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Why power plants lack sufficient gas — Presidency

By on May 5, 2014

The challenge of inadequate gas supply faced by power generation companies in the country is purely commercial, the Presidential Task Force on Power has said.

The Chairman, PTFP, Mr. Beks Dagogo-Jack, in an interview with our correspondent in Abuja, said the Federal Government was addressing the constraints faced by the Gencos, adding that until gas pricing was corrected, short supply to power firms might persist.

Dagogo-Jack said it was not true that the Nigerian government supplied gas adequately in the international market to the detriment of local consumers.

He said, “The government is doing much domestically. Take for an instance, the West African Gas Pipeline. Currently, we are paying the equivalent damage and we are giving them less than 60 per cent of the contract value. The country is paying for not giving them 100 per cent. This is simply because we want to meet up with domestic demand.

“So, it is not true that we are giving 100 per cent to WAGP. Also, it is good for us to establish the right understanding of the issues that are on-going. The issues that are ongoing are extremely commercial in nature. We have to just remove from our heads the concept of some ubiquitous government that can make things happen.

“The pressure we must put on government now is to make sure that the price of gas is correct. So, you tackle a market from commercial rather than from mental fiat and emotions; you don’t do that.”

Dagogo-Jack expressed the conviction that once gas pricing was corrected, its supply to power plants would become adequate.

This, he said, would boost power supply and increase electricity generation in the country as well as improve Nigeria’s economy.

He said, “Let the pricing of gas be right, let counter parties to gas contracts sign to obligations. They should not just make phone calls and expect gas to flow; they should sign contracts. They should be forced to sign contracts. When they do this, they are more likely to live up to it.

“Some of the contracts signed have no penalty; just a flippant arrangement between two friends. How will this drive the power market? That is what the reform established, that first, the price of gas must shift by 2016 I think. And that we should get to export pricing, which means whatever these people are getting for taking it outside, we are ready to pay domestically.”

Gas supply to power plants and industries has been a major challenge to the firms and the Federal Government for months.

The Minister of Power, Prof. Chinedu Nebo, and the Chairman, Nigerian Electricity Regulatory Commission, Dr. Sam Amadi, during separate interviews with our correspondent, had stated that inadequate gas supply to power plants was a major reason why electricity supply had been erratic in many parts of the country.

 

 

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