortunately, the NIPP
programme has been subject to long delays and serious cost overruns.
The NIPP's contribution is very small compared to the investments that are
required for the country to meet the generating target that it has set for 2020,
namely 40,000 MW. Even if this target of 40,000 MW is met, Nigeria's power
capacity per head of population in 2020 would still be less than a quarter of
what South Africa currently enjoys.
According to Government estimates, reaching this relatively modest target of
40,000 MW by 2020 will require investments in power generating capacity of
at least USD 3.5 billion per annum for the next ten years (excluding the
AZURA EDO IPP
2-1
DRAFT EIA REPORT