Sustainable energy development in Nigeria: Current status and policy options

Renewable and Sustainable Energy Reviews 51 (2015) 356–381

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Renewable and Sustainable Energy Reviews journal homepage: www.elsevier.com/locate/rser

Sustainable energy development in Nigeria: Current status and policy options Nnaemeka Vincent Emodi n, Kyung-Jin Boo Department of Technology Management, Economics and Policy Program, Room 312, Building 37, 1 Gwanak-ro, College of Engineering, Seoul National University, Seoul 151-744, South Korea

art ic l e i nf o

a b s t r a c t

Article history: Received 25 January 2015 Received in revised form 11 May 2015 Accepted 1 June 2015

Sustainable energy development focuses on maintaining the provision of energy in a manner that can enhance the short-, medium-, and long-term economic development of a country. The provision of sustainable energy requires the development and implementation of technologies that can improve the energy situation of a given country, such as renewable energy, energy-efficient technologies, and the proper use of conventional energy resources. To achieve this, effective energy policy options must be instigated that can adjust to changing circumstances. In Nigeria, the development of sustainable clean modern energy is an immense challenge, as is the proper use of the country's conventional energy resources. This is as due to the lack of effective support policies and poor participation by the government in clean energy development. The energy situation in Nigeria could be improved by the provision of adequate energy policy options designed to augment existing energy policies. This study critically reviews the current status of energy resources in Nigeria and the associated policies. Important policies, unavailable under current government strategies, are proposed and prioritised based on their likelihood of success in short, medium and long term. Among the most important policies based on priorities are policies to address crude oil theft, complete deregulation of the petroleum subsectors, utilisation of associated gases, creation of favourable business climate for private investors, increase attraction for Foreign Direct Investment in clean energy technology, Renewable Portfolio Standards development, introduction of Tendering Schemes, use of efficient fuel stoves, development of DemandSide Bidding and Energy Efficiency Standard Law. We believe that these proposed policy options could improve the sustainable development of Nigeria's energy resources. & 2015 Elsevier Ltd. All rights reserved.

Keywords: Sustainable energy Conventional energy Renewable energy Energy policy Policy options Energy development

Contents 1. 2.

3.

n

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 357 Non-renewable energy resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 357 2.1. Crude oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360 2.1.1. Petroleum policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360 2.1.2. Policy options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362 2.2. Natural gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363 2.2.1. Gas policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365 2.2.2. Policy options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365 2.3. Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366 2.3.1. Coal policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366 2.3.2. Policy options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366 Renewable energy resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369 3.1. Hydro energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369 3.2. Solar energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370 3.3. Wind energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371

Corresponding author. Tel.: þ 82 10 4624 5932. E-mail address: [email protected] (N.V. Emodi).

http://dx.doi.org/10.1016/j.rser.2015.06.016 1364-0321/& 2015 Elsevier Ltd. All rights reserved.

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357

3.4.

Biomass energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371 3.4.1. Biogas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373 3.5. Renewable energy policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373 3.6. Policy options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375 4. Energy efficiency and conservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376 4.1. Policy options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378 5. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380

1. Introduction The term “energy policy” can be defined as the process, manner, or techniques with which the government of a country addresses issues of energy development such as energy generation, distribution, and consumption [1]. The ultimate goal of a country's energy policy is to achieve sustainable energy development, that is, the maintainable provision of energy growth that can satisfy present generation needs without compromising the needs of future generation [2]. Sustainable development is an approach to the continued economic development of the world that equally balances the three pillars of sustainability: social, environmental, and economic considerations [3]. Provision of sustainable energy invariably involves the development and implementation of technologies (e.g., renewable energy and energy-efficient technologies) that will improve the energy situation within a given country. The importance of the global quest for sustainable energy development has increased dramatically in the modern world, which has raised the issue of sustainable economic development and growth. Therefore, sustainable energy development has emerged as one of the most promising means of addressing the challenges of energy demand [4]. In many countries, achieving sustainable energy has proved difficult and in some cases, especially in African countries, almost impossible. In Nigeria, providing access to sustainable clean modern energy has proven difficult and the efforts made by the government have yielded few results over the years. The energy policies in Nigeria have effectively failed to improve the energy situation of the country since their establishment [5–7]. This is because of a lack of available policy options to address the changing energy situation of the country and the ineffectiveness of the present policies to address the current situation in the energy sector. Given the lack of progress made through Nigeria's current energy policies, as highlighted above, a critical review of the current status of the development of energy resources in Nigeria and the associated policies is required. This paper reviews the current status of the development of energy resources in Nigeria and the associated policies. Furthermore, some policy options that could help ensure sustainable energy development in Nigeria are presented. The remainder of this paper is organised as follows. Section 2 presents an

appraisal of conventional energy resources in Nigeria together with the associated policies and policy options. Section 3 discusses the various renewable energy resources available in Nigeria, including an account of their current development, and the associated policies, and policy options. Energy efficiency and conservation policy options are presented in Section 4, and Section 5 presents our conclusions based on this review.

2. Non-renewable energy resources Nigeria has considerable reserves of conventional energy resources. It is the world's largest producer of oil and it has the largest reserves of natural gas on the African continent. It therefore became the world's fourth leading exporter of liquefied natural gas (LNG) in 2012. Nigeria is also a member of the Organisation of the Petroleum Exporting Countries (OPEC), which it joined in 1971 after over 10 years of oil production that began in the late 1950s [8]. Coal reserves stand at 2.175 billion tonnes, but production has long since ceased as the government has concentrated on the oil and gas resources. Nigeria is also rich in tar sand or oil sand, which is a combination of clay, sand, water, and bitumen (a heavy black viscous oil). Tar sands can be mined and processed to extract the oil-rich bitumen, which can be refined into oil [9]. Table 1 lists the conventional energy reserves in Nigeria and their potentials. According to the US Energy Information Agency estimate, the total primary energy consumption in Nigeria in 2012 was about 4.5 quadrillion Btu (British thermal units). This comprised 80% from traditional biomass and waste (wood, charcoal, manure, and crop residue) and much smaller percentages from oil and natural gas (Fig. 1). The Nigerian oil and gas sector is regulated by the Nigerian National Petroleum Corporation (NNPC), which was established in 1977 with the secondary responsibility of overseeing the development of the upstream and downstream oil sectors [12]. Despite the large energy resources in Nigeria, energy consumption is relatively low compared with other African countries with comparable energy resources (Fig. 2). This low energy consumption is due to the recurrent scarcity of petroleum products at vehicle petrol stations, while

Table 1 Conventional energy reserves in Nigeria and their potentials. Source: Ref. [10] Resource type

Natural gas Crude oil Tar sands Coal & lignite Nuclear element

Reserves Natural units

Energy units (Btoe)

187 trillion SCF 36.22 billion barrels 31 billion barrels of equivalent 2.175 billion tonne None

4.19 5.03 4.31 1.52 –

Production

Domestic utilization (natural units)

6 billion SCF/day 2.5 million barrels/day Insignificant – –

3.4 billion SCF/day 450,000 barrels/day Insignificant – –

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1% 6%

13% Traditional biomass Oil Natural gas Hydro

80%

Fig. 1. Total primary energy consumption in Nigeria in 2012. Source: Ref. [11].

3000

Ktoe per capita

2500 2000 1500 1000 500 0 Nigeria

Angolia

Algeria

Egypt

Ethiopia

Ghana

Libya

Morocco

South Africa

Tunisia

Fig. 2. Energy consumption per capita in African countries. Source: Ref. [13].

500,000,000 450,000,000 400,000,000 350,000,000 300,000,000 250,000,000 200,000,000 150,000,000 100,000,000 50,000,000 0 2015

2020

2025

2030

2035

2040

2045

2050

Fig. 3. Projections of population growth in Nigeria. Source: Ref. [16].

frequent electricity “black-outs” have resulted in a high reliance by the Nigerian populace on personal electricity generators. Despite the scarcity of petroleum products, energy demand has been increasing in Nigeria, because of the increase in economic development and the growth of the population. According to Sambo et al. [14], the major driver behind increasing energy demand is the population growth, while the most important determinant is the level of economic activity, measured by the country's gross domestic product (GDP).

Nigeria's population is projected to grow from 178,516,904 (as of 2014) to 183,523,432 by 2015, 273,120,384 by 2030, and 440,355,062 by 2050 (Fig. 3). To address the needs of this increasing population, the Energy Commission of Nigeria (ECN) [15] analysed the country's energy sector from 2000 to 2030 using the Wien Automatic System Planning (WASP) package and the Model for Analysis of Energy Demand (MAED). The results (Fig. 4), based on reference, high growth, and two optimistic (11.5% and 13% GDP growth) scenarios, project that energy demand in Nigeria will increase by 2.5, 3, 3.5, and 4.5 times,

359

2000

2010

2015

Reference (7%)

2020

High growth (10%)

245.19

414.52

429.11

331.32

259.19

169.18

312.61

245.97

190.73

118.14

148.97

108.57

94.18

79.36

72.81

56.18

56.18

51.4

32.01

32.01

32.01

32.01

553.26

715.7

N.V. Emodi, K.-J. Boo / Renewable and Sustainable Energy Reviews 51 (2015) 356–381

2025

Optimistic (11.5%)

2030

Optimistic (13%)

2005

2015

2020

Transport (4.7%)

2025

38.00

34.27

33.36

33.94

26.95

15.89

26.53

33.60

39.47 19.70

12.14

28.01

26.03

2010

Industry (16%)

16.59

8.38

22.42

13.48

12.59

18.82

6.43

11.70

8.08

92.34

145.21

Fig. 4. Projections of total energy demand (Mtoe) in Nigeria.

2030

Household (2.6%)

Services (8.7%)

COAL

GAS

2010

HYDROPOWER

2015

NUCLEAR

2020

0.0 0.1 2.9 2.3 1.8

13.1 11.0 10.4 8.3

9.4 5.3 8.3 6.7

0.1

0.0

0.0

9.9 13.8 15.3 15.6

21.3 18.9 13.6 10.7 8.6

48.5 53.5 53.0 59.0

78.6

Fig. 5. Total energy demand (Mtoe) based on 10% GDP growth rate.

SOLAR

2025

WIND

2030

Fig. 6. Nigeria’s current and future electricity generation capacity (%) by fuel (reference case).

respectively, from 2000 to 2015, and by 8, 13, 17, and 22.5 times, respectively, from 2000 to 2030. As described by the ECN, the increase in energy demand will develop in-line with the high level of economic activity expected in Nigeria, as measured by the total GDP. The sectorial energy demand (Fig. 5) shows that although the industrial sector had lower energy demand in 2005 (8.05 Million Tonnes of Oil Equivalent (Mtoe)), it will

have the highest energy demand by 2030 at 145.21 Mtoe with GDP growth rate of 16.27%, as the economy begins to improve based on increased industrial activity. The service sector is projected to have the second highest growth rate of 8.7%, while the residential sector is expected to have the lowest average growth rate of 2.6%. These projections for increasing energy demand can only be met if effective policies are put in place.

