Industrial Energy Management Practices in Nigeria

1. Industrial Energy Management Practices in Nigeria By Prof. A. S. Sambo, OON, NPOM Director-General, Energy Commission of Nigeria Being Country Paper Presented at the UNIDO EGM on Industrial Energy Efficiency and Energy Management Standards Held from 21st – 22nd March 2007 at Vienna

2. Outline • Introduction • An Overview of the Nigerian Industrial Sector • National EE & C Activities • Energy – Efficient Appliances in Nigeria • Walk-through Energy Audits • Barriers to EE & C Programmes • Opportunities for Collaboration • Conclusion

3. Introduction • Population ( 2006 census): 140 million • Location/Size: West Africa/ 923,770 square kilometers (356,700 square miles), slightly more than twice the size of California • Languages: English (official), Hausa, Yoruba, Ibo • Total Energy Consumption (2002E): 275billion kWh (0.2% of world total energy consumption) • Fuel Share of Energy Consumption (2002E): Oil (67.3%), Natural Gas (25.1%), Hydroelectric (7.5%), Coal (0.1%) • Energy-Related Carbon Dioxide Emissions (2002E): 91.94 million metric tons (0.4% of world carbon dioxide emissions) • Per Capita Energy Consumption (2002E): 1,964.3 kWh (vs U.S. value of 99,356.3 kWh) • Per Capita Carbon Dioxide Emissions (2002E): 0.66 metric tons (vs U.S. value of 19.97 metric tons) • Energy Intensity (2002E): 2.712 kWh/ $ nominal-PPP (vs. U.S. value of 2.738 kWh/$ nominal-PPP)

4. Introduction Contd…. TRANSPORT INDUSTRY RESIDENTIAL Energy Consumption by Sector, 2005

5. Item unit 2005 2010 2015 2020 2025 2030 Agriculture [%] 40 36.7 34 30.6 26.9 20 Construction [%] 3.04 4 4.93 5.54 5.98 8 Mining [%] 0.387 0.45 0.5 0.55 0.6 1 Manufacturing [%] 7.25 9.1 11.4 14.2 17.6 22 Energy [%] 9.203 8.1 5.97 4.91 4.19 4 An Overview of the Nigerian Industrial Sector • Currently, the growth rate in GDP is about 6% with the share of manufacturing sector being only about 5%. • In 2005, manufacturing sector contributed just 7.25% to GDP); To industrialize Nigeria : • the share of manufacturing sector in GDP must be higher than 15% • per capita income must lie between US$4,232 and US$6,350 in PPP terms. • attain the lower middle income average level by 2028 if the economy grows at an average of 7% per annum, 2021 if the economy grows at 10% per annum and by 2019, if the economy grows at a very optimistic mean of 11.5% per annum Source: Presidential Report on Industrializing Nigeria, 2006

6. S/N SUB-SECTOR CAPACITY UTILIZATION 1998 1999 2000 1. Food, Beverages, Tobacco 31.5 36.1 32.6 2. Textiles, Wearing apparels, Footwear, Leather products, Carpet/Rug 33.1 39.2 37.8 3. Wood & Wood Products, including furnitures 27.2 29.6 26.5 4. Pulp, Paper & Products, Printing & Publishing 28.9 28.1 27.9 5. Chemical & Pharmaceutical 30.6 25.6 29.0 6. Non-Metallic Mineral Products 37.2 45.5 35.5 7. Plastic, Rubber & Foam products 27.2 35.5 37.8 8. Electrical & Electronics 27.0 35.5 37.8 9. Basic Metal, Iron & Steel and Fabricated Metal products 27.2 33.9 14.5 10. Motor Vehicle & Miscellaneous Assembly 26.2 24.8 30.4 Average for the Year 29.6 32.4 29.7 An Overview of the Nigerian Industrial Sector – Contd… • 30% average capacity utilization • Old, obsolete, inefficient industrial equipment/ machinery; • Inadequate and inefficient energy supply and use situation is the main cause of Nigeria's poor industrialisation

7. National EE & C Activities The Provisions of The National Energy Policy on EE & C are: • Efficient and cost-effective consumption pattern of energy resources; • Importation of the more energy-efficient equipment/appliances; • Promotion of awareness of the benefits of EE & C; • Development of codes, standards, regulations and guidelines on EE & C.

