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Power firms perform poorly despite 70% gas supply

By BusinessNews Staff on July 15, 2014

Fresh facts have emerged that power generating companies in the country get as much as 70 per cent of the total gas supplied in the Nigerian market, but they are performing poorly.

In January, President Goodluck Jonathan, through the Minister of Power, Prof. Chinedu Nebo, directed the power companies to ensure that there was visible improvement in electricity supply before the end of June.

But this has yet to be achieved; rather, the power firms and regulators of the sector are blaming their abysmal performance on inadequate supply of gas compounded by the continued rupturing of gas pipelines by vandals.

However, a document obtained by our correspondent from the Nigerian National Petroleum Corporation revealed that the power sector was getting as high as 70 per cent of the total gas supplied to the domestic market.

Although the corporation admitted that gas pipeline vandalism was adversely affecting product supply to the power plants, it revealed that the electricity firms were getting their gas supplies at a subsidised rate when compared to other industrial users.

The document, which contained a brief scorecard of the Group Managing Director, NNPC, Mr. Andrew Yakubu, in the past two years, also noted that the corporation was in the process of completing the construction of pipeline connections to all gas-fired power plants to ensure improved supply.

Most power generating plants in the country are gas-fired, with experts noting that this is one of the best ways of generating electricity.

Yakubu said in the document, “Gas supply to the Nigerian market has grown from 300 million cubic feet per day a few years ago to an all-time high of 1,500mcfpd, of which almost 70 per cent is dedicated to support the power sector.

“In the same period, we have embarked on the most aggressive expansion of the nation’s gas pipeline infrastructure for effective transmission and distribution of natural gas. Already, we are in the process of completing the construction of pipeline connections to all gas-fired power plants.”

The NNPC GMD also said 200 manufacturing industries were currently utilising natural gas and that the number would double when the gas infrastructure construction programme was completed.

The governance poll for the month of June by NOIPolls, an indigenous survey agency, revealed that slightly more than half of respondents, 52 per cent, indicated that power supply to their households over the past month was either bad and/or had gone worse.

This was a seven-point increase from May 2014. The poll, which was released on July 1, said the South-East zone experienced the worst supply of power to households. It puts the percentage of those who experienced poor supply in the region at 61 per cent.

Last week, the Chairman/Chief Executive Officer, Nigerian Electricity Regulatory Commission, Dr. Sam Amadi, while speaking on Political Platform, a radio programme aired in Abuja, said the country’s target of getting about 7,000 megawatts of power by December was feasible “if there is gas.”

The Group Executive Director, Gas and Power, NNPC, Dr. David Ige, while making a presentation to journalists recently, noted that the government was working hard to provide more gas to the power firms.

Ige, who spoke through Mr. Alfred Amadi, stated that the government’s aspiration was to grow the gas generation capacity by 300 per cent in the next five years, adding that this was possible.

On the enabling policies to ensure that electricity generation companies got enough gas, he explained that a domestic gas supply obligation had been put in place.

“This means that for every gas producer in the country, a certain percentage of production must be supplied to the domestic market. And this is already in place,” he added.

On gas pricing and the disparity between what is paid by industrialists and the power firms, Ige said, “Earlier than 2011; 1,000 standard cubic feet of gas sold for 10 cents. In 2011, we achieved 30 cents. In 2012, we climbed to $1 and we are hoping that we will get $1.50 by the end of this year. This is domestic gas.

“But the wholesalers, who are the industrialists, other than the power companies pay as high as $3 per 1,000scf of gas. This shows that there is a wide disparity between the two groups. Now, if you remember, the biggest consumer of gas in Nigeria for now is the power sector.

“If somebody is paying $3 and another person is paying $1.50, one of these consumers is, therefore, being subsidised. And there is even the issue of the power companies paying for the gas. Thanks to God that we’ve been able to separate that from our federal budget. So, it is now between the successor companies of the Power Holding Company of Nigeria and the gas producers.”

Asked if the disparity in gas pricing was contributing to the complaints often made by power firms that they got inadequate gas supply, Ige maintained that the power sector received the highest amount of gas in the domestic markets.

He said, “The supply to industries is virtually unnoticeable as the bulk of the domestic gas supply in Nigeria is to power. So, if somebody says the disparity in price is what is affecting gas supply to the power plants, that is not exactly correct.

“What is happening is that not until all the operators meet their domestic supply obligations, then, every power plant will be in a position to privately negotiate with a supplier. When we get to this point, it will now become a situation of a willing buyer and a willing seller. That is the ultimate aspiration of the NNPC.

“When all of them meet their domestic obligations, the extra gas that goes into the market can be sold to anybody. And by then, the grid will be in place; meaning that if you negotiate with Shell and they sell gas to you in Port Harcourt, you can receive the gas in Kano. It doesn’t have to be you going to a Shell or Chevron pipeline to be supplied. When we have a grid in place, gas can come and leave from any location.”

[Punch]

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