Well-located plants, constructed pipelines, a reasonable price regime, and additional investment in gas sector will help the four power generation companies to improve electricity in the country, experts have said.
The experts, Supo Shadiya, Philip Ihenacho and Taiwo Afonja, who spoke at a summit with the theme: The Nigerian Gas:The backbone of Nigeria power sector in Lagos, said the Geregu, UghelIi, Shiroro and Kainji power plants would increase electricity megawatts when these above conditions are met.
Shadiya, a Director at the Nigerian National Petroleum Corporation (NNPC)/Chevron Nigeria Limited Joint Venture, said infrastructure were crucial to the growth of the gas sector, adding that with the right infrastructure in place, it would be easier to produce enough gas for the power generation firms.
He said investment in gas pipelines, among other critical areas, would help to foster the growth of power sector. He urged the governemnt to construct the East-West and North gas pipelines to enable power generation firms operate well, saying when this happens, firms would be able to access gas irrespective of their locations.
Shortfall in gas production, he said, would continue, for as long as Nigeria is not ready to synchronise investments in the sector, stressing that stakeholders need to share and combine ideas for growth. He said immense opportunities exist for those that are ready to tap them.
With Nigeria’s 179 billion gas cubit feet reserves and an estimated 600billion cubit feet projection, investors, he said, had a lot to gain from the sector, arguing that government’s ability to provide an enabling environment would help the International Oil Companies to produce gas for power firms.
Ihenacho, the Chief Executive Officer, Seven Energy International, called for a paradigm shift in the ways gas plants are cited in the country. He said gas plants should be evenly distributed, as against the situation where they are sparsely sited. He argued that the manner the gas plants are sited will not meet the needs of the power generation companies.
He said the collocation of gas plants and power generation companies must be given priority, in view of the problems in the power sector. The gas plants and power generation firms, he said, must be sited close to each other to improve electricity supply.
Minimal distance, he added, should be between the power firms and gas plants if Nigeria wants to generate more electricity megawatts.
“‘This brings us to the issue of cost involved in processing and transporting gas from one place to another. The farther the distance between a power generation firm and a gas plant, the higher the cost of transporting the product and vice-versa. Besides is the nature of producing gas. The cost of production varies, depending on the source of the product.
“For instance, gas derived from deep, semi -deep or shallow onshore attracts different prices. Once consumers (individual and corporate) are not ready to bear the cost, it is a problem for the gas company. To process and supply gas it to consumers require huge investment. Investors can only invest in gas production, when the rate of returns is high,’’ he said, adding that the huge cost of producing and transportating gas, discourage people to shy away from the sector.
He said the unattractive pricing is a disincentive in gas production and distribution, stressing that the issue has affected the operation of power generation firms.
Ihenacho added: “A gas pricing scheme introduced in 2010 shows that gas should be produced and transported to designated locations at $1.50 mmbtu. This is a term used to describe the unit of gas processed and transported to consumers). At that price, investment in gas value chain is no longer attractive.
He said collocation of gas plants must be giving priority to foster growth of the firms.
Iheancho continued: ‘‘The distance between gas and power plants must not be too long. For instance, the distance between the Escravos Gas Project in Bonny, Rivers States, and Omotoso power plant is long, making it difficult for the plant to access enough gas for operation. Proximity between the gas plants and the power plants is one area that must be given priority in the country.’’
Afonja, a Partner, Energy and Project Finance, Adepetun Caston-Martins Limited, said investment in gas plants was crucial to the growth of power companies.
He urged investors to provide bankable projects to grow the gas and power sector. She said financial institutions are not ready to support non-bankable projects, adding that the development has culminated in low investment in the sector.
Information from The Nation was used in this report.