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Table 2 Characteristic features of Nigeria’s crude oil. Source: Ref. [18]. Product name

Sulphur content (as % of mass)

API gravity (in degrees)

Ports of sale

Agbami Amenam blend Amenam/ Mars blend Antan blend

0.044 0.12

47.2 38.2

0.94

33.5

Offshore Unity FSO/Odudu Terminal –

0.27

26.4

0.26 0.16 0.16 0.08 0.12 0.17 0.16

29.1 33.4 – 35.1 31.8 34.2 30.8

0.15 0.15

30.5 30.50 0.06

Bonga Bonny light Brass River EA crude Erha Escravos Forcados (to Europe) Odudu Okono Oso

condensate

Knock Taggart FPSO/ Antan Terminal Bonga FPSO Bonny Brass River Terminal Sea Eagle FPSO Erha FPSO Escravos Forcados – – 45.7

Qua Iboe Qua Iboe Ukpokiti Yoho Crude

0.14 0.14 0.08

36.3 36.3 39.3

Qua Iboe – Falcon FPSO

The ECN undertook a study using MESSAGE1 under the auspices of the IAEA2 to ascertain the future fuel mix for the diversification of Nigeria's electricity supply. The study used six different types of fuel for the optimisation: coal, natural gas, hydropower, nuclear, solar, and wind energy. Oil was not considered in the optimisation because of its use for export to the international energy market, meeting domestic energy demand and no current plans by the government to establish oil power plants in the future. The results (Fig. 6), which were based on the reference case scenario, show that energy from coal and nuclear sources (currently not part of the nation's electricity generation mix) will account for 15.6% and 6.7% of the total, respectively, by 2030. The proportion of Nigeria's energy generated by hydropower will decrease from 21.3% in 2010 to 8.6% by 2030. The high growth and optimistic scenarios follow similar supply patterns [17].

2.1. Crude oil Nigeria produces mostly light sweet crude oils that are predominantly exported to the world market. Table 2 shows the characteristic features of the crude oils produced in Nigeria and their ports of sale used for export. In Nigeria, commercial production of crude oil began in 1958 based on proven recoverable reserves of 1.48  QUOTE 6 billion tonnes. Production rose from an initial quantity of 3.1 million metric tonnes to 20.3 million tonnes in 1960, 54.2 million tonnes by 1970, and 104.1 million tonnes in 1980, all in response to demand from international markets rather than from domestic demand. On average, local consumption accounted for just 3% of production, while the remaining 97% was exported. Since 1980, three domestic petroleum refineries have supplied petroleum products for local consumption: the Kaduna Refinery with a capacity of 110,000 bbl/d (barrels per day), Port Harcourt Refinery with a capacity of 210,000 bbl/d, and Warri Refinery with a capacity of 125,000 bbl/d [19]. As shown in Fig. 7, the production of crude oil in Nigeria increased rapidly between 1980 and 2012; however, the rate of increase was 1 Model for the energy supply strategy alternatives and their general environmental impact. 2 International Atomic Energy Agency.

dependent on the economic and geopolitical situations in both producing and consuming countries. Nigeria’s current production capacity of 2.4 million bbl/d remains low because of problems in the Niger Delta3 and OPEC production restrictions. However, projections have placed future (2030) production at over 5.0 million bbl/d [20]. Crude oil production reached its peak in 2005, but has subsequently declined significantly because of the activities of militants in the Niger Delta region. These activities came to a halt in 2009 when amnesty was granted to the militants and by 2010, oil production began to increase as oil companies began operating at full capacity. The Nigerian government also took drastic measures to attract investment in deep-water acreage in order to diversify the location of oil fields and increase oil production. This has resulted in the production of an additional 800,000 bbl/d since 2003. However, crude oil production declined from 2011 to 2012 because of heavy floods and supply disruptions. In addition to the challenges faced by the government, the indigenes of the Niger Delta region suffer from the effects of environmental damages resulting from pipeline vandalisation. When pipelines are vandalised, crude oil is stolen to supply illegal refineries. The result is damage to the environment and the risk of a pipeline explosion for local communities. The rates of domestic production and export of crude oil did not improve significantly between 2006 and 2014 (see Fig. 8) because of the issue of crude oil theft. The oil price in Nigeria has been in-line with the OPEC price and has fared well over the years, reaching its peak in 2008, but declining in 2009 (Fig. 9). The price of oil in Nigeria was US$102.33 per barrel in August 2014; however, with the recent fall in the crude oil price,4 which is US$53 for West Texas Intermediate (WTI) and US$57.33 for Brent crude, the country’s economy will be adversely affected. The previous rise in the crude oil price was due to high oil consumption in countries such as China and India, in conjunction with conflict in key oil exporting countries such as Libya.5 High oil prices induced companies in Canada and the United States (US) to start drilling for new hard to extract crude in North Dakota’s Shale formations and Alberta’s oil sands. This has resulted in a “Price-War” between OPEC and the US [24]. The US, which was the largest single importer of crude oil from Nigeria (Fig. 10) in 2012, ceased importing oil at the end of 2014. Other countries have also reduced their oil imports from Nigeria, including the countries of the European Union. Fuel subsidies cost the Nigerian government US$8 billion in 2011 alone, which constituted 30% of federal government expenditure, 4% of the country’s GDP, and 118% of the capital budget. However, the Nigerian government removed the fuel subsidy on the 1st of January 2012. Subsequently, oil consumption in Nigeria has increased, as shown in Fig. 11. Downstream industries in Nigeria, which include domestic refineries and various petrochemical industries, use the crude oil produced in Nigeria. These refineries produce products such as linear alkyl benzene, benzene, heavy alkylate, and deparaffinated kerosene for domestic consumption [26].

2.1.1. Petroleum policies The Nigerian government, through its ministries6 and agencies, has articulated strategic policies intended to increase its oil base. The Federal Government Privatisation Policy is one example that allows private individuals or entities to own oil wells and engage 3 The Niger Delta region has been known for militant activity, but this activity was halted by the intervention of the late Nigerian President Umaru Yar’Adua who granted amnesty to the militants. 4 According to www.oilprice.net on 2nd January 2015. 5 www.useconomy.about.com/od/commoditiesmarketfaq/p/high_oil_prices. htm. 6 E.g., the Ministry of Petroleum Resources, Department of Petroleum Resources, and Energy Commission of Nigeria.

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361

3,000

2,500

bbl/ day

2,000

1,500

1,000

0

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

500

Fig. 7. Crude oil production in Nigeria. Source: Ref. [21].

3.5

Million barrel/day

3 2.5 2 1.5 1

0

2006 (1) 2006 (4) 2006 (7) 2006 (10) 2007 (1) 2007 (4) 2007 (7) 2007 (10) 2008 (1) 2008 (4) 2008 (7) 2008 (10) 2009 (1) 2009 (4) 2009 (7) 2009 (10) 2010 (1) 2010 (4) 2010 (7) 2010 (10) 2011 (1) 2011 (4) 2011 (7) 2011 (10) 2012 (1) 2012 (4) 2012 (7) 2012 (10) 2013 (1) 2013 (4) 2013 (7) 2013 (10) 2014 (1) 2014 (4) 2014 (7)

0.5

Domestic Production (mbd)

Export (mbd)

Fig. 8. Rates of domestic production and export of crude oil in Nigeria. Source: Ref. [22].

160 140 120

US$

100 80 60 40 20 2006 (1) 2006 (4) 2006 (7) 2006 (10) 2007 (1) 2007 (4) 2007 (7) 2007 (10) 2008 (1) 2008 (4) 2008 (7) 2008 (10) 2009 (1) 2009 (4) 2009 (7) 2009 (10) 2010 (1) 2010 (4) 2010 (7) 2010 (10) 2011 (1) 2011 (4) 2011 (7) 2011 (10) 2012 (1) 2012 (4) 2012 (7) 2012 (10) 2013 (1) 2013 (4) 2013 (7) 2013 (10) 2014 (1) 2014 (4) 2014 (7)

0

Fig. 9. Crude oil prices in Nigeria. Source: Ref. [23].

in oil exploration activities. This operates in tandem with special incentives for indigenous entrepreneurs willing to participate in upstream exploration activities. The incentives take the form of the allocation of acreages in the Nigerian oil basins. The federal government also introduced non-price incentives for prospective oil explorers that include exploration incentives, petroleum profit tax modifications, royalty rate modifications,

enhanced annual allowances, and investment tax credit royalties. Also, in situations where oil exploration is unsuccessful, the costs of the exploration are tax deductible. Another policy is the investment tax credit; investors enjoy investment tax credit when obtaining assets for the purpose of petroleum projects under the accounting period in which the taxable asset was first used.

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5%

United States

4% 18%

India

9% Brazil Spain

12%

Netherlands Other Europe

29%

8%

Africa Other Asia & Oceania

8%

Other Americas

7% Fig. 10. Crude oil and condensate exports in Nigeria in 2012. Source: Ref. [25].

350 300 250 200 150 100

0

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

50

Fig. 11. Crude oil consumption in Nigeria (bl/d). Source: Ref. [27].

2.1.2. Policy options We propose that Nigerian government should introduce policies that will address the crude oil theft responsible for the loss of crude oil revenue for many years. According to the NNPC Annual Report [28], Nigeria loses at least 100,000 bbl/d to oil theft, which accounts for around 5% of the total oil production. Internationally, Nigeria is among the five counties (others are Mexico, Indonesia, Russia and Iraq) most plagued by crude oil theft. However, effective measures have not been taken by these countries to address the issue.7 Studies [29–31] have found that the cause of crude oil theft in Nigeria is because of security lapses, state negligence for Niger Delta development, quest for personal riches and criminal tendencies of the international oil traders. In reality, crude oil theft cannot be tackled by the Nigerian government without the cooperation of other foreign governments. This could be achieved by controlling the physical movement of oil and by improving the security of the nation’s water ways, which are the pathways through which the stolen crude is distributed to potential buyers abroad. International collaboration could also improve the security of Nigerian crude oil as were proposed by the G8.8

7 www.business.financialpost.com/news/energy/these-are-the-5-countriesmost-plagued-by-oil-theft?_lsa ¼0a0d-aaa6. 8 Great Eight—France, Germany, Italy, Russia, Japan, Canada, United Kingdom and the United States. www.thisdaylive.com/articles/group-urges-g8-to-end-cru de-oil-theft-in-nigeria/151440/.

Another means would be to impose sanctions on any country found to have purchased stolen crude. If this proved difficult, then the Nigerian government could operate with foreign governments to freeze the accounts of those individuals or companies engaged in crude oil theft. The government could also place those companies involved in crude oil theft on a “do-not-trade-list”, pass a law that would prevent banks from lending them money or processing payments, and even deny their personnel visas to travel to Nigeria. The present decline in the crude oil price and the low revenue generation due to the halt in crude oil purchases by the US and most countries within the EU present some short-term difficulties. The only solution is the complete diversification of Nigeria’s export commodities and the improvement of other sectors of the economy.9 A disaggregated approach to policy formulation and implementation will encourage the involvement of all stakeholders during the introduction and implementation of such policies. The petroleum sector has not been completely deregulated and this has led to a steady increase in free-market distortions. Therefore, the complete deregulation of the petroleum sector would greatly reduce freemarket distortions and enhance competiveness (see Refs. [32,33]). The Nigerian government should also do more to increase private sector participation in both the upstream and downstream

9 www.france24.com/en/ 20150205-business-interview-nigeria-oil-prices-election-economy-africa-energy.

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363

1600 1400

Trillion cubic feet

1200 1000 800 600 400 200

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

0

Natural gas consumption

Natural gas production

Fig. 12. Natural gas production and consumption in Nigeria. Source: Ref. [41].

45 40 35 30 25 20 15 10 5 0 Russia

Nigeria

Iran

Iraq

USA

Rest of the World

Fig. 13. World’s top natural gas flaring countries, 2012. Source: Ref. [42].

oil sectors. This would be in conjunction with the Petroleum Industrial Bill (PIB)10 energy sector reforms, with which the Nigerian government plans to totally privatise the refining sector and fully liberalise domestic fuel prices. Although this has widely been rejected both by political office holders and by various labour organisations in Nigeria, this is the way forward. The total removal of the petroleum subsidy should be seen as a move in the right direction. This would aid the reduction of corrupt practices experienced in the petroleum sector and stimulate consumers to use their energy commodities more efficiently. Although a study carried out by Soile et al. [34] argue that the removal of fuel subsidy may have a negative impact on the economy, another study carried out by Siddig et al. [35] showed that the gradual reduction of the subsidy will increase the country’s Gross Domestic Product (GDP) but will have a detrimental impact on household income (poor households in particular). The solutions will be to accompany the subsidy reduction with income transfers aimed at poor households or domestic production of petroleum products to alleviate the negative impacts on household income [36,37]. 10 This bill intends to address the problems in Nigeria’s oil and gas sector: to establish a new legal framework, create efficient and effective regulatory agencies, reform the scandal-prone national oil company, and develop a new set of guidelines governing operations in the upstream and downstream sectors.

