gas plant2As a major gas province with estimated 187 trillion standard cubic feet of gas and several gas-powered power plants, the world expected Nigeria to generate adequate electricity, capable of meeting the demand of its citizens and other nationals. The plants, including AES barge, Aba power plant, Afam 1V, V and V1, Olaoji power plant, Calabar power plant, Egbema power plant, Egbin power plant, Geregu 1 and 2 power plant, Ibom power plant, Ihovbor power plant, Olorunsogo 1 and 2, Okpai power plant, Omoku 1 and 2, Omotosho 1 and II and Sapele have the capacity to generate commercial megawatts of electricity.

But this has not been the case at least for a reason. The nation has not yet developed sufficient gas for utilization in the power sector. In fact, where gas abound, the nation lacks adequate infrastructure, especially pipeline to deliver the product to the power plants. Consequently, Nigeria still flares about 40per cent of the natural gas it produces and re-injects 12per cent to enhance oil recovery while the power plants are undersupplied with gas.

The Federal Government is aware of the seriousness of the situation. The Minister of Power, Prof. Chinedu Nebo attributed the drop in power generation to low gas supply to the generation plants, especially in eastern Nigeria where three power stations in the region: Afam IV, Afam VI, and Rivers Independent Power Plant, were shut down some time ago, as a result of gas constraint. Nebo put total generation loss from the stations at 624mw, with the Olorunsogo power station also down due to low gas pressure, as a result of which 89mw of power was lost.

Investigations showed that the problem of epileptic gas supply perennially experienced by Nigeria’ s gas-fired power stations remains a major barrier to progress. While the nation can generate an average of a little above 4, 000mw per day, power generation often drops to less than 2,000 mw when gas supply is reduced by the Nigerian Gas Company, NGC, especially whenever the gas level is low at the nation’s hydro power stations.

Available data showed that many power stations experience different levels of gas shortage. For instance, the Omotosho, Papalanto and Geregu power stations are said to be currently working far below capacity because of inadequate supply of gas to them. The Lagos Thermal Station, Egbin, has also many times generated at a quarter of its installed capacity due to the same problem.

However, the Federal Government has emerged with a Gas Master Plan to address the gas challenge. Specifically, the plan is targeted at positioning the country to become the world’s second largest liquefied natural gas (LNG) producer after Qatar. The plan predicated on an anticipated aggressive demand increase of up to 25 percent is also focused on implementing domestic projects such as methanol plants, gas-to-liquids plants, fertiliser plants, independent power projects and other LNG export plants. From all indications, the government seems to be committed to the execution of the plan. For instance, it recently earmarked $8 billion (N1.3 trillion) for the execution of the Nigerian Gas Master Plan with specific interest in meeting the gas-topower demand in the country.

Vice President Namadi Sambo said the programme would be jointly implemented by Nigerian National Petroleum Corporation (NNPC), Nigeria Gas Commission (NGC) and the private sector. According to him, already $500 million (N80 billion) of the $1 billion dollars realised from Euro-Bond would be utilized as counterpart funding for implementation of the project.

Also, the World Bank provided its first Partial Risk Guarantee (PRG) for US$145 million to support Nigeria’s gas sector and bring more electricity to Nigerian consumers. The PRG agreements in support of a Gas Supply and Aggregation Agreement (GSAA) were signed between the World Bank and the Power Holding Company of Nigeria (PHCN), Egbin Power PLC, Chevron Nigeria Ltd, and Deutsche Bank.

Under the 10-year GSAA, which is based on the industry template developed by Nigeria National Petroleum Corporation (NNPC), Chevron Nigeria Ltd will provide gas to Egbin power plant, thereby assuring gas availability and reliability for power generation and assisting in economic growth. This is the first time that Egbin power plant will be able to procure gas under longterm arrangements.

“With over 75per cent of Nigeria’s power generation depending on natural gas, assuring the availability and reliability of gas supply is a critical step in realizing the goal of un-interrupted electricity supply to Nigerian consumers,” said Marie Francoise Marie- Nelly, World Bank Country Director for Nigeria.

Furthermore, the Federal Government and private investors are expected to invest $15billion in a 2,700-hectare gas-based industrial park in Ogidigben, Delta State. The group executive director, Gas and Power, NNPC, David Ige, said the gas industrial park will house 350 megawatts (MW) power plant to be built by Chevron and a central processing facility, port infrastructure free trade zone (FTZ) base infrastructure and other support services.

But the execution of the plan seems to be constrained by some problems. For instance, delayed paper works by the Federal Government, represented by the NNPC and contractors, and nonpassage of Petroleum Industry Bill, PIB expected to encourage massive investments into the gas sector have in one way or another affected projects, including the $15bn (N2.39tn) Ogidigben gas-based industrial park.

Despite the challenges, the government remains optimistic that the plan would be implemented. For instance, Ige, noted that meeting the power sector requirement was a focus area for the gas sector and that good progress was being made. “Steady progress has been made in delivering the critical pipeline infrastructure. This will address many of the gas deliverability challenges.”

He said the NNPC was working to bridge the gap between increasing power demand in the country and gas supply. “We need to build infrastructure to boost natural gas production and supply. There is a lot of pipeline activity going on.”

Ige is not alone. Vice President Sambo, already $500 million (N80 billion) of the $1 billion dollars realised from Euro- Bond would be utilised as counterpart funding for implementation of the project. He said government had also embarked on an extensive programme for the upgrading of the nation’s power transmission capacity.

‘‘We are also implementing an the end of 2014, we can transmit up to 10,000mw and by 2016 to transmit up to 20,000mw,” Sambo said.

He said the total funding for the project is estimated by the Transmission Company of Nigeria (TCN) to cost about $3.7 billion. ‘I am pleased to inform you that funding for these projects has already been arranged. $1.6 billion is coming from the sale proceeds of the NIPP/NDPHC ten new power plants, $500 million from the China- EXIM bank and the balance from the African Development Bank (AfDB), Islamic Development Bank and (from you) our local banks,” he said.

Sambo announced that the PHCN asset would be handed over to private sector operators on September 30. He reassured that government would continue to improve the efficiency and affordability of power supply in the country. Specifically, Sambo said, “The Federal Government shall, in tandem with the goals and objectives of the National Electric Power Policy (NEPP), continue to, among others, improve the efficiency and affordability of power supply.

He said, “I will like to share with that we are investing in improving their mix generation capacity of this country by the construction of the Zungeru hydropower which would add 700megawatts at the cost of 1.2billion dollars, work is already on this project.

“The construction of the Mambila Hydro power plant which would add 3, 050 mw and we are utilising N1.7billion from the sale proceeds of the NIPP Power plant as counterpart funding for this project that will cost 6.4billion dollars,’’ he said.

Sambo commended the private sector and the banking industry for supporting government’s efforts to improve the power situation in the country through their positive response to financing the Independent power projects. He particularly commended the Central Bank of Nigeria (CBN) for kick-starting the privatization process through its N300 billion intervention fund for the power and aviation sectors of the economy.

He said, “Let me also congratulate the banking industry for its contribution so far to put our great country on the path of growth to attain our aspiration to be among the top twenty economies in the world through reliable, affordable and adequate power supply.’’

However, operators in the sector called on stakeholders, especially legislators and government to work toward ensuring that the PIB is passed into law in order to attract more investment into the gas sector. The increased investment is said to be key in completing many gas projects to deliver gas for use in the power sector.

 

Information from National Mirror was used in this report.

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