Erratic power supply and its attendant crushing effects on the nation’s socio-economic development necessitated the privatisation of the power sector. Years after privatising the sector, Nigerians continue to groan in darkness. LUCAS AJANAKU writes on how to bridge the power deficit.
About 140 years ago, electricity was discovered. Since then, many countries have made remarkable advances in power generation and distribution to unlock their economic potential, drive industrialisation and drastically reduce unemployment and poverty.
According to the Nigerian Electricity Regulatory Commission (NERC), electricity generation began in 1896 but the first electric utility company, known as the Nigerian Electricity Supply Company was established in 1929.
Despite the over 123 years since electricity generation began, stable power supply remains a wishful thinking in Nigeria. This is despite the billions of dollars invested in the sector to overhaul power infrastructure spanning generation, transmission and distribution. Not even the privatisation of power generation and distribution has delivered the desired results.
For instance, between January and November this year, the national grid collapsed a record 11 times.
A key objective of sustainable economic development, especially in a developing country such as Nigeria is to establish energy development paths that are both economically efficient and sustainable. This, however, depends significantly on having key players demonstrate commitment to taking leadership and investing in the human and material resources necessary to fulfil obligations in the energy/power value chain.
A 2016 report by PwC highlighted the transformative potential of the power sector. The report noted that the country’s current economic slow-down and stated: “In order to emerge from the current situation, Nigeria needs to take specific steps towards building internal capabilities which will enable and support the economy. One area requiring immediate focus and investment is the power sector, where the low availability of power is currently a major obstacle.”
The report also cited the example of India that has shown a “strong commitment towards improving the business climate through addressing key bottlenecks in infrastructure.”
The Indian government is seeking to attract investments worth $1trillion to the power sector by 2030. This is clearly one key factor that has marked India as one of the few emerging markets with promising growth prospects. Nigeria should borrow a leaf from this initiative.
According to the PwC report, power supply comes from a mixture of sources. Thermal power (mainly oil and gas), that makes up the majority of power generation (82 per cent) with hydro-power making up 17.8 per cent and non-hydropower renewable sources shoring up the remainder.
Gas as feedstock
Because of the increasingly pivotal role of gas in the energy mix, the Federal Government approved the Nigerian Gas Master Plan on February 13, 2008.
A guide for the commercial exploitation and management of the gas sector, the Master Plan targeted growing the economy with gas by pursuing three key strategies.
The strategies are to stimulate the multiplier effect of gas in the domestic economy; position the country competitively in high-value export markets and guarantee the long-term energy security of the country.
The Federal Government aspires to increase electricity generation from the current 5 Gigawatts (Gw) to 20 Gw. This represents a huge development opportunity for Nigeria’s domestic gas industry.
Currently, the country has around 12 GW of installed electricity capacity but often less than 5 GW is available on the grid due to inadequate and weak transmission infrastructure and other challenges.
To address challenges of gas constraints in the power sector, the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mele Kyari, said it will continue to expand and integrate gas pipeline network systems to meet domestic demand.
But among players in the gas supply industry, Accugas Limited, a Savannah Petroleum Company has made tremendous strides in the gas supply space. The firm continues to contribute to economic development in the country by supplying gas to meet domestic consumption – for power generation and industrial use.
It currently supplies gas to some power generating plants which deliver about 10 per cent of national power generation and industrial customers in the Southeast of the Niger Delta – driving industrialisation, providing employment for the skilled and unskilled local populations, in addition, to directly improving Internally Generated Revenues (IGRs) of some states in the region.
With hundreds of millions of US dollars invested in the development and operation of a gas processing and transportation infrastructure network, including a 200 million standard cubic feet per day (mscf/pd) gas processing facility and about 260km of main gas pipelines capable of transporting 600 mscf/pd, among other investments, it has shown its confidence in the oil and gas sector and, by extension, the economy.
With its 68km, 24-inch Uquo to Creek Town pipeline that currently supplies gas from the Uquo Field in Akwa Ibom State to National Independent Power Plant (NIPP) Calabar, Cross River State; it has demonstrated its confidence. If operated optimally, the Calabar NIPP has capacity to add 560 megawatts (Mw) to the National Grid.
Power sector challenges
In July this year, an industry publication, Petroleum Economist highlighted payment problem as one of the challenges hampering the power sector.
“There is no doubt that Nigeria needs gas domestically. Electricity supply remains intermittent, despite successive administrations putting gas at the centre of the power sector reforms. However, gas supply is not the biggest bottleneck in the system,” it said.
In a chat with Petroleum Economist, Gas Commercial Advisor at the Nigerian Petroleum Development Company (NPDC), Adedamola Adegun said: “We have oversupply. We have a liquidity or credit problem [so] gas suppliers don’t get their money.”
Other challenges include a lack of sufficient investment in power and gas distribution infrastructure occasioned by several factors. Gas flaring is another challenge.
According to the Department of Petroleum Resources (DPR), Nigeria’s total gas production stood at around 1.2bn ft3/d, out of which 41 per cent was exported and 48 per cent used domestically. 11 per cent was flared. Accugas and its parent company, Savannah Petroleum are helping to address this challenge by processing the otherwise flared gas at the Stubb Creek and delivering it to off-takers to power the Nigerian economy.
Determined to reduce gas flaring, the Federal Government, in 2016, established the Nigerian Gas Flare Commercialisation Programme with the intention to encourage its use for power. A target date of 2020 for the elimination of gas flaring was set, but this target appears unrealistic.
“Supply disruptions due to violence are an additional challenge observed across the power value chain in Nigeria. Militant groups recognise the impact of disruptions on the economy – as evident through rampant violence targeted at oil and gas pipelines which, in turn, impacts power generation,” PwC report said.
Accugas has been able to deal with this through involvement of community stakeholders to jointly secure its pipelines in the region.
The Managing Director of Savannah Petroleum Nigeria, the parent company of Accugas Limited, Ian Brown-Peterside has reiterated the firm’s commitment to Nigeria and support for the Federal Government’s effort in increasing national power output.
“Accugas is a valuable partner of the Nigerian people. As a stakeholder in the Nigerian economy, we reiterate our commitment to and support for the Federal Government’s ongoing efforts to ensure increased and sustainable electricity supply to the entire country,” he said.
He said the firm has demonstrated support by ensuring that its network of pipelines is strategically located to deliver gas to NIPP, IPP and industrial customers in the Southeast.
“Our infrastructure, which cost hundreds of millions of dollars, has enabled us to provide a reliable supply of gas to various off-takers. Notwithstanding the challenges within the value chain, we expect to continue to increase our investment in Nigeria,” he said.
“While there is no single short-term solution to Nigeria’s power challenges, there are a number of opportunities for companies to bring their global skills and expertise to the table and participate in the journey of powering Nigeria’s long-term growth,” the PwC report, however, stated.