2.2. Natural gas The estimated proven reserves of natural gas in Nigeria stand at 182 trillion cubic feet (TCF) with a mean gauge pressure of about 12 bar, a calorific value of 35 mJ/m3, and a mean specific volume of 1.56  10  3 m3/kg. In 2012, the production rate was about 1.35 TCF of dry natural gas (Fig. 12), making Nigeria the 25th largest producer of dry natural gas in the world [38–40]. Natural gas reserves are located in the Niger Delta region of Nigeria (South–South). In the past, Nigeria flared about 73% of its gas because of poor infrastructure, which placed Nigeria second in the list of gas-flaring countries (Fig. 13). However, because of the efforts of the Nigerian government to reduce gas flaring through the financing and provision of relevant infrastructure to use the previously flared gas, Nigeria is now 365th on the list [43]. Infrastructure that uses the previously flared gas includes the power sector, which accounts for 80% of the total domestic consumption (Table 3 and Fig. 14) and generates 81% of the total electricity supply in Nigeria. Based on the current amount of gas remaining in the natural gas reserves, it is expected that they will last for about 88 years [45]. In order to improve natural gas activities, in 1988, through the NNPC, the government created a subsidiary and strategic business unit called the Nigerian Gas Company (NGC). This company is responsible for the development of policies for the transmission, distribution, marketing,

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Table 3 Current power plants in Nigeria and their locations. Source: Ref. [44]. Power station

Location

Type

Installed capacity (MW)

Year completed

AES Barge Aba Afam IV–V Afam VI Alaoji (NIPP) Calabar (NIPP) Egbema (NIPP) Egbin Geregu 1 Geregu 11 (NIPP) Ibom (NIPP) Ihorbor (NIPP) Okpai Olorunsogo Olorunsogo 11 Omoku Omoku 11 (NIPP) Omotosho 1 Omotosho 11 (NIPP) Sapele Sapele (NIPP) Ughelli Itobe Kainji Jebba Shiroro Zamfara Kano Kiri Mambilla

Egbin Aba, Abia State Afam, Rivers State Afam, Rivers State Abia State Cross River State Imo State Egbin Geregu, Kogi State Geregu, Kogi State Ikot Abasi Benin City Okpai Olorunsogo Olorunsogo Omoku Omoku Omotosho Omotosho Sapele Sapele Delta State Kogi State Niger State Niger State Kaduna State Zamfara State Kano State Benue State Taraba State

SCGT SCGT SCGT CCGT CCGT SCGT SCGT Gas-fired steam turbine SCGT SCGT SCGT SCGT CCGT CCGT CCGT SCGT SCGT SCGT SCGT Gas-fired steam turbine SCGT SCGT CFB technology Reservoir Reservoir Reservoir Reservoir Reservoir Reservoir Reservoir

270 140 726 624 1074 561 338 1320 414 434 190 450 480 336 675 150 225 336 450 1020 450 900 1200 800 540 600 100 100 35 3050

2001 2012 1982 2009 2013 2014 2013 1986 2007 2013 2009 2013 2005 2007 2012 2005 2013 2005 2012 1981 2012 1990 2015–2018 1968 1985 1990 2012 2015 2016 2018

NIPP¼ National Integrated Power Project, SCGT ¼ single combined gas turbine, CCGT¼ combined cycle gas turbine, CFB ¼ circulating fluidized bed.

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Coal (MWh)

Oil (MWh)

Gas (MWh)

Hydro (MWh)

Fig. 14. Electricity production by fuel type (%). Source: Ref. [48].

and pricing of natural gas and all its derivatives to the market within Nigeria and West Africa [46]. This implies that a monopoly exists in the Nigerian gas market, which also includes state and private companies such as the electricity companies and multinational companies (known as International Oil Companies; IOCs) including Shell, Chevron, and ExxonMobil who supply natural gas to the NGC [47]. Natural gas consumption in Nigeria has been increasing since its discovery (Fig. 12) and reached its peak in 2008 when a disruption in gas supply occurred. One of the IOCs (Shell) shut down their plants in order to repair damage to pipelines connected to the Soku plant. This damage was the result of pipeline vandalisation performed by local groups that were siphoning

condensate. After five months, the plants re-opened but then closed again in 2009 because of operational problems. The Soku plant provides a substantial amount of gas to the NGC’s liquefied natural gas (LNG) facility and, because of the supply disruption, a decline in gas production occurred [49]. Nigeria’s exports of natural gas (in the form of LNG) in 2012 are shown in Fig. 15. Europe has reduced its LNG imports from Nigeria since 2012, whereas the US has completely stopped importing from Nigeria because of increasing domestic production. However, imports have increased in Asian countries such as Japan, South Korea, and India, while France, Spain, Portugal, Taiwan, and Turkey still maintain their LNG imports from Nigeria. In 2013, there was some supply disruption and a temporary blockade on Nigeria’s

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2% 3%

365

2% Japan

1% 4%

Spain France

5% 24%

South Korea India

6%

Portugal Taiwan

6%

Turkey Mexico

7%

Kuwait

19% Other Asia Other Latin America

9% 12%

Other Europe

Fig. 15. Nigeria’s LNG exports, 2012. Source: Ref. [50].

LNG shipments, which led to a fall in its production and export; however, this did not affect domestic consumption. 2.2.1. Gas policy In 2008, the Nigerian government prepared the Gas Master Plan that was intended to promote natural gas production and encourage supply to domestic power stations to boost electricity generation. The bill established a gas market aggregator to manage the country’s gas supplies and it required companies to acquire a separate licence for gas exploration. In addition, tax on gas was lowered below that on oil to encourage the production of natural gas [51]. Other policies include the Natural Gas Infrastructure Blueprint, which provides flexibility through the use of open access (these will ensure establishment of three gas gathering and processing facilities, a network of gas transmission lines to boost gas supply), and the Domestic Gas Supply Obligation intended to ensure gas availability in the short and medium terms [52]. The main goals of these policies are to improve the long-term development of the gas sector and to alleviate the challenges of price distortions in the domestic gas sector. The development of gas resources can only occur when it is produced in commercial quantities and transported immediately to the market. 2.2.2. Policy options The government should encourage oil-producing companies to gather and use associated gases to eliminate flaring. As Nigeria is presently experiencing various reforms in the power sector, such as the sale of electricity generation companies and distribution firms to private investors, the flared gas should be channelled to the power plants. This would ensure an increase in the power supply to meet the growing domestic demand for electricity. Gas-fired power plants constitute veritable investments, and the infrastructure required for the transportation of gas from the wells to the country’s various power plants also represents an investment opportunity. The government should introduce policies that impose appropriate and effective penalties to discourage gas flaring. Flaring of natural gas has been illegal since 1984, but oil companies and the Nigerian government remain in a state of misunderstanding over who is responsible for the lack of the appropriate infrastructure necessary to capture, pipe, and channel gas to the power plants. According to the NNPC [53], about 23.5 billion cubic feet of gas was flared by ExxonMobil, Shell, and Chevron in January 2014

alone, which cost the Nigeria government US$2.5 billion in revenue However, these companies insist that the flaring of gas remains cheaper than capturing it because of the cost of the necessary technologies. Therefore, they choose to pay the fines rather than to devise the means of capturing the flared gases. The Nigerian government attempted to end natural gas flaring by mandating a “flare-out” deadline. The initial deadline of 2008, according to the National Energy Policy (NEP), was pushed back to December 2012, but this also failed [54]. The ECN has revived the NEP and considered 2015 to be the final “flare-out” date, but the IOCs are still insisting on 2020. The federal government must devise more effective penalties for breaches of the “flare-out” moratorium, once both parties have reached an agreement regarding the availability of funds to purchase the technology required to capture the gas, re-inject it back into the ground, or use it for power generation. The Nigerian government should encourage the establishment of the necessary infrastructure for effective gathering, transmission, and distribution of the gas nationwide. National gas distribution and transmission does not cover the entire nation. In regions where it does exist, it is poorly maintained and vandalised. The government should open up investment to the private sector in the area of natural gas transmission and distribution. Policies should be formulated to ensure that suitable urban and regional planning regulations provide the effective distribution of natural gas to domestic and industrial customers. The Nigerian government should initiate policies that will provide the necessary incentives to indigenous and foreign entrepreneurs to facilitate full private sector participation in the gas industry, encourage domestic and industrial consumers to use or switch to gas, and enable the introduction and use of LPG appliances in areas with no access to natural gas. The government should also ensure that the price of natural gas is cost effective,11 giving special consideration to its effect on local consumption. Natural gas research and development activities should be introduced, encouraged, and expanded in various institutions within the country, with some form of incentive offered to the institutions.12

11 This can be achieved by the government facilitating the movement of natural gas from the producers to the customers through the construction of natural gas transportation and storage facilities. Hence, improving local consumption. 12 www.iofina.com/iofina-natural-gas/overview.

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900.00 800.00 700.00 600.00 500.00 400.00 300.00 200.00 100.00 0.00

Fig. 16. Coal production in Nigeria (tonnes). Source: Ref. [57].

2.3. Coal Coal was the first conventional fuel to be discovered and used in Nigeria. It was discovered in Enugu State, in the south-eastern region of Nigeria in 1909. The first coal mine, the Ogbete drift mine, was opened in 1916 with an output of 24,500 tonnes. Its operation was merged with that of others within the country in 1950 following the formation of a new corporation known as the Nigerian Coal Corporation (NCC). The responsibility of the NCC in holding a monopoly on coal production (including coke mining) and sales was to exploit coal resources. The Polish firm KOPEX was in charge of its management from the NCC’s formation until its collapse after the Nigerian Civil War in 1970 [55]. Coal production reached a peak of 790,030 tonnes (Fig. 16) in 1956 and about 70% of this quantity contributed to Nigeria’s energy generation. Production began to decline when oil was discovered in 1956 at Oloibiri in the Niger Delta by Shell-BP, which was the sole concessionaire at that time [56]. The Nigerian Railway Corporation was the largest consumer of coal in the country. The corporation began to convert their railway engines from coal to diesel and gas in 1955. By 1982, production of coal had fallen to 62,830 tonnes [58]. Another set-back in coal production was the conversion of power plants from coal to oil by the National Electric Power Authority (NEPA) (now defunct) and only one coal-fired power plant was left. Following the discovery of coal in commercial quantities (1916– 1980), the total cumulative production was about 25.3 million metric tonnes. By 1980, oil contributed 70% to electricity generation, compared with 25% and just 1% for gas and coal, respectively. In terms of coal consumption, about 95% of the coal produced in Nigeria was consumed by the Nigerian Railway Corporation, NEPA, and cement companies for heating cements. Coal consumption by the Nigerian Railway Corporation fell to 60% in 1958, less than 30% in 1966, and to an insignificant level by 1986. NEPA’s coal consumption fell from 30% in 1966 to an insignificant level in 1970, and the last remaining coal plant was shut down in 1992 (Fig. 13) [59]. Because of the loss of its largest consumers, the NCC began to export its desirable low-sulphur-content coal to the United Kingdom and Italy. In 1999, the NCC lost its monopoly over the Nigerian Coal Industry (NCI) following the implementation of the federal government’s privatisation policy by the then civilian head of state (President Olusegun Obasanjo). In 2002, work stopped at all NCC-operated mines and the government established a technical advisory committee to revive the NCI [60]. Current coal reserves in Nigeria are estimated to be 2.75 billion metric tonnes and the nation’s proven reserves stand at 639

