But despite having a considerable wealth of oil, Nigeria is one of the world's poorest nations. More than 70 percent of its people live in poverty. A small fraction of Nigeria's population benefits financially from Nigeria's oil wealth, but, in many cases, such benefits are derived from corrupt practices, such as stealing oil and reselling it or accepting bribes from foreign oil companies in exchange for the ability to develop oil fields.34
Nigeria's economy is also heavily dependent on oil sector revenues, which account for 80 percent of government revenues. Nigeria's widespread poverty and weak economy have manifested themselves in the energy sector in the form of an inability to establish a sufficient infrastructure to support energy supply and production. This, in turn, has resulted in inconsistent power supply, especially electrical power. Only about 40 percent of Nigeria has access to electricity, and the country experiences frequent power outages. The electricity sector consistently fails to operate up to its full capacity because of poor maintenance and disordered operations. In February 2006 peak electric demand was 7,600 megawatts, but actual generation capability was less than half of that.
In November 2004 electricity generation fell from 3,500 megawatts to 2,566 megawatts, even though Nigeria has 5,900 megawatts of installed electricity generating power. This caused widespread power outages. The state-owned National Electric Power Authority (NEPA), which dominates the Nigerian electric power sector, blamed the power outrages on low water levels that reduced output at hydropower stations. The lack of consistent power supply to support industrial growth has debilitated the economy of Nigeria even further, preventing the country from keeping pace with the industrialization of the nations to which it provides so many of its energy exports.
Energy infrastructure inadequacies have also led to frequent natural gas flaring in Nigeria. Since Nigeria does not possess the necessary technology or systems to collect and process its large supply of natural gas, an estimated 75 percent of natural gas is disposed of by being burned, or flared, each year. Nigeria flares more natural gas than any country in the world—43 percent of total annual natural gas production. The high incidence of natural gas flaring, with its associated pollutant and safety risks, is one of Nigeria's top energy-related problems.
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