In Nigeria’s industrial sector, the persistent challenge of energy reliability and soaring energy costs have remained the big elephant in the room, severely impacting production efficiency and profitability.
Manufacturers have long struggled with the dual burden of unreliable grid power supply and the exorbitant cost of self-generated alternatives.
The hurdle to closing Nigeria’s energy gap continues to be the biggest impediment to the country’s aspirations towards rapid industrialisation.
The critical question is: can industries achieve energy self-sufficiency that guarantees cost-effectiveness and reliability? Natural gas holds the potential to address this question, providing an accessible and consistent supply, while enabling seamless industrial operations and contributing to the stability of the nation’s production sectors.
According to the International Energy Agency (IEA), over 600 million Africans, representing 43% of the continent’s population lack access to reliable and affordable energy.
Consequently, industries are constrained to adopt alternative energy supply solutions to stay productive and effectively meet their revenue targets. This includes integrating diesel or low-pour-fuel oil (LPFO)-fuelled power generation with grid energy supply to sustain manufacturing processes.
This reality has pushed diesel or petrol-fuelled energy production to reach 40% within the energy mix, hence driving up production costs.
Achieving Energy Autonomy
Achieving self-sufficiency status allows businesses to take control of their energy needs, reducing vulnerability to external factors and assuring uninterrupted operations. Natural gas plays an advantageous role here- it is an abundant, affordable, and cleaner-burning fuel than coal or oil, making it a preferred choice for industries and power generation.
With a proven natural gas reserve of 209 trillion cubic feet (tcf), Nigeria holds the largest natural gas reserves on the African continent, the ninth largest globally and has recorded significant export growth over the past two decades, exporting approximately 32.2 billion standard cubic meters (SCM) in 2022.
According to Statista, Nigeria’s natural gas production hit an all-time high in 2023 reaching about 44 billion cubic meters, reflecting the country’s renewed focus on gas in the quest for growth in the energy sector. This national endowment ensures fuel availability prompting the Nigerian government to advocate for a gas-based economy through strategic investments, partnerships, and policy reforms.
In 2023, natural gas demand in Nigeria surged to approximately 18.7 billion standard cubic meters, significantly rising from around 13 billion standard cubic meters in 2022—the highest demand volume recorded in over two decades. This growing demand highlights the nation’s shift towards cleaner energy sources and underscores the critical role natural gas plays in powering Nigeria’s economic and industrial growth. By prioritising natural gas infrastructure development, deepening domestic gas utilisation, and fostering a conducive investment climate, Nigeria is on its way to becoming a global gas powerhouse and a model of energy resilience in Africa.
How Axxela is Enabling Self-Sufficiency
Though the unreliability of grid power and the vast chasm between supply and demand have placed an onerous burden on manufacturing companies and other industries alike, Axxela has spearheaded several trailblazing efforts in natural gas infrastructure and power development empowering industries to embrace natural gas whilst also customising its power solutions to achieve energy autonomy.
The switch to gas-powered solutions including captive and embedded power plants remains a viable option. This not only ensures a steady, affordable energy supply but also promotes environmental sustainability by reducing dependence on traditional dirty fossil fuels and reducing carbon emissions. These integrative solutions empower industries to be more resilient and enhance their long-term operational efficiency.
Axxela’s innovative solutions to self-generation and collaboration with customers can pave the way for a future where energy self-sufficiency can become the reality, helping to improve productivity, drive economic growth and enable Nigeria’s industrialisation.
Akute IPP located in Akute, Ogun State, Nigeria, with a capacity of 12.15MW comprising four units of 3.0375MW JMS 620 GS-NL gas-fuelled engines is one of such. It was developed and operated by Axxela prior to its divestment.
The IPP provides 24-hour power supply to the Lagos Water Corporation intake at Akute and the Water Works in Adiyan and Iju Lagos. Alausa IPP located in Ikeja, Lagos State, Nigeria was developed to provide power to the Lagos State Government Secretariat Complex in Alausa. Alausa consists of two (2) units of 3.3 MW gas-fuelled engines and two (2) units of 2.0MW series 4000 MTU diesel engines.
The distribution network comprises more than 25 units of 11KV distribution sub-stations in and around Alausa, all connected to a major receiving station. It has now been divested by Axxela.
Most recently is the development of a 5.8MW IPP delivering reliable power supply to Cadbury Nigeria PLC. The IPP, which comprises of one unit each of 4.3MW and 1.5MW MTU gas engines, provide 24-hour power supply to Cadbury to power its factories and administrative facilities. The project was financed and is owned by Axxela. All the three plants receive Natural Gas supply via a pipeline network by Gaslink Nigeria Limited, a subsidiary of Axxela.
Whilst the journey to energy self-sufficiency is not without challenges, the rewards are immense. Industrial and commercial organisations enjoy several benefits when they make the switch to natural gas. The versatility of natural gas makes it more ideal for diverse industrial operations. From powering turbines for electricity generation to serving as feedstock for chemical processes, natural gas adapts to the specific needs of different industries. This compatibility with various industrial applications further enhances its adaptability.
Additionally, natural gas-fired equipment requires lower maintenance and has longer operational lifespans, minimising disruptions, enhancing efficiency, and lowering operating costs. Beyond operational advantages, natural gas’ cleaner combustion results in lower emissions.
This multi-benefit positions natural gas as a sustainable and reliable energy choice for industrial and commercial operations. In the dynamic landscape of Nigerian industrial operations, where stability, versatility, and sustainability are paramount, natural gas will continue to play a pivotal role.
