Emmanuel Addeh in Abuja
The Niger Delta Power Holding Company (NDPHC) Limited has decried what it described as the ‘prohibitive’ pricing of gas used in generating thermal-based electricity nationwide.
Managing Director of the company, Mr. Chiedu Ugbo, who spoke at the 2023 Nigeria Energy Summit (NES) which held in Lagos, said the cost of gas remains overly priced in Nigeria.
A statement by the organisation yesterday noted that Ugbo, therefore advocated for a rethink in the current practice of pricing domestically produced natural gas in foreign currency.
“I understand that producers have their own arguments, but unfortunately this is Nigeria and if Nigeria has over 200 Trillion Cubic Feet (TCF) of proven gas reserves, why is it so difficult to get gas?
“Maybe there has to be investment in technology that can bring out this gas cheaper. A big question is: why is gas denominated in US dollars? Before the unification of the exchange rates, we were buying gas at official rate of around N440/$ but now that is floated, are you going to pass the pass-through cost to consumers?
“Are you going to push over 100 per cent increase to consumers? That will be difficult, and it emphasises the availability question,” he contended.
Although he admitted that renewables may be the future of energy supply globally, the NDPHC boss noted that as of now, Nigeria needs natural gas to power its heavy industries.
In his view, some industries like those in the steel sector and some other heavy power consumers cannot transit immediately to solar energy, explaining that they will still need natural gas.
“As such, we still have a lot of opportunities especially in power generation to ensure the consumption of gas as we transit to renewables. There are also opportunities in homes for the use of natural gas in cooking and such other uses.
“However, for gas to play an effective role as a transition fuel, certain challenges have to be dealt with.
“In the power sector, we have serious problems with availability of gas. For example, NDPHC has over 2,000 megawatts (mw) available generation capacity on the Western axis of the Niger, all the way from Delta State to Ogun State.
“ And we need at least 600 million Standard Cubic Feet of Gas (SCF) to power them. Incidentally, I just managed to get between 100 million and 120 million SCF of gas. It is that bad. So, availability is a major challenge,” he reiterated.
The NDPHC boss therefore advised that regulators in the electricity as well as oil and gas sectors should intervene to provide succour and ensure generation of enough electricity for Nigerians.
“If we can find a means to reduce cost of gas at least for domestic consumption, that would help a lot. Gas should not be denominated in US dollars and then exposed to the vagaries of the forex market.
“As electricity producers, we need gas to fire our power plants. We should find a reasonable means to supply gas for domestic consumption. International Oil Companies (IOCs) have gas but they are unwilling to reserve gas for the domestic market.
“ I understand their position about illiquidity of the domestic market, but there needs to be a good handshake between the gas regulator and electricity regulator for us to harmonise interests,“ Ugbo argued.
He, however assured that nonetheless the challenges in the sector, the NDPHC will continue to strive to ensure that Nigerians get electricity supply in their homes and workplaces.
Nigeria, a nation of over 200 million people mostly depends on between 3,500mw and 4,500mw supply of electricity. Gas-generated power is about 80 per cent of current grid electricity.
Although it is the 9th largest gas producer in the world, many power generation plants in the country suffer incessant shortages of the commodity.