Operators Proffer Solutions to Challenges in Power, Gas Sectors


Ejiofor Alike

Experts in Nigeria’s power and gas sectors have proposed solutions to the problems of the sectors, saying that ongoing projects should be pursued vigorously to completion, while the new electricity tariffs should be implemented.

Immediate past Group Executive Director (GED) in charge of Gas and Power at the Nigerian National Petroleum Corporation (NNPC), Dr. David Ige told THISDAY at the weekend that the two most critical challenges in the short term were project delivery and vandalism.

Ige said there were many gas supply projects that had been in very advanced stages of maturation for the last one or two years, but yet to be completed.

“The delay has become worrisome, because if these projects had been completed, the current gas challenge will not be there. Some of the projects include the Utorogu Non-Associated Gas (NAG 2) Plant, Pan Ocean’s Oil Prospecting Lease (OPL) 267 Project, Nigerian Petroleum Development Company (NPDC) Odidi, Bonga Divert, and Total NOPL pipeline.Some of the problems with project delivery are as follows; funding inconsistency, which results in payment delays and cost overruns; administrative issues in the past – such as Bureau of Public Procurement (BPP) approvals, and internal board approvals; community interruptions; contractor performance; and inadequate mechanisms for responding to real time scope changes. No amount of incentives will mitigate against poor project delivery. It is essential that these bottlenecks are addressed,” Ige explained.

Ige, who is the Chief Executive Officer of GasInvest Limited, added that vandalism was the next challenge, which needed to be addressed, stressing that gas pipeline vandalism was usually a manifestation of grievance with the community and militants.

According to him, crude oil vandalism could also be a consequence of grievance or outright criminal motive, adding that bespoke solutions must be developed for each.

Ige said despite the frustrations about gas, gas supply capacity had actually grown at the fastest rate in the last three years or so, from about 400 million cubic feet per day (mmcf/d) to now close to 2,000mmcf/d.

“However much of this growth is not visible due to the vandalism mentioned above or due to other challenges in the power sector such as transmission, leading to cases of stranded gas, most notably in the East. An interesting observation with the growth in supply is that it has come largely from NPDC, SEPLAT, Frontier Oil/Seven Energy, Pan Ocean. These are mostly independents. The IOCs have made very insignificant contribution to the growth in supply and are less likely to do so going forward,” Ige explained.

Ige charged President MuhammaduBuhari’s administration to focus its incentives on this category of developers and identified their key challenge as access to acreage.

According to him, the International Oil Companies (IOCs) sit on most of the country’s gas reserves, yet have not made meaningful contribution to the domestic capacity, whilst the Independents with less than 10 per cent of the available reserves are making the most contribution.

“I suggest the incentives should include a more visible reward for those that contribute to the domestic market, that is, make more acreages available to the Independents, review the fiscal terms for gas for this category and adjust as appropriate to reflect the lack of robustness of their portfolios,” he added.

Ige said the present administration must deploy more stringent criteria before renewing acreages for underperforming companies.

On his part the immediate past Chairman of the Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi told THISDAY at the weekend that he had argued that the real challenge of the electricity sector reform now is project management and not necessarily change of model, stressing that the country has a project management problem and not a modeling problem.

He said the work they did in NERC in the last five years had guaranteed a stable electricity model even in the face of very acute problems of poor quantity and quality of electricity.

To ensure the attainment of 10,000MW by 2019, Amadi said the country needed to start from the end and get back to the beginning.

“We do know that the frailties of distribution networks and the ineffective change management strategies of the Discos have precluded them from effectively taking electricity above 4,500MW. So, in the minimum we need to boost that capacity by another 6,000MW before 2018 if we want to consistently generate 10,000mw by 2019. This is very easy,” Amadi said.

“This means they have to invest in their network to expand the capacity and also ensure quick response to line and fault clearing, so that there are no downtimes in distribution of electricity. The new tariff and the service level agreements which we factored into the tariff order guarantee this,” Amadi added.