Report: Implementation of PIA Will Free More Gas for Power Generation

Emmanuel Addeh

The recently signed Petroleum Industry Act (PIA) will make more gas available for power generation in Nigeria, a new report by African Energy, an independent research organisation on the continent’s energy industries, has indicated.

With an installed capacity likely to reach 18.3GW by 2025, the report said available generation will be constrained to just 7.6GW, while supply will continue to lag far behind demand, without the current gas supply challenges.

In the “Nigeria Power Report 2021/22,” the body stated that the problems facing the power sector are likely to continue in the medium-term, with the lack of gas supply, insufficient Transmission and Distribution infrastructure, and sector illiquidity will contribute to an environment where new projects are unlikely to emerge in the coming years.

However, it noted that after many false dawns, the prospect of long-promised recovery may be in sight as government policies, supported by the World Bank, look to resolve some of the key issues holding the sector back.

“The passing of the Petroleum Industry Bill (PIB) will provide much needed clarity for the sector and could unlock new gas supply to the domestic market, as will the construction of major gas pipeline projects. Combined, these may break down some of the major barriers for new Independent Power Plants (IPPs), “the 23 year research organisation noted.

In the near term, the report stressed that opportunities for private participation are emerging beyond new build generation, while plans are afoot to privatise the Transmission Company of Nigeria (TCN), as state-owned National Integrated Power Projects (NIPPS) are being retendered after an unsuccessful privatisation attempt several years ago.

It added that currently, installed capacity is woefully insufficient to meet demand and hampered by numerous constraint, underscoring the proposed franchising of distribution, including the role of mini-grids.

“Gas supply will be crucial. Gas will continue to fuel Nigeria’s power sector for many years to come while oil continues to play a key role in the country’s economy,” the report said.

On off-grid growth opportunities, it stated that the use of backup diesel generators has become widespread, but opportunities for renewables solutions are growing.

In assessing political and economic risk , it stressed that with President Muhammadu Buhari reaching the mid-way point of his final term and the economy reeling from the impacts of Covid-19 and the fall in oil prices from their early 2010s peak, the report questioned whether the bleak economic picture will improve in the coming years.