Govt, gas firms step up stable power bid, to clear N26b debt

 Fuel queues return in Abuja

THE quest for stable power supply topped talks between the Federal Government, power firms and gas suppliers in Abuja yesterday.
As the government unveiled its “ambitious aggressive gas supplies to power stations” to guarantee stable power supply by December 2012, the industry players struck a N26 billion deal to realise the dream.

The participating gas suppliers and power firms, specifically agreed on the mode of full payment for gas supplies to the power plants to boost their efficiency.
In the energy sector, the government’s bureaucracy and untidy payment style for imported fuel to oil marketers is causing ripples in the sector.

There are fears that if the exercise was not reviewed to meet demands of importers, another round of scarcity of petroleum products and queues at filling stations is imminent.
Already, long queues were seen in Abuja as most of the filling stations allegedly ran out of products.

The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, who unveiled a master-plan for aggressive gas supplies to power generation firms in the country in Abuja yesterday, said the persistent erratic power supply was influenced by challenges mainly located in the Western axis of the country where a majority of the new power plants are located. He said the supply gap originated in the past from misalignment between the gas and power sector had also compounded the situation.

She explained that in the last few months, the government had worked tirelessly to better the alignment between both sectors.
She said: “It is expected that that between now and December 2012, Nigerians can expect to see continued growth in the current all time peaks recorded in both power and gas supplies. Going forward, this trend will continue as we further aggressively address the understanding challenges of the supply system. It is my conviction that we have effectively begun to positively reverse the Nigerian power situation and we should expect a steady upward climb from here. Nigerians can be assured that President Goodluck Jonathan is committed to delivering on the earlier promise of improved power generation for Nigerians, critical underpinning factor of which is stable sustainable gas supply.”

The minister hinted that within the next four weeks, a further 65mmcf/d is expected to come from ongoing work at Oredo, Edo State, saying this would effectively bridge the outstanding gap in supply with all available power plants on the Western axis, as of today, being fully supplied.
According to her, by September, the gross short-term additions to gas supply resulting from the aggressive emergency plan implementation will be 245mmcf/d as opposed to the promised 180mmcf/d.

The minister also added that barring any unforeseen circumstances, the combined impact of the additions would be an expected increase of almost 2GW by the end of the gas emergency period.
“Since the roll out of the plan, we have achieved major milestones in the expansion of the Escravos-Lagos pipeline system – the major gas supply artery to the power plants. This is part of the most extensive expansion ever undertaken on this pipeline network since it was built over 30 years ago.”

On the payment accord, the Group Executive Director, Gas and Power of the Nigerian National Petroleum Corporation (NNPC), Dr. David Ige, said good progress had been made between gas suppliers and power plants as the Minister of Power, Prof. Barth Nnaji, had intervened in the disagreement.

According to him, “we have made a good progress with discussions with the Minister of Power over how to overcome the payment challenge. Going forward, the issue of under-payment will be addressed. I am not aware that the figure is an issue because the invoices are usually reconciled between the buyer and the seller. On the average, the monthly bill is about N2.5 billion. But since the volume of gas supplied is increasing we expect the amount to also increase. What is being owed cumulatively is about N26 billion until June. But now, as we speak we are expecting the first full payment.”

He said there had always been payment but that the issue was short-payment by power firms. “What has always been paid was about 50 to 60 per cent of the total amount of gas supplied but going forward we expect 100 per cent payment.”

When asked on the possible cause of the queues in Abuja yesterday, the Group Managing Director of the NNPC, Mr. Andrew Yakubu, who accompanied the Minister of Petroleum Resources to the briefing on gas supply, declined comments.

Alison-Madueke said the government’s Gas Supply Emergency Plan, enunciated four months ago, had achieved tangible goals, which invariably led to the attainment of 4.2GW of electricity in the country.
“Since the roll-out of the plan, we have achieved major milestones in the expansion of the Escravos-Pipeline System – the major gas supply artery to the power plants. This is part of the most extensive expansion ever undertaken on this pipeline network since it was built 30 years ago,” Alison-Madueke said.

She itemised completed projects in the critical pipeline segment to include the 27kmx24inch permanent gas supply pipeline from Itoki to Olorunsogo via Ewekoro all in Ogun State, the 56kmx24inch Escravos-Warri gas pipeline – doubling the pipeline capacity and enhancing gas evacuation from Escravos as well as the 130kmx36inch Oben to Geregu pipeline.

“The net impact of all these is the addition of 120 million cubic feet of gas per day (mmcf/d) to the grid and the permanent elimination of the challenges of low gas pressure that has plagued the Olorunsogo Power Holding Company of Nigeria (PHCN) and the Nigeria Integrated Power Plant (NIPP) facilities. We are also now well positioned to supply gas to the existing Geregu power plant and all anticipated future expansions in that axis,” Alison-Madueke added.

She said in addition to the pipeline projects, major works on the Utorogu and Ughelli gas plants had reached advance stage.
Both plants had earlier this year recorded an all-time low combined output of 300mmcf/d as a result of maintenance challenges.

Meanwhile, the Delta State government plans to partner with NNPC in the establishment of gas, petro-chemical and fertiliser plants in the state.
Governor Emmanuel Uduaghan, who announced this yesterday when the Group Executive Director, Refinery and Petro-Chemical of NNPC, Tony Ogbuigwe, visited him in Asaba, said the gas sector was lucrative and the state would therefore work with NNPC to establish the plants.

Uduaghan said NNPC should tap the potential in the gas sector, explaining that there was a hidden gold mine in the industry, begging to be tapped.
Ogbuigwe said the NNPC was ready to stimulate local capacity and generate 120,000 jobs.
He added that the corporation had a master-plan to establish a petro-chemical industry in Koko and develop the Koko Port to decongest the Lagos ports.