million tonnes. However, the coal reserves have not been fully explored or even marginally developed despite the long history of the coal industry. The locations of the coal deposits in Nigeria are mostly in eastern parts of the country, as shown in Table 4. They are mostly lignite and sub-bituminous, although some are highvolatility bituminous deposits [61]. 2.3.1. Coal policies Various policies led to the growth and failure of the Nigerian coal industry. These policies were created by various government agencies including the Nigerian Railway Corporation, Energy Commission of Nigeria, National Electric Power Authority (now defunct and named the Power Holding Company of Nigeria), Nigerian Ports Authority, Bureau of Public Procurement, Nigerian Coal Corporation, National Electricity Regulatory Commission, and Nigerian Export Processing Zones Authority. The policies introduced and their effects are listed in Table 5. Since 2013, various coal electricity projects have started in Nigeria (Table 6). These indicate that the various policies implemented by the Nigerian government, aimed at reviving the coal industry, have been successful. With a target total supply of coalderived electricity of 4800 MW, the national electricity deficit will be greatly reduced and, more importantly, the source of the nation’s electricity generation will be diversified. 2.3.2. Policy options Although coal technology for electricity generation remains in its infancy, some policy options are provided that will offer significant developmental benefits to Nigeria. These policies are suggested with regard to strategies for the mitigation of the effects of carbon emissions on climate change. We propose that the Nigerian government should develop a programme to systematically assess current and emerging technologies that might be vital for the medium- to long-term future of the coal power sector, and develop a strategic national plan for the development, adaptation, and deployment of suitable technologies. The government should also invest in a detailed geological assessment of on-shore and off-shore carbon storage locations.13 This will be important in the long term with regard to the growing international concern regarding climate change. This has presented several benefits according to a study carried out in the United States.14 13 www.decarboni.se/publications/assessment-sub-sea-ecosystem-impacts/ 11-global-potential-offshore-co2-storage. 14 Vidas H, Hugman B, Chikkatur A, Venkatesh B. Analysis of the costs and benefits of CO2 sequestration on the U.S. outer continental shelf. ICF International. 2012.

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367

Table 4 Coal reserves in Nigeria. Source: Ref. [62]. Mine location

State

Coal type

Estimated reserves (million tonne)

Proven reserves (million tonne)

Borehole record

Coal outcrop and seam thickness (m)

Coal depth (m)

Mining approach

Current status

Okpara Mine

Enugu

100

24

20

Many

180

Underground

Functional

Onyeama mine

Enugu

150

40

Many

Many

180

Under-ground

Functional

Ezimo

Enugu

156

56

4

10(0.6–2.0)

30–45

Under-ground

Inyi

Enugu

50

20

4

(0.9  2.0)

25–48

Amansiodo

Enugu

1000

NA

3

NA

563

Open cast, Under-ground Under-ground

Ogugu/Awgu

Enugu

NA

NA

Nil

NA

NA

Under-ground

Okaba

Kogi

250

73

Many

(0.8  2.3)

20–100

Kogi

427

107

31

17(0.8  2.3)

20–100

Ogwashi- Uku/ Azagba/Obomkpa Oba/Nnew Ihioma Lafia/Obi

Delta

250

63

7

4 (3.5)

15–100

30 40 156

NA NA 21.42

2 Nil 123

14(0.3  4.5) Many  1.3

18–38 20–80 80

Open cast, Under-ground Open cast, Under-ground Open cast, Under-ground Underground Open cast Under-ground

Functional

Ogboyoga

SubBituminous SubBituminous SubBituminous SubBituminous Bituminous (cokeable) SubBituminous SubBituminous SubBituminous Lignite

75

57

Many

(0.8  2.3)

20–100

Functional

50

NA

Nil

NA

20–100

Open cast, Under-ground Under-ground

NA

NA

Nil

NA

NA

Under-ground

NA

NA

Nil

NA

NA

Under-ground

NA

NA

Nil

NA

NA

Under-ground

NA

NA

Nil

NA

NA

Under-ground

NA

NA

Nil

NA

NA

Under-ground

NA

NA

Nil

NA

NA

Under-ground

NA

NA

Nil

NA

NA

Under-ground

NA

NA

Nil

NA

NA

Under-ground

Owukpa Afikpo/Okigwe Afuze Ute Lamja Gandi-Akwati Jamata-Koji Doho KurumuPindiae GarinMaiganga

Anambra Lignite Imo Lignite Nasarawa Bituminous (cokeable) Benue SubBituminous Abia SubBituminous Edo SubBituminous Ondo SubBituminous Adamawa SubBituminous Plateau SubBituminous Kwara SubBituminous Gombe SubBituminous Gombe SubBituminous Gombe SubBituminous

The government should set up emission control standards and provide incentives for investors who install pollution-control technologies such as carbon capture and storage. Advance emission control technologies should include; NOx control, particulate control, SO2 control, SO3/H2SO4 control, sorbent injection, wet ESP and mercury control.15 These emissions are common with coalfired power plants and they pose an environmental health risk [64]. Hence, the Nigerian government should ensure that this standards are in-place before coal fired power plants become operational in Nigeria. Policies should be implemented by the government to encourage the deployment of higher-efficiency pulverised coal combustion technologies such as supercritical and ultra-supercritical technologies. An improved efficient power plants can generate a higher amount of energy that can be extracted from a single unit of coal. Moreover, the efficiency of electricity generation are essential in tackling climate change. Hence, one percentage point

15 Moretti AL, Jones CS, Asia PG. Advanced emissions control technologies for coal-fired power plants. Babcock & Wilcox Power Generation Group. BR (-1886). 2012.

improvement in the efficiency of a conventional pulverised coal combustion plant results in a 2–3% reduction in CO2 emissions.16 Supercritical and ultra-supercritical coal-fired power plants on the other hand reduces the amount of coal used per MWh due to higher efficiencies, and reduces the harmful emission from coal fired units.17 These will present some benefits for Nigeria in reducing CO2 emission while meeting its energy demand. The government should create favourable conditions for a business climate that encourages private investment in coal mining. Countries such as India18 and Indonesia19 have provided some form of incentives to potential investors in coal mining in order to ensure rapid investment in the sector. These incentives could be in the form of import duty and tax relief on mining/extraction machinery, equipment, spare parts and auxiliary equipment.

16 www.worldcoal.org/coal-the-environment/coal-use-the-environment/ improving-efficiencies/. 17 Poulsen HH. Advantages of ultra-supercritical technology in power generation. In: Proceedings of the international conference on clean coal, Italy. 2005. 18 www.hurriyetdailynews.com/incentives-on-coal-mining-expanded.aspx. 19 www.tradecommissioner.gc.ca/eng/document.jsp?did=133467#toc21.

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Table 5 Coal policies in Nigeria and their effects. Source: Ref. [63]. Policy

Policy effect

Acts 29 of 1950 establishing the Electricity Corporation of Nigeria (ECN) NEPA was created by Decree No. 24 of 1972 by merger of ECN and Niger Dams Authority (NDA) Nigeria Coal Corporation (NCC) was established by the coal ordinance No. 29 of 1950 Mineral act (Cap 121 of 1946). Quarries Decree 26 of 1969 Quarry Regulations 1969 The explosive Act of 1964 Explosive regulation 1969 Railway Corporation Act 1955 Nigerian Port Authority Act of 1954 (Cap.155) 1972 indigenisation decree NCC Amendment Act 26 of 1988 Acts No. 63 of 1992 Decree 86 of 1992

The law established the ECN which installed the Oji coal power plant NEPA was given the monopoly for power generation, transmission and distribution NCC was given the mandate to solely develop coal in Nigeria

The mines manual Minerals regulations, safe mining regulation Minerals regulations, safe mining regulation Regulates explosive use in mining Regulates explosive use in mining Established Nigerian Railway Corporation on 1st October 1955 The Nigerian Ports Authority was established in April 1955 following the Ports Act of 1954 (Cap.155) The decree nationalised most of the mines resulting in the foreign mining companies Broke the monopoly of NCC in mineral exploration Created incentives for mineral exploration Mandated Environmental Impact Assessment (EIA) for all major projects in Nigeria including mining and power generation Act No. 62 of 1979 Energy Commission of Nigeria was established by Act No. 62 of 1979 After the 1999 Hand-Over from military to civilian government Bureau of Public Enterprise (BPE) and national council of Privatisation of Government owned companies including coal mines and power plants privatisation (NCP) 2005 National Energy Policy 2003 Resuscitation and extensive exploration of coal using clean technologies; private sector/indigenous participation through adequate incentives, infrastructures, and export encouragement; enactment of environmental law in the mining activities; replacement of fuel wood with coal for domestic cooking, power generation from coal; regulation of prices of coal stove and sensitization of the people about smokeless coal briquettes as energy source National Energy Master Plan 2003 Intensifying coal exploration through privatisation; awareness creation; provision of incentives (i.e. tax holiday) for local and foreign investors; fast-track the passage of minerals and mining bills; enhancement of transparency in the sector and provision of up to date quality geographical data; development of investors-friendly framework, infrastructures including the revamping of nations railway system, dredging inland systems and reactivating of coal washing plant at Ogbete, Oji River coal fired power plant and the drive to establish more coal fired power plant; encouragement of coal stove through affordable prices, research and middle level manpower; development of coal briquetting and sensitisation of the people about the efficiency of coal briquette burningstove Electricity sector reform act 2005 Un-bundling PHCN, Privatisation of successor companies, creation of Competitive electricity market, Deregulation of the electricity industry, Expansion of power infrastructures and transmission, Price regulation and financing by operators, Enhancement of competition and private sector participation in order to develop a competitive power market for efficient, safe and sufficient electricity production National Electricity Regulatory Commission (NERC) 2005 Establishment of power consumer assistant fund for subsidising underprivilegedconsumers to protect consumers and public interest through international best practice codes with stable, equitable rates; expansion of electricity to rural and urban settlers; licensing of individuals involved in electricity enterprise and settlement of dispute in the industry internally. Regulating the electricity sector Empowerment to generate electricity in excess of 1 MW, distribute in excess of 100 kW, transmission, system operation, trading and installation Nigeria export processing zones Authority (NEPZA) (2006) Incentives of Nigerian export processing zone shall apply to coal mining Nigerian minerals and mining act, 2007 Provision of mining incentives such as exemption of custom duty and other benefits and permission to retain and use earned foreign exchange; construction of road and use of mining roads; prohibition of road use hindrance; participation of small scale miners; environmental consideration and right of host communities. Regulation of Nigerian mining industry, establishment of incentives such as tax holiday for 3–5–5 years, royalty payment deferment, extension of basic infrastructure such as road and electricity and 100% foreign owning of mining centers. Establishment of mining cadaster and saddled with autonomous responsibility of minerals titles in Nigeria Road map for power sector reform (2010) Private sector driven power supply. Recommended coal for electricity generation Vision 20: 2020 Nigeria requires 20,000 MW to be among the 20th industrialised nation by 2020

Table 6 Current coal power plants projects in Nigeria. Source: Ref. [63]. Projects

Capacity (MW)

Coal source

Project location

Value of project ($ Billion)

Investor

Project duration

Enugu Coal power plant Enugu Coalpower plant* Kogi Coal power plant Gombe Coal power plant

1000 600 1000 1000

Nsukka Enugu Odu & Abocha NA

3.7 0.6 1.5 NA

HTG-Pacific Energy (Chinese) ESSAR Group (Indian) Skipper & Energy Co. (Swiss) NA

2013–2015 2011–2015 2013– 2013–

Benue Coal power plant (FGN) Total

1200

Ezinmo Enugu, Inyi Okaba & Ogboyoga Lamja, Doho, Garin, Maigagan Orukpa

Gboko

4

Sepco III-Pacific Energy (Chinese)

2013–

4800

9.8

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369

Table 7 Renewable energy resources in Nigeria and their potential. Source: [67] Resource type

Reserves

Production

Domestic utilization (natural units)

Natural units

Energy units (Btoe)

Small hydropower Large hydropower Wind

3500 MW 11,250 MW 2–4 m/s at 10 m height (main land)

30 MW 1938 MW –

30 MW 1938 MW –

Solar radiation

3.5–7.0 kWh/m2/day (4.2 million MWh/ day using 0.1% land area)

0.34 (over 40 years) 0.8 (over 40 years) 0.0003 (4 m/s @ 12% probability, 70 m height, 20 m rotor, 0.1% land area, 40 years 5.2 (40 years and 0.1% land area)

6 MWh/day

6 MWh/day

–

0.120 million tonne/day

–

0.781 million tonnes of waste/day 0.256 million tonnes of assorted crops/day

0.120 million tonne/ day None

Biomass Fuel wood Animal waste

11 million hectares of Forest and wood land Excess of 1.2 m tonne/day 211 million assorted animals

Energy crops and 28.2 million hectares of arable land ( ¼30% – agricultural residue of total land)

The government should also revive the railway network because it represents the most competitive means by which to transport coal to the necessary locations. Although the current Nigerian President20 has made several effort to revive the Nigerian Railways, more commitment needs to channelled into the railway sector to ensure that the challenge of coal transportation is addressed.

3. Renewable energy resources Renewable energy plays a vital role in meeting the needs of both rural and urban areas of the country in terms of sustainable development [65]. The development and proper use of renewable energy should be given high priority, especially now that the issues of climate change and global warming are among the most critical issues discussed by the various governments of the world. Developed and developing countries are now adopting renewables in order to achieve energy sustainability [66]. Nigeria is blessed with an abundance of renewable energy resources that must be fully harnessed, developed, and properly used. However, the development of renewable energy has so far been slow, and the desperate situation of the energy sector in Nigeria can only be resolved if adequate policies are implemented to attract investors in renewable energy to Nigeria. Nigeria’s renewable energy resources are presented in Table 7 and discussed in detail below.

None

Table 8 Small hydropower potentials in Nigeria. Source: Ref. [73]. State (Pre 1980)

Sokoto Katsina Niger Kaduna Kwara Kano Borno Bauchi Gongola Plateau Benue Cross Rivers Total

River basin Total sites

SokotoRima SokotoRima Niger Niger Niger Hadeija– Jamaare Chad Upper Benue Upper Benue Lower Benue Lower Benue Cross Rivers

Hydropower potential Developed (MW)

Undeveloped (MW)

8.0

22.6

30.6

11

8.0

8.0

30 19 12 28

117.6 59.2 38.8 40.2

117.6 59.2 38.8 46.2

28 20

20.8 42.6

20.8 42.6

38

162.7

162.7

92.4

110.4

19

69.2

69.2

18

28.1

28.1

702.2

734.2

22

32

277

6.0

18.0

32

Total capacity (MW)

3.1. Hydro energy Hydro energy technology is dependent on the potential energy difference between the levels of water in reservoirs, dams, or lakes and their discharge tail water levels downstream. A water turbine, which converts the potential energy of the water to shaft rotation, is coupled to a suitable generator to produce the electricity [68]. In Nigeria, hydro energy technology is currently the prominent commercial renewable energy technology in the country’s electricity supply mix. Economy of scale has enabled the development of largescale hydropower technology to account for a large proportion of the total commercial renewable energy resources for electricity generation under greenhouse gas (GHG) emission constraints [69]. A part from the problem of relative water levels, hydropower can supply uninterrupted power. Nigeria’s total hydropower potential stands at 14,750 MW, but only 1930 MW (i.e., 14%) is currently generated at Kanji, Shiroro, and Jebba, which represents about 30% of the gross installed grid-connected generation capacity in Nigeria 20

Dr. Goodluck Ebele Azikiwe Jonathan, GCFR, BNER, GCON.

Table 9 Small hydropower schemes in Existence in Nigeria. Source: Ref. [73]. River

State

Installed capacity (MW)

Bagel I Bagel II Ouree Kuna Lere Lere Bakalori Tiga

Plateau Plateau Plateau Plateau Plateau Plateau Sokoto Kano

1 2 2 8 4 4 3 6

Total

30

[70]. This assessment is based on the type of large-scale hydropower that was in operation before the 1973 oil crisis. Clearly, Nigeria’s hydropower potential has not been fully exploited. However, small hydropower (SHP) has recently received

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Fig. 17. Nigerian water ways. Source: Ref. [74].

considerable global attention. This attention is because of the inherent advantages of SHP in reducing environmental impact, minimising civil works, and offering the possibility of combining power generation with flood prevention, irrigation, and the development of fisheries. Nigeria’s current SHP generation is estimated at 3500 MW, which represents about 23% of the entire national hydro potential [71], as shown in Table 7. A study undertaken in 12 states and 4 river basins revealed over 278 unexploited SHP sites with a total potential of 734.2 MW [72]. Three of the states surveyed, Kano, Sokoto, and Plateau, had installed operating SHP generators with a total capacity of 30 MW. The Nigerian Electricity Supply Company (NESCO) is currently generating 21 MW from six other sites in Plateau state. Currently, about 5% of the available SHP capacity is exploited, while other SHP sites have been set aside for future development [71]. However, out of the total potential of 734.2 MW, only 32 MW have been developed. Table 8 shows the SHP potential in Nigeria, Table 9 presents the existing SHP schemes [73], and Fig. 17 shows the various water ways within the country [74]. The establishment of additional SHP plants across the country would help provide electricity for rural populations. This could be achieved by establishing SHP in rural areas that have small rivers within the local communities. This would transform the rural areas into semi-urban centres, enhancing various economic activities that would in turn improve the wellbeing of the rural dwellers. 3.2. Solar energy Solar energy is the most promising renewable energy source because of its apparent limitless potential. The sun radiates energy at the rate of about 3.8  1023 kW/s. Most of this energy is transmitted radially as electromagnetic radiation, reaching the boundary of Earth’s atmosphere at about 1.5 kW/m2. After traversing the atmosphere, a square metre of Earth’s surface can receive

as much as 1 kW of solar power, or about 0.5 kW on average during daylight hours. This huge energy resource is available for about 26% of the day [75]. Solar energy can provide cheap and abundant energy for communities whose connection to the utility grid might not be economical because they are located too far from the nearest gridconnection point. Solar energy is therefore a very good alternative source of energy in the rural areas of Nigeria. It could aid the rapid development of small-scale industries and reduce rural–urban migration [76]. Nigeria is located within a high sunshine belt and solar radiation is well distributed. The annual average total solar radiation varies from about 25.2 MJ/m2/day (7.0 kWh/m2/day) in northern regions to about 12.6 MJ/m2/day (3.5 kWh/m2/day) in southern parts. Assuming an average of 18.9 MJ/m2/day (5.3 kWh/ m2/day), Nigeria has an estimated 17,459,215.2 million MJ/day (17.439 TJ/day) of solar energy arriving over its 923,768 km2 land area. The annual average intensity is 6898.5 MJ/m2/year or 1934.5 kWh/m2/year [77]. As the average sunshine per day is 6.5 h, the annual solar energy available is about 27 times that of the country’s total fossil fuel resource, and it is over 115,000 times the electrical power generated [78]. This implies that about 3.7% of the land area in Nigeria could collect an amount of solar energy equivalent to the conventional energy reserves within the country [71]. This is in agreement with a study by Oji et al. [79], who considered that the minimum harnessing of solar power in some parts of Nigeria would be more than enough to power an average three-bedroom flat and two-room apartment that use low-power appliances. The monthly averages of daily solar radiation for 28 states in Nigeria over 25 years are presented in Table 10 [80], and the annual average daily sun in Nigeria is illustrated in Fig. 18 [81]. The levels of solar energy awareness and acceptance have already gained ground in northern parts of Nigeria, as presented in a survey performed by Shehu [82]. Other studies, surveys, and pilot projects

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Table 10 Maximum, minimum and yearly average global solar radiation (kWh/m2/day) Source: Ref. [80] Stations

Location Lat. 1N

Location Long 1E

Altitude (m)

Maxa Minb

Monthly Average

Abeokuta Abuja Akure Azare Bauchi Beni City Calabar Enugu Ibadan Ilorin Jos Kaduna Kano Katsina Lagos Lokoja Maiduguri Makurdi Minna New Bussa Nguru Obudu Oweri Port Harcourt Serti Sokoto Wari Yola

7.25 9.27 7.25 11.8 10.37 6.32 4.97 6.47 7.43 8.48 9.87 10.6 12.05 13.02 6.58 7.78 11.85 7.73 9.62 9.7 12.9 6.63 5.48 4.85 7.5 13.02 5.52 9.23

3.42 7.03 5.08 10.3 9.8 5.6 8.35 7.55 3.9 4.58 4.97 7.45 8.53 7.68 3.33 6.74 13.08 8.53 6.53 4.48 10.47 9.08 7.03 7.02 11.3 5.25 5.73 12.47

150 305 295 380 666.5 77.52 6.314 141.5 227.23 307.3 1285.58 645.38 472.14 517.2 39.35 151.4 383.8 112.85 258.64 152 342 305 120 19.55 610 350.75 6.1 186.05

4.819 5.899 5.172 6.028 6.134 4.615 4.545 5.085 5.185 5.544 6.536 6.107 6.391 5.855 5.013 5.639 6.754 5.656 5.897 5.533 8.004 5.151 4.649 4.576 4.727 6.29 4.237 6.371

4.258 5.337 4.485 5.571 5.714 4.202 3.925 4.539 4.616 4.979 5.653 5.672 6.003 4.766 4.256 5.035 6.176 5.077 5.427 4.952 6.966 4.224 4.146 4.023 4.488 5.92 3.748 5.774

a b

3.474 4.359 3.811 5.022 4.886 3.616 3.324 3.974 3.622 4.096 4.539 4.446 5.563 3.656 3.771 4.68 5.426 4.41 4.41 4.15 6.326 3.375 3.684 3.543 3.972 5.221 3.261 4.974

Average for the months of March, April and May. Average for the months of July and August.

have been undertaken by the Sokoto Energy Research Centre and the National Centre for Energy Research and Development under the supervision of the ECN. They have implemented solar PV water pumping and electrification, and solar thermal installations such as solar cooking stoves, crop drying facilities, incubators, and chickbrooding systems. However, solar technology has not penetrated into the deep rural areas, especially the off-grid areas, where candles and kerosene lamps are still used for lighting homes at night. An effective policy should be created to foster the development of solar energy across Nigeria to help reduce poverty in rural areas of the country. 3.3. Wind energy Wind is a natural phenomenon related to the movement of air masses caused primarily by differential solar heating of the earth’s surface. The seasonal variation in the energy received from the sun affects the strength and direction of the wind. The ease with which aero-turbines transform the energy of moving air into rotary mechanical energy lends itself to the conversion of wind energy to electricity. For many years, wind energy has been used for pumping water and milling grain [83]. Wind energy generation has gained worldwide recognition and it is the fastest growing renewable energy market in the world. The global cumulative installed capacity of wind power has increased steadily from 6100 MW in 1996 to 158,505 MW in 2009, and was expected to be over 238 GW by the end of 2014, a target that will aid the reduction of GHG emissions [84]. Currently, 82 countries generate electricity from wind energy, 49 of which have increased their installed capacity since 2009. In 2009, Africa, Egypt, Morocco, and Tunisia were the leading countries for wind energy with installed capacities of 430, 253,

371

and 54 MW, respectively [85]. In Nigeria, wind measurements at 10-m height show that some sites have wind speeds between 1.0 and 5.1 m/s. These wind speeds can be classified into four regimes: 44.0 m/s, 3.1–4.0 m/s, 2.1–3.0 m/s, and 1.0–2.0 m/s. Therefore, Nigeria is located within a moderate wind21 regime. The wind speed in southern Nigeria is relatively low, except for coastal regions and offshore, where the high wind speeds indicate great potential for exploiting wind energy [77]. A study undertaken by the ECN [83] revealed that the total exploitable wind energy reserves at 10-m height might vary from 8 MWh/yr in Yola to 51 MWh/yr in the mountainous area of Jos, and possibly even as high as 97 MWh/yr in Sokoto. In addition to the study performed by the ECN, many indigenous researchers [86–90] have analysed wind data from various parts of the country and these data include wind speeds and power flux densities. Furthermore, the wind energy potential and the conditions that must be met before a wind turbine can be connected to the utility grid have also been studied in the literature [71,86,87]. Adekoya and Adewale [86] produced estimates of potential wind speeds at 10 selected sites within the country. The results were compared with wind speeds calculated by the Mainz climate model, which revealed a discrepancy of –4.3% to 4.1%, which is within acceptable error limits [71]. The results, presented in Tables 11 and 12, list the estimated gross energy yield, while Table 13 presents the estimated wind energy potential of some selected states in Nigeria [86,87]. Fig. 19 shows the potential of wind energy locations in Nigeria [91]. According to Shaaban and Petinrin [71], assuming a medium generation capacity of 5 MWh/km2 with (a) a 30% capacity factor and (b) using only 1% of the effective wind area of the selected states, Nigeria has the potential to generate about 50,046 MWh/yr of electricity. The detailed potentials and wind energy densities at 25-m height for 22 selected states in Nigeria are presented in Table 14 [86,87]. Currently, no commercial wind power plants are connected to the national grid in Nigeria. The few power plants that exist are those installed in the 1960s in five northern states and the 5-kW wind electricity conversion system installed in Sayyan Gidan Gada in Sokoto state. However, the latest development in wind energy generation in Nigeria is the ongoing installation of wind turbines in Katsina state, which is expected to generate 20 MW of electricity on completion. The progress of harnessing the potential of wind energy is too slow. Most communities in northern parts of the country are not connected to the electricity grid and therefore, the federal government must do more regarding the exploitation of wind power, especially in these northern areas where the wind speed is high.

3.4. Biomass energy Biomass energy refers to energy that is developed from organic materials like scrap lumber, forest debris, crops, manure, and some types of waste residue. Biomass is an indirect form of solar energy because it arises from the process of photosynthesis. Biomass resources found in Nigeria include wood, shrubs, and forage grasses, and waste from animals, forestry, agriculture, industry, and municipal areas. Nigeria’s biomass resources have been

21 Moderate wind or breeze according to the Beaufort wind force scale gives the sea condition as small waves with breaking crests, fairly frequent whitecaps and land condition as dust, loose paper raised, small trees branches begin to move (see National Meteorological Library and Archive fact Sheet 6—The Beaufort Scale— PDF).

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Fig. 18. Yearly average of daily sun in Nigeria. Source: Ref.[81]. Table 11 Summary of the measured data of annual wind speeds. Source: Ref. [86,87]. Site

Enugu Jos Pankshin Sokoto Kano Gumel Maiduguri Ibi Gembu Lagos

Land-use type

Complex landscape Complex landscape Complex landscape Plain surface Plain surface Plain surface Plain surface River valley Highly complex landscape Coastal area

Altitude (m a.s.l.)

466 1344 1355 352 340 393 373 300 1800 2

estimated at 88  102 MJ.22 Biomass energy from plants could be used as fuel for small-scale industries or fermented by anaerobic bacteria to produce cheap and versatile biogas [92]. Fuel wood is the most common form of biomass in Nigeria, with about 80 million m3 used annually for cooking and various other domestic purposes [68]. The energy content of this fuel wood is 6.0  109 MJ, out of which only 5% and 12% are used for cooking and other domestic uses, respectively [93]. In addition, increasing demand for wood by the furniture and construction industries is causing a rapid depletion of the biomass resources in Nigeria. Shrubs and forage grasses have been estimated to produce 200 million tonnes of dry biomass that could release up to 2.28  106 MJ of energy [77]. Because of the high dependence on fuel woods for

22 Lawal Nadabo S. Renewable energy as a solution to Nigerian energy crisis. 2010.

Height (m)

30 30 40 30 30 30 30 30 40 30

Wind speed (m/s)

Differences (%)

Measured

KLIMM

4.6 5.2 4.9 5.4 4.9 4.1 4.7 3.6 5 4.7

4.4 5.1 4.7 5.2 5.1 4.2 4.6 3.3 5.2 4.9

-4.3 -1.9 -4.1 -3.7 4.1 2.4 3  8.3 1 4.3

cooking and heating by rural dwellers in Nigeria, 350,000 ha of forest and vegetation are lost annually, although this is much lower than the afforestation rate of 50,000 ha per annum [94]. However, soil erosion and desert encroachment will result from these activities if the situation is not properly controlled. This could be achieved by discouraging the use of firewood through the introduction of affordable solar stoves. The introduction of a three-stone stove with an efficiency as low as 15%, which was developed locally by the ECN through its energy research centres at the University of Nigeria in Nsukka and Usman Dan Fodio University in Sokoto, will ensure the reduction of fuel wood consumption [94]. Biomass is an important renewable energy source, but the sustainability of its production needs to be clearly understood. Nigeria should use its wood, municipal waste, oil palm product, sugar cane, and rice husk resources sustainably for biogas energy production. As has been practiced in South Africa and Malaysia,

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Table 12 Estimated gross energy yield. Source: Ref. [86,87]. Site

Gross energy yield measurement (MWh) Model FL 100, 100/20 Model FL 250, 250/50 Model V52, 850/ Rotor dia. 21.0 m Hub Rotor dia. 29.5 m Hub 52 Rotor dia. height 34.5 m 100/20 height 42.0 m 250/50 52.0 m Hub height 44.0 m

Enugu Jos Pankshin Sokoto Kano Gumel Maiduguri Ibi Gembu Lagos

92.9 129.6 117.1 153.5 116.3 73.4 102.7 49.8 112.9 129.3

217.9 299 272.1 358.8 281.2 197.2 262.2 141.3 253.9 386.1

734.20 1025.80 936.60 1235.80 963.60 681.40 906.10 481.20 855.30 1402.80

Table 13 Estimated wind energy potentials. Source: Ref. [86,87]. Selected State

Area (km2)

Wind area (%)

Effective wind area (km2)

1% Area (km2)

Potential capacity (MW)

Potential generation (MWh/yr)

Adamawa Bauchi Borno Gombe Jigawa Kaduna Kano Katsina Kebbi Plateau Sokoto Taraba Yobe Zamfara Total

37,957 48,197 72,767 17,428 23,415 44,217 20,389 23,822 36,320 26,539 32,146 58,180 44,880 33,667

45 50 100 100 100 60 90 100 25 90 90 40 100 80&

17,080 24,098 72,767 17,428 23,415 26,530 18,350 23,822 9080 23,885 28,931 23,672 44,880 26,933

171 241 728 174 234 265 184 238 91 239 289 237 449 269 3809

854 1204 3638 871 1170 1326 917 1191 454 1194 1446 1183 2244 1346 19,043

2244 3166 9561 2290 3076 3486 2411 3130 1193 3138 3801 3110 5897 3539 50,046

sugar mill companies in Nigeria could make use of their cane residues and waste, while paper and packaging mills could use their waste biomass to generate process steam [71]. Table 15 lists the estimated quantities and energy values of Nigeria’s biomass resources [94].

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hyacinth, water lettuce, agricultural residues, urban refuse, and sewage [97]. Studies have shown that Nigeria produces about 227,500 tonnes of fresh animal waste daily and 20 kg of municipal solid waste per capita annually [84]. About 0.03 m3 of gas can be produced from 1 kg of fresh animal waste; therefore, 6.8 million m3 of biogas could be produced daily in Nigeria [71]. Research conducted by Adeoti [99] showed that a 6.0-m3 family-sized biogas digester could produce about 2.7 m3 of biogas per day, which would be sufficient to satisfy the cooking needs of a family of nine persons. The initial cost of the project was US$500 (i.e., NGN 80,100 in Nigeria Naira); annual expenditure was NGN 11,200, while the benefit was NGN 25,000. Although the project appears to have good economic potential, it might be too expensive for the low-income earners who reside mostly in rural areas. If measures are not taken to lower the costs or assist the low-income earners economically, low-income households might not accept the use of biogas [92]. It is of great importance for Nigeria’s government to establish some biogas plants to help the development of the country’s energy sector, because the technology can generate energy rapidly as the raw materials needed to feed the biogas plants are relatively abundant across the country [95]. In addition to the use of biogas for household consumption and electricity generation, other areas such as the transport sector could benefit from this renewable option. The production of biogas in Nigeria would not only develop the energy sector but also aid in the reduction of urban waste. 3.5. Renewable energy policies Before the federal government of Nigeria approved the energy policy in 2003, there was no comprehensive energy policy. The established energy policy is the NEP, which was developed by the ECN. The NEP sets out government policy on the production, supply, and consumption of energy reflecting the perspectives of its overall needs and options. The main goal of the policy was to create energy security through a robust mix of energy sources by diversifying the energy supply and energy carriers based on the principle of “an energy economy in which modern renewable energy increases its share of energy consumed and provides affordable access to energy throughout Nigeria, thus contributing to sustainable development and environmental conservation” [100]. Importantly, the national policy already outlines the key elements for the development and application of renewable energy:

 To promote a decentralised energy supply, especially in rural 3.4.1. Biogas Biogas is produced from the anaerobic digestion of agricultural and animal waste in the absence of air. It has an estimated combustion temperature in the range of 65–750 1C and it is 20% lighter than air. Biogas is similar to LPG gas because it has no colour or odour and it burns with a brilliant blue flame. Its caloric value has been estimated to be about 20 MJ/m3 and it burns with an efficiency of about 55% in a conventional biogas stove. The gas contains a mixture of carbon IV oxide, hydrogen sulphide, methane, nitrogen, and water vapour [95]. The raw materials for biogas production include animal dung and waste from industry, farmland, and households. Biogas constitutes a form of energy suitable for households and the agricultural and industrial sectors of the economy. It is a useful substitute for diesel, fuel wood, charcoal, and kerosene; it reduces GHG emissions, and it has no health risks because it burns clean [96]. In rural areas of Nigeria, suitable feed stock has been identified and is considered economically viable for the production of biogas, including cassava leaves, dung, solid waste, water

areas, based on renewable energy (RE) resources;

 To develop, promote, and harness the RE resources of the   

country and to incorporate all viable options into the national energy mix; To promote efficient methods for the use of biomass energy resources; To de-emphasise and discourage the use of wood as fuel; To keep abreast of international developments in RE technologies and applications.

In an effort to translate the RE component of the NEP into an actionable plan, in 2005 the ECN developed the Renewable Energy Master Plan (REMP) to complement the NEP, which reiterated the government’s pledge to support the development, demonstration, and implementation of RE resources for both small and large applications. To create the appropriate environment for the promotion of RE, the REMP identified the need for appropriate financial and legal instruments, technology development, raising of awareness, capacity building, and education as strategic areas

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Fig. 19. Wind energy locations in Nigeria. Source: Ref. [91].

Table 14 Wind energy estimates at 25 m height. Source: Ref. [86,87]. Site

Mean wind speed at 25 m level (m/s)

Monthly mean wind energy (kWh)

Table 15 Nigeria’s biomass resources, estimated quantities and energy values. Source: Ref. [94]. Annual wind energy (kWh)

Annual wind energy from a wind turbine (kWh) 10 m blade diameter

Benin City Calabar Enugu Ibadan Ilorin Jos Kaduna Kano Lagos (Ikeja) Lokoja Maiduguri Mina Makurdi Nguru Oshogbo Port Harcourt Potiskum Sokoto Warri Yelwa Yola Zaria Total

2.135 1.702 3.372 2.62 2.078 4.43 3.605 3.516 2.671 2.235 3.486 1.589 2.689 4.259 1.625 2.64 3.636 4.476 2.027 3.36 1.824 2.891

2.32 1.12 7.83 4.15 1.23 16.05 9.91 8.57 4.36 2.6 8.42 1.05 4.44 14.48 1.07 4.17 9.44 16.47 2.02 7.76 1.45 5.32 134.23

27.86 13.42 93.91 49.78 14.73 192.64 188.88 102.86 52.32 31.21 101.01 12.60 53.27 173.74 12.81 49.98 113.25 197.68 24.20 93.13 17.34 63.88 1680.50

25 m blade diameter

218.81 13,673.78 1053.69 6587.53 7375.75 46,097.96 3909.70 24,436.19 1157.06 7230.57 15,129.60 94,559.98 936.81 58,355.08 8078.61 50,491.28 4099.78 25,682.52 4451.23 15,320.17 7933.61 49,583.17 989.60 6185.01 4183.51 26,148.85 14,645.19 85,284.42 1006.60 6288.09 3925.48 24,533.88 8894.35 55,591.46 15,525.75 97,035.94 1900.66 11,879.15 7314.88 45,714.59 1361.88 8511.75 5017.26 31,357.02 120,078.90 790,548.39

for attention and furthermore, it established specific goals for each of these areas. The REMP aims at a 10% RE contribution to the national energy mix by 2020 through the adoption of a renewable portfolio standard (RPS). The RPS is a requirement for electric utilities to supply a specific amount of renewably sourced energy to customers. This can be

Resources Fuelwood Agro-waste Saw dust Municipal solid waste

Quantity (million tonne) 39.1 11.244 1.8 4.075

Energy value (000 MJ) 531.0 147.7 31.433 –

achieved through the purchase of RE certificates from suppliers with a larger share of renewables in their energy mix. Other measures under consideration are the creation of innovative fiscal and market incentives to grow RE industries, as well as preferential customs duty exemptions for imported components of RE technology. The Nigerian Electricity Regulatory Commission (NERC)23 developed the Multi-Year Tariff Order 1 (MYTO 1) in 2008 under the authority of the Electric Power Sector Reform Act 2005 (the Act). The MYTO 1 regulated prices paid to licensed electricity generation companies for providing electricity for distribution and retailing companies from the 1st of July 2008 to the 30th of June 2013 (the policy was withdrawn in 2012). This was also a policy that provided fiscal and financial incentives for electricity companies who exploited multiple RE resources for power generation. The policy also provided options for feed-in tariffs and premiums for small electricity providers, as well as consumers who were able to generate electricity for sale to the utility companies. However, this policy was suspended in 2013 after a progress review by the federal government.24 The ECN, in collaboration with the Federal Ministry of the Environment, finalised the REMP and it came into force in 2011. The REMP was intended to increase the supply of renewable electricity from 13% of the total electricity generation in 2015, to 23 Nigerian Electricity Regulatory Commission (NERC) is an independent regulatory body with authority for the regulation of the electric power industry in Nigeria. 24 www.nercng.org/index-php/nerc-documents/func-startdown/42/.

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23% and 36% by 2025 and 2030, respectively. This would enable renewable electricity generation to contribute the intended 10% to the total energy consumption of Nigeria by 2025. The REMP contains the following installed capacity targets for some RE sources for power generation:

critical reviews on the Nigerian Biofuel Policy and associated incentives can be found in Refs. [101–103].

 Wind energy technology to generate 20 MW in 2015 and

The Nigerian government should develop effective policies that will attract Foreign Direct Investment (FDI) into the country. The Skypower FAS Energy contract for the solar power plant is one example of how FDIs can help the development of RE. Furthermore, FDIs come with the added benefits of job creation and technology transfer. The government could encourage such projects by reducing tariffs by up to 10% on imported capital goods, such as machinery and manufacturing equipment, that are imported by investors for RE projects. This would encourage investors who currently operate abroad to establish facilities for the manufacture of RE technologies in Nigeria. Policies should be initiated by the government to encourage infrastructure investment because of the various associated benefits. Most companies owned by either indigenous or foreign investors thrive under this kind of business environment.28 Infrastructure investment tends to be less volatile than equities over the long term and it generally provides higher yields. This can only be achieved if a proper business climate is created by the government to attract investors to the country to explore the RE potential within its borders. The government should set aside a special infrastructure fund for the development of RE, which is accessible to both indigenous and foreign investors alike. Fiscal and financial incentives should be encouraged and the Nigerian government should consider this when implementing policies to foster the development of RE. Tax relief should also be considered by the Nigerian government. Such policies would induce investors to explore the Nigerian energy market and reduce the investment burden they might face. The government should develop a Ten-Year Energy Plan that could be reviewed on its completion. This should involve strategic planning by all the stakeholders involved and policy support should also be created to ensure the maximum benefit. The government should develop an effective policy for the rapid expansion of biofuels. This has the capacity to deliver about 20% of the nation’s energy needs if properly exploited and biofuels could be exported to other countries. The government should support the development of the ethanol industry by direct investment in the appropriate research and development in universities and research institutions. The Nigerian government should establish a National Innovation System with a special focus on energy and RE development. This system was first adopted in the 1970s and used by the Brazilian government to address its energy situation [105]. The Nigerian National Innovation System will require science and technology institutes such as universities and research institutions, funding institutions at federal and state level, private and public entities that will promote innovative activities in the field of RE, and qualified personnel. Another policy option for the development of RE is the RPS29 that would mandate increased electricity generation from RE sources such as solar PVs, wind turbines (offshore and onshore), and biomass. This

   

40 MW of electricity by 2025; Biomass-based power plants to generate 50 MW in 2015 and 400 MW in 2025; SHP to generate 600 MW in 2015 and 2000 MW by 2025; Solar PV technology (large scale, i.e., QUOTE 1 MW) to generate 75 MW in 2015 and 500 MW by 2025; Concentrated solar power (CSP) to generate 1 MW in 2015 and 5 MW in 2025.

These plans will increase the electricity supply and improve the Nigerian electrification rate from 42% in 2005 to 60% in 2015, and to 75% by 2025. The REMP also contains some fiscal and market incentives to foster the development and deployment of RE technology. The short-term plan includes a moratorium on import duties for RE technologies, while the long-term plan addresses the design of further tax credits, capital incentives, and preferential loan opportunities for RE projects.25 A recent RE development resulting from the policy was the agreement signed by the Nigerian government and Skypower FAS Energy, which is a joint venture between Skypower Global and FAS Energy to develop and operate 3000 MW of utility-scale PV power plants over the next five years. The project is worth US$5 billion in capital requirements and it will create 30,000 green jobs for Nigerians.26 The NERC has released the Multi-Year Tariff Order 2 (MYTO 2), which has similar features to MYTO 1 but includes some improvements, and will be effective from 1st June 2012 to 31st May 2017. The retail tariff in MYTO 2 will be reviewed bi-annually and changes may be made for all electricity generated at wholesale contract prices, adjusted for the Nigerian inflation rate, US$ exchange rate, daily generation capacity, and accompanying actual CapEx and OpEx requirements that will vary from those used in the tariff calculation. The review of all inputs to the tariff calculation is expected to begin by 2016 as the basis of a new Multi-Year Tariff Order (MYTO) designed to kick-start the next five years starting from 1st June 2017. The MYTO 2 contains a 15-year tariff pathway for electricity generated from RE, with bi-annual minor reviews and major reviews every five years. The MYTO 2 tariffs are negotiable if a generator can prove to the NERC that their costs for electricity generation from renewables are not in-line with the assumptions of the MYTO 2. Fig. 20 shows the MYTO 2 feedin tariffs from 2012 to 2016 in Nigeria (Nigerian Naira per MWh (N/ MWh) and the dollar equivalent).27 The Nigerian Biofuel Policy and incentives are policy tools developed by the Nigerian government to gradually reduce the nation’s dependence on imported gasoline and to reduce environmental pollution, while at the same time creating a commercially viable industry that can generate sustainable domestic jobs. In August 2005, the Nigerian government issued a directive on the Automotive Biomass Programme for Nigeria, and the NNPC was given a mandate to prepare for the start-up process of a domestic fuel ethanol industry. The Nigerian Biofuel Policy, together with its incentives, came into full effect on the 24th of July 2007. Some 25 www.energy.gov.ng/index.php?option¼com_docman& task¼ cat_view&gid ¼39&Itemid ¼ 49. 26 http://cleantechnica.com/2014/05/14/is-3000mw-of-new-nigeria-solarpower-a-model-to-end-energy-poverty/. 27 www.nercng.org/index.php/myto-2.

3.6. Policy options

28 A study carried out by Initiative et al. [104] showed that investment in corporations’ investments is the easiest investment path for most institutional investors in the field of renewable energy. However, this was done with the corporations own strategy and financial considerations. Another type is direct investment in renewable energy projects by investors. The study also stressed the need for government to identify the policy barriers that discourage institutional investors in renewable energy. 29 www.nrel.gov/tech_deployment/state_local_governments/basics_portfolio_standards.html.

2014

2015

Small hydropower (less than 30 MW)

37.357

33.433

32.006

34.572

30.943

85.401 29.643

32.000

28.641

79.116

2013

27.456

29.623

26.512

24.433

27.426

24.543

67.917 23.561

2012

Solar PV (ground mounted)

92.192

N.V. Emodi, K.-J. Boo / Renewable and Sustainable Energy Reviews 51 (2015) 356–381

73.000

376

2016

Onshore wind

Biomass

Fig. 20. Nigeria’s MYTO 2 FiTs for 2012–2016 in Nigerian Naira Per MWh (N/MWh).

policy should be initiated by the Nigerian government in order to improve the national development of RE. Under the RPS policy, electricity generating companies in Nigeria could earn certificates for every unit of electricity generated from RE sources. These companies could then sell the certificates to supply companies who could submit the certificates to the NERC. The RPS programme would enable greater price competition between various RE sources and ensure competition, efficiency, and foster innovative activities to deliver RE technology at the lowest possible cost. In other words, this would enable RE to compete with cheaper conventional energy sources such as oil, gas, and coal. The Net Metering Policy30 is another option that should be considered by the Nigerian government. Under this policy, the electricity consumer who has an eligible on-site electricity generating facility (from an RE source in this case) can sell electricity to the local distribution companies, who may use this electricity to offset electric energy provided by the electricity generating companies to the consumer during an applicable billing period31. Table 16 lists the various RE support policies implemented in selected countries. Another effective policy option is tendering, which has been effective in many countries such as France, Denmark, the UK, China, India, and Brazil, and in the state of California (Table 16). There are many types of tendering scheme that can be used in the electricity sector to remunerate renewable electricity generation, and the remuneration price is usually the most important evaluation criterion. This is a type of auctioning system and the result determines the premium or the full remuneration level. In such tendering systems, investors bid a certain price for every kWh of electricity produced, which matches the costs of installing the plant. The final remuneration tariff is paid for a specific period or for a given amount of full-load hours [107]. This tendering was the foundation of Brazil’s success in wind energy development [105]. The Biofuels Obligation Policy32 should be considered by the Nigerian government as an effective policy option. Under the policy, the government places an obligation on suppliers of mineral oil to ensure that a certain percentage by volume of the 30

www.sunlightelectric.com/netmetering.php. www.ferc.gov. 32 www.dcenr.gov.ie/NR/rdonlyres/26358B8D-1DC7-4B0F-B697-2F2FE DA32F46/0/BiofuelsObligationRIAJuly09.pdf. 31

motor fuels (gasoline and motor diesel) they sell to the market in Nigeria will be produced from RE sources. Although Nigeria has a biofuel policy in place, this biofuel obligation will ensure its full effectiveness if considered by the Nigerian government.

