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Power generating plants perform below 30% capacity – FG

By BusinessNews Staff on October 24, 2014

Eleven months after being run by private operators, some power generating plants in the country are performing below 30 per cent of their installed capacities, the Federal Government has said.

The poor performance, it said, was largely due to gas constraints, which had posed a major challenge that was hampering the visible impact of the reform efforts in the power sector.

A document made available to our correspondent by the Nigerian Society of Engineers in Abuja, which contains a presentation by the Minister of Power, Prof. Chinedu Nebo, revealed that many power plants built to generate electricity were only able to utilise a fraction of their installed capacities due to shortfalls in the supply of gas.

Nebo said, “Of the original six power plants that were privatised, not one is functioning at up to 70 per cent of installed capacity. Some are functioning at less than 30 per cent capacity due to gas shortage. To make matters worse, many of the gas infrastructure that supply these power plants have come under attack by vandals with various agendas.

“Oil thieves are breaking up gas pipelines in the hopes of finding oil to steal. Political enemies are hoping to reduce power supply in one area or the other in an effort to sabotage opponents. Even when the gas infrastructure is free of sabotage, obtaining the gas needed is a problem because of the historically low price for gas in the domestic market.

“This low price made investments in the supply of gas to the domestic gas market unattractive for gas producers. Consequently, for years, development in supply of gas to the domestic market in general and power in particular, has stagnated.”

The PUNCH had on Tuesday reported that the current epileptic supply of electricity being experienced across many parts of the country was as a result of the massive drop in generated power by 1,000 megawatts in the last one week, a development that was attributed to shortfalls in gas supply.

The minister, however, noted that the government was working to redress this.

He said the Federal Government had entered into agreements with some international oil companies and local producers to make sure that they ramped up gas supply.

According to him, the government is working to ensure that even the marginal gas fields are exploited in order to have the quantum of gas necessary to drive the power reform.

Nebo said, “Under my leadership and in partnership with the minister of petroleum resources and the NERC, we have been able to recently bring the price of domestic gas to $2.50 per million btu. We also have an additional provision for a maximum of $0.80/mmbtu for transport.

“We expect these changes to incentivise the negotiation and execution of more gas supply and purchase agreements between gas suppliers and power producers, resulting in noticeable improvements in the medium term.”

[Punch]

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