8. National EE & C Activities Contd… NATIONAL AWARENESS CREATION/ CAPACITY BUILDING • Sensitization Workshop on Energy Efficiency – 1993, 2001, 2002 • National Sensitization Workshop on Energy Efficiency in Industry – 1998 (with support of UNIDO) • Industrial Energy Efficiency and Demonstration Walk-Through Energy Audit – May 2001, 2003,2004 (UNIDO Technical Assistance) • NNC- WEC Africa Forum on Energy Efficiency – January 2007 • “Nigerian Energy Labeling Program for Appliances” – proposed to GEF/UNDP for support – at negotiation stage • Approval by Government for establishment of a National Centre for Energy Efficiency and Conservation.

9. Energy Efficient Products in Nigeria

10. Walk-through Energy Audits Energy Savings Potential • Energy efficiency in the industrial sector in Nigeria is low; • Over 40% of total energy used is wasted on old, obsolete and inefficient equipment; • 25% saving potential exists through good housekeeping measures alone; • Retrofitting in industries could save over 35% of energy currently used; • 40% of electricity consumption for air conditioning could be saved through more efficient equipment and practices; • 30% and 35% saving potentials can be achieved in residential and transport sectors respectively;

11. Walk-through Energy AuditsPower Outage Cost Analysis • While electricity from PHCN accounted for about 60% of total electricity consumption by the firms, the average cost per kWh is N8.5. Auto-generation accounted for only 40% of electricity consumption, but the average cost was N40.47 per kWh. The audits show that 262 firms spent nearly N2 billion on privately supplied electricity in 2003. • Firms lost 900 working hours to power outages in 2003; • Assuming an eight-hour working day, this translates to about 113 working days in 2003. Also, about 35% of the firms reported having to shut down production at one time or the other in the year as a result of power outages. • The annualized cost of generator to the firms is N318.63 per kW. • Annualized other capital items like generator house (N282.57); stabilizer (N20.51); fuel oil tank (N100.46); and others (N256.98). Thus the capital cost of keeping a generator is N700 per kW. • For the industrial sector, existing measure of outage costs vary between $2.27 to $32.46/kWh of unserved electricity. Residential outage costs vary between $0.05 and $24.61/kWh unserved.

12. Walk-through Energy Audits Electricity Supply Situation • Frequent power cuts and voltage fluctuations; • Every industrial establishment undertakes extra investments in generators; • Over 30% of total cost of production is on energy supply that is wasted on inefficient equipment; • Capital value of generators is on the average, 25% of the total value of machinery and equipment Proportion of Electric Power Supply from Own Gen. Sets by Firm Size, 2002

13. Barriers to EE & C Promotion • Lack of Detailed and Reliable Data; • Lack of Awareness on EE & C Benefits among Policymakers and End-Users; • Lack of skilled manpower to identify and implement specific EC measures; • Lack of Adequate Institutional Framework; • Inefficient Energy Pricing Policies; • Lack of Capital to finance EC programs/projects; • Low Manufacturing Capacity

14. Opportunities for Collaboration • Industrial Energy Assessment Program • Trading on Energy-efficient products – CFLs, Energy-efficient Motors, Improved steam boilers, • ESCOs on EE & C – not existing • Human capacity building on EE & C programs • Energy Labeling – urgently required

15. Conclusion • Inefficiency in energy use has brought a significant negative impact on the cost competitiveness of the manufacturing sector in Nigeria; • There is the urgent need for international support to see to the take off of the NCEEC in Nigeria and the subsequent entrenchment of the EE & C practices.

16. Thank You and God Bless!!