4. Energy efficiency and conservation Land, capital, labour, and energy are important production factors that require proper management. The amount, and hence the cost, of required energy production can be reduced by the efficient use of energy. In order to improve energy efficiency, we need to look at the overall economic efficiency of the energy system as well as the physical efficiency of the technical equipment and facilities [108]. Improvements in practices and products that reduce the energy necessary to provide services such as heating, cooking, cooling, entertainment, transport, and manufacturing are referred to as energy efficiencies. More work is performed for less energy by energy-efficient products [109]. Furthermore, investment in energy efficiency helps mitigate the effects of GHG emissions and aids the reduction of fossil fuel use. Sustainable development cannot be achieved without proper energy efficiency. The rapid worldwide development and industrialisation will require energy efficient technologies in order to achieve energy sustainability. In Nigeria, the rate of energy efficiency is very poor, which can be attributed to the high degree of energy loss through energy wastage. Energy saving has great potential for the three sectors in Nigeria that consume the most energy: households, transport, and industry. Households have the highest energy losses because of the use of traditional three-stone stoves with low efficiencies of between 5% and 12%. This could be improved through the use of improved fuel wood stoves. Energy could also be saved in the household sector by switching from incandescent bulbs, in which only about 5% of the total energy is actually used for light and the rest is lost as heat energy, to energy-saving bulbs. However, the cost of energy-saving bulbs is quite high in Nigeria and most people, especially in rural areas, prefer to buy the cheaper N30–N100 incandescent light bulbs, rather than the N200 energy-saving bulbs. In 2009, the Sustainable Lighting Programme in Mexico energised the Mexico Green Policies by replacing over four million incandescent light bulbs with energy-saving eco-friendly bulbs.

Table 16 Renewable energy support policies. Source: Ref. [106]. Country

O R O O R R R O O O O OS R OS O O O R*

Fiscal incentives and public financing

Regulatory policies FiTs/ premium payment

Electricity utility quota obligation/ RPS

Net Tradable metering REC

Tendering Heat obligation/ Mandate

O O O

R R O R R O

O

R O R R R O

R R* O

R*

O O O O OS O OS

Na

O O

O O

O O

OS O O

O

OS O O

O R*

O R*

O OS

Sub-national.

OS O OS O O

OS O

O O R

R

Capital subsidy or rebate

Investment or production tax credits

O O

O O

Note: O: existing national, N: New, OS: existing sub-national, R: revised, X: removed/expired. a

Biofuels obligation/ Mandate

OS

R O R O O O

O O R O O O O

Reductions in sales, EneEnergy energy, CO2, VAT, or other production payment taxes

Public investment, loans, or grants

O O R

O

O

O R O O O O O

O O O N

R O O O

O O

O O O O

O R

O O

O X

O O

R O O

O O O O

O

R O

O OS O

O

O O O O OS O O O O O R

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Nigeria Egypt Brazil Mexico France India China Germany Indonesia Japan Spain UAE UK Canada Denmark South Africa Korea USA

Renewable energy targets

377

378

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Fig. 21. Seoul Metropolitan Subway Map [90]. Source: Ref. [112].

The project was expected to cover more than 11 million families by 2012 [110]. This gesture could be replicated by the Nigerian government to aid energy efficiency. The indiscriminate use of electricity by urban dwellers is another issue that requires attention. Switching off electric bulbs and appliances by consumers can reduce the consumers’ electricity bills and the costs of running power plants for the government and electrical utility suppliers. The purchase of used or “second-hand” appliances, ranging from televisions to other home entertainment appliances that consume too much energy needs to be stopped. The use of such appliances is a long-standing practice, and the government has done nothing to halt it. In the transportation sector, efficiency could also be achieved by placing a ban on the importation of used vehicles (known locally as “Tokunbo”) and encouraging the use of fuel-efficient vehicles. Energy consumption could also be reduced in the industrial sector by turning off electrical machinery on a no-load condition, plugging steam leaks, and avoiding material wastages. Energy-efficient practices could be achieved in Nigeria if the government were to create awareness for the potential and importance of energy efficiency and facilitate the rapid integration of RE technologies in both households and the national grid. 4.1. Policy options Some policy options and strategies for proper energy efficiency and conservation of energy in Nigeria are given as follows:

 Ensure the importation of energy-efficient vehicles, appliances, and machinery. This will be verified at their various ports of entry into the country. The Standards Organisation of Nigeria

     

will have to work with the Nigeria Port Authority and Nigerian Customs Service to implement this policy measure. Import electric transformers that are strong enough to function when overloaded to accommodate the peculiarities of the power sector in Nigeria. Intensify research and development efforts into increasing the content of local materials in the design and construction of energy-efficient buildings. Develop and implement an equipment power-labelling programme. Adopt a tariff structure and other schemes that promote the demand- and supply-side management of electricity consumption. Embark on studies that address supply- and demand-side management for the power sector to reduce electricity losses. Incorporate demand-side bidding33 and energy planning; this involves bidding for energy-efficiency projects that are proposed and implemented by commercial or industrial customers. Demand-side bidding could be undertaken by government agencies such as the NERC and ECN, who could issue requests for energy-saving projects, evaluate proposals, and properly select the correct projects for implementation. The proposals should contain measures for implementation, the location, estimated project costs, estimated energy and peakdemand savings, estimated lifetime of the proposed measures, and a requested incentive level. Demand-side bidding could be an effective tool for promoting energy efficiency in the Nigerian electricity sector.

33

www.ieadsm.org/ViewTask.aspx?ID ¼16&Task¼ 8&Sort ¼0.

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379

Table 17 Proposed energy policy options. Energy source

Policy options

Priority

Crude oil

Address crude oil theft Diversification of oil export Disaggregated approach to policy formulation and implementation Complete deregulation of the petroleum sub-sectors (upstream and downstream) Total removal of the petroleum subsidy Encourage oil producing companies to gather and utilise associated gases Impose appropriate and effective penalties to discourage gas flaring Encourage the establishment of the necessary infrastructure for effective gathering, transmission and distribution of gas nationwide Provision of incentives to indigenous and foreign entrepreneurs to facilitate full private sector participation in the gas industry Provision of incentives to encourage domestic and industrial consumers to use or switch to gas Introduce LPG appliances in areas with no access to natural gas Ensure the price of natural gas is cost effective Introduce, encourage and expand R&D activities in natural gas development Develop a programme which will systematically assess current and emerging technologies in coal power Invest in a detailed geological assessment of on-shore and off-shore carbon storage locations

High High Low High Medium High High Medium

Natural gas

Coal

Renewable energy

Energy efficiency and conservation

Set-up emission control standards and provide incentives to investors who install pollution control technologies Encourage the development of higher-efficiency pulverised coal combustion technologies Create favourable condition and business climate for private investors in coal mining Completely revive the railway network Develop effective policies that will attract FDI in renewable energy Encourage infrastructure investment Encourage fiscal and financial incentives to investors Develop a Ten-Year Energy Plan Support the development of ethanol industry by the direct investment in R&D activities Set-up a National Innovation System with special concentration on energy and renewable energy development Develop and implement Renewable Energy Portfolio Standards Develop and implement Net Metering Policy Develop an effective Tendering Schemes (Auctioning System) Develop and implement Biofuels Obligation Policy Mandate the use of efficient fuel wood stoves Encourage the use of energy efficient lighting bulbs Ensure the importation of energy efficient vehicles, appliances and machinery Import electric transformers that are durable when overloaded Develop and implement an Equipment Power Labelling programme Adopt a tariff structure which will promote demand and supply side energy management Embark on studies that deals with demand and supply side energy management to reduce power losses Incorporate Demand-Side Bidding and energy planning Develop and implement a National Appliance Efficiency Standards law Improve efficiency of passenger transport system Educate the public on the benefits of energy efficiency

 Develop and implement a National Appliance Efficiency Stan-



dards law. This law would ensure that every electrical appliance, either imported or manufactured in the country, would meet the minimum efficiency standards for energy consumption. The standards would cover all major household appliances (home entertainment appliances, refrigerators, freezers, washing and drying machines, electric cookers, and air conditioners), lighting products (lamps and fluorescent lighting ballasts), and other appliances used in the industrial, commercial, and service sectors of the economy [111]. Improve the efficiency of the passenger transport system in Nigeria. The transportation sector is one of the main sources of energy consumption and atmospheric pollution in Nigeria. A more sustainable transport system could be achieved if there were proper coordination of urban and transport planning to reduce light vehicle and fuel use. Policy options for a sustainable transport system include the stimulation of public transportation through the introduction of an intermodal passenger and freight transport system that will better integrate and improve the lives of Nigerians. A specific example is the Seoul Metro System in Seoul, 34 South Korea, as shown in Fig. 21. This subway system can reduce energy use in cars and buses for urban movement. For the Nigerian government to facilitate and implement this



Low Medium Low Low Medium Low Low/ Medium High Medium High High High Medium Medium Low Medium Low High Medium High Medium High Medium Low Low Medium Low Medium High High Medium Medium

option, some incentives should be provided. These incentives could include the promotion of subway use, expansion of the public transport infrastructure, improvement of loadmanagement actions, use of urban tolls, increase in the cost of automobile parking spaces in congested urban areas, restrictions on the use of automobiles to reduce congestion and air pollution in major cities, and improvements in telecommuting policies in Nigeria. Educate the public on the benefits of energy efficiency. The Nigerian government should educate its citizens on proper energy-efficiency practices, especially those who live in rural areas, to make them aware of its potential benefits.

34 The Seoul Metropolitan Subway is known as the world’s longest multioperator metro system by route length, and consists of 18 lines that serve the Seoul Metropolitan Area. The subway system is packed with advanced technology such as 4G LTE, WiFi, DMB, and WiBro services. Most of the trains are equipped with digital TV screens; all the trains are air conditioned, and include climate-controlled seats that operate automatically during the winter. All the subway lines use the T-money smart payment system using RFID and NFC technology for automatic payment by Tmoney smartphones or credit cards, and one can transfer to any of the lines within the subway system for free.

380

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5. Conclusions Achieving sustainable energy development not only involves the proper use of a nation’s energy resources and improved energy-efficiency/conservation practices, but it also requires effective policy options that can address the changing times. This article reviewed the conventional and RE resources in Nigeria and their associated policies. The energy policies implemented in Nigeria to improve the country’s energy system show a wide range of results, from successes to failures, and some policies that could ensure sustainable energy development have not been considered or implemented. The oil sector in Nigeria was observed to have various weaknesses in the development and control of it resources; these included oil theft, a poor approach to policy formulation and implementation, lack of private sector participation, and the current dilemma over oil subsidies. It was identified that the gas sector had issues including flaring, a poor infrastructure for the transmission and distribution of natural gas, and a lack of attractive incentives for investors. RE development in Nigeria was shown to require policies to address the problems of direct foreign investment, fiscal and financial incentives, the absence of a Ten-Year Energy Plan, the absence of a National Innovation System, and mechanisms such as the PRS and net metering. Clearly, there is room for improvement in the Nigerian energy sector. Thus, some policy options have been proposed in this article to promote sustainable energy development in Nigeria. The policies have been proposed in five areas: (i) crude oil, (ii) natural gas, (iii) coal, (iv) RE, and (v) energy efficiency and conservation. Table 17 lists the proposed policies and the author’s judgment regarding the priority for their implementation. These proposed policies are given these priorities based on their likelihood to attain success on the short, medium and long term in the Nigerian context. We believe that the proper implementation of the proposed policies will ensure a sustainable energy development in Nigeria.

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