Despite Completion of 10 Power Plants by NDPHC, Gas Supply Still a Challenge
Having successfully realised the mandate of building 10 medium-sized gas-powered plants worth $7.1 billion through the Niger Delta Power Holding Company, the next step for the federal government is to incentivise investment in domestic gas aggregation, pr
According to the Advisory Power Team, Office of the Vice President of Nigeria, only nine per cent of gas produced in Nigeria is domestically utilised for power generation.The team said in its report that 41 per cent of gas produced is exported to the international market, while 10 per cent of the gas produced is still being flared
Nigeria has grappled with myriad developmental problems and top on the list is the inability to guarantee reliable electricity supply to millions of its citizens for domestic and industrial use. The failure to provide uninterrupted power has been a major hindrance to the country’s industrialisation and economic prosperity. The country had tried various measures to try to meet the power challenge; the administration of former President Olusegun Obasanjo initiated a most comprehensive scheme, the National Integrated Power Project, funded by the three tiers of government.
The NIPP, funded by the federal government and all the states and local governments in Nigeria, was to fast track power generation and delivery. With this project, the Niger Delta Power Holding Company was established as a special purpose company owned by the three tiers of government and tasked with the responsibility of implementing the NIPP.
GAS PLANTS
The NIPP was a major key to bringing in steady and uninterrupted electricity supply with the construction of 10 gas- fired power plants, with seven of them situated in the Niger Delta for ease of access to gas feedstock. This $7.1 billion generation asset was to deliver 4,771 megawatts of electricity, which will be transmitted and distributed across the country. NIPP, managed by the NDPHC, was a gas-for-power initiative, like the Marshall Plan, gas being Nigeria’s most reliable source of power ahead of hydro.
As the Minister of Power, Works and Housing, Mr. Babatunde Fashola, said, “The simplest way to put it is that we do not have enough power…power cannot be steady unless it is enough. Not only must it be enough, we must create excess capacity.’’
This is where the NDPHC’s mandate and purposeful leadership come to the fore.
GAS SHORTAGE
The NIPP scheme has succeeded in building power plants but without ensuring effective gas supply to them. The power plants include the 451MWcapacity Ihovbor Power Plant built by Maurbeni Engineering West Africa Limited in Benin, Edo State; the 561MW-capacity Calabar Power Plant at Ikot Nyong, near Calabar, built by Maurbeni Engineering; the 451MW-capacity Sapele II Power Plant built also by Maurbeni in Ogorode, Sapele in Delta State; and the 434MW-capacity Geregu II Power Station built in Ajaokuta, Kogi State, by Siemens Nigeria Limited.
Others are the 676MW-capacity Olorunsogo II Power Plant built in Olorunsogo in Ogun State by SEPCO III Electric Power Construction Corporation of China and the 451MW-capacity Omotosho II Power Plant built by China Machinery Engineering Corporation (CMEC) in Okitipupa Local Government Area of Ondo State. The two other power stations, which were all built by Rockson Engineering, are 961MW-capacity Alaoji Power Plant in Abia State and the 225MW-capacity Gbarain Power Plant in Gbarain Ubie, Bayelsa State.
Also built by Rockson are the 338MW-capacity Egbema Power Plant located near Owerri in Imo State and the 225MW-capacity Omoku II Power Plant in Rivers State.
ONUS
Though gas supplies to these plants are outside the mandate of the NDPHC, many believe it is the leadership of the company that should be put on the spot with regard to the task of ensuring adequate gas supply to the stations to launch Nigeria into economic boom.
There are individuals and companies, who want to invest in the domestic gas aggregation, processing and supply business. This huge market requires investment, and the present administration has assured investors of fair play. But there is need for a committed leadership to drive this goal, many analysts have said.
According to the Nigeria Vision 2020 Report of the Energy Sector National Technical Working Group, the energy sector should be the major engine of Nigeria’s sustainable social, economic and industrial growth, delivering affordable and constant energy supply efficiently to other sectors of the economy to fuel growth.
Nigeria has enough gas reserves to power the economy. It is not running out of gas. It also has the wherewithal to build accompanying power plants.
Where then lies the problem? Analysts say what is needed is an efficient body of manpower, with considerable discipline and patriotic dedication by the country’s chief executive and leadership, to properly harness the abundant potential and power Africa’s largest economy.
The NDPHC, established with a mandate to implement the 10 gas-fired power plants to fast track power generation and delivery, should also be involved.
ENERGY SECTOR’S LINKAGE TO GDP
The Nigerian economy has its various sectors linked and energy is a major input that should turn the whole wheel. The energy sector was strategic to the development of the Western world. In fact, it is the main determinant of the West’s progress, apart from constitutional rule, good national policies and efficient and dedicated manpower. If Nigeria is to rise to its expected position in world affairs, it must start with reducing its poverty level, improve productivity and enhance the quality of life of its people. The institutional framework to get all these achieved, apart from stable constitutional rule and good national policies, is the efficiency of the energy sector, especially capacity to successfully harness the huge natural energy reserves.
According to a former Federal Permanent Secretary, Chief Philip Asiodu,“There is a direct relation between total energy consumption and growth of GDP.”
Nigeria’s attainment of constant power will naturally shoot up its investment attraction and gear up a viable sector of small and medium scale industries and enterprises.
The attendant economic boom and prosperity will quadruple and poverