HAVING failed to harness and channel its huge natural gas resources into generating electricity, Nigeria is facing acute power shortages in spite of committing $5 billion to building 10 new generating plants under the National Integrated Power Plants project. In May, the authorities put national output at only 1,327 megawatts from a high of 4,500MW on April 3. This is ironic, and the situation has attracted global concern.
Marie Marie-Nelly, the Country Director, World Bank, recently reminded the government of the need to take urgent steps to deal with the quagmire. She advised the new government to muster the political will to “resolve the gas-to-power problems,” saying that without electricity, the business climate in the country would continue to get worse in the face of dwindling oil income.
The latest statistics from the Niger Delta Power Holding Company put power generation potential from the new NIPPs that are lying idle due to lack of gas to fire them at 5,000MW.
Dafe Sejebor, the Managing Director of the Nigerian Gas Company, says that the country is losing 200 million standard cubic feet of gas per day to pipeline vandalism. Not only does a case of vandalism take two weeks to repair, Sejebor estimates that Nigeria lost N8.01 billion as revenue in the first quarter of 2015 to pipeline vandalism.
In a country with a minimum estimated demand of 10,000MW to light up homes and power the industries that create jobs, the result is constant power outages that drive up costs, erode jobs and make life unpleasant. “It is critical to get the gas-to-power issue sorted out without further delay because it is very important towards boosting the economic growth at this point in time when the decline in oil prices has impacted negatively on the economy,” Marie-Nelly said.
With proven reserves estimated to be the eighth largest in the world, Nigeria ought to have adequate gas needed to fire its thermal plants. But that is not the case. Instead, the country allows international oil companies and their local counterparts to flare “24 per cent of its 7.8 billion cubic feet gas wells production per day,” according to the Department of Petroleum Resources. Gas flaring is the practice of burning of natural gas that is pumped up from the ground during oil production, which is a factor in global warming.
Therefore, it is pressing for the Muhammadu Buhari administration to address the issue holistically, ensuring that gas is available to power the thermal facilities, which make up 80 per cent of our power plants, and thus drive economic growth. Fortunately, the problems have been exhaustively laid bare by industry experts, needing only a government with vision, economic skills and political will to take them on and comprehensively resolve them.
Since 1969, when the Yakubu Gowon regime issued the first deadline to IOCs to end gas flaring in 1974, Nigeria has not been able to do so. The Petroleum Industry Bill, which has a provision to end gas flaring by 2012, was a non-starter because the bill has atrophied at the parliament since its introduction by the late Umaru Yar’Adua government in 2008. Other deadlines, including the last one fixed for December 2013, have not worked.
Economically, Nigeria, which, according to the World Bank, has the second worst gas flaring record in the world after Russia, loses potential income of $2.5 billion annually to this aberration. Nigeria flared about 536 billion standard cubic feet of natural gas in 2010, or a third of the gross natural gas produced, according to the Nigerian National Petroleum Corporation. The challenge before Buhari is to find innovative ways of ending the flaring.
Emeka Duruigbo, a United States-based law professor, said something instructive. “Gas flaring is something that bothers me,” he said. “The technology exists to capture this gas, re-inject it and use it. It is not only a monumental environmental disaster in that we are poisoning the environment of the host communities, it is also a large economic tragedy…”
The government needs no further prodding before it acts, first, to safeguard the ecosystem; second, to make money; and third, to fire our near-comatose thermal power plants.
As it was later discovered, the NIPPs were mostly located far away from the source of gas supply. This necessitated the construction of expensive gas pipelines after many years of the plants being completed. Plants were sited in places like Ogun and Kogi states, in a move driven by politics, not economics, as the gas comes from the Niger Delta. Therefore, 11 years after the Olusegun Obasanjo government initiated the NIPPs, electricity generated cannot be distributed.
We urge the government to shun political considerations in building such power plants in future. Power plants should be built close to gas supply sources. In Canada, the Quebec province plays host to the major power projects that serve Canada and some American states. There are 34 major transmission lines crossing the Canada-United States border from Quebec. In one of the latest projects being undertaken between Quebec and America, the Hydro-Quebec company will deliver 1,000MW of electricity to New York consumers through a-531km transmission line, raise $20 million in taxes and save US consumers $650 million in utility bills on completion.
Nigeria needs to learn from this. Building power plants near the sources of energy and evacuating power through transmission and distribution will help solve the problem of vandalism and sabotage, which has bedevilled the sector.
Buhari should scrutinise the gas supply agreement deals with other countries, and with inventiveness, re-negotiate the deals where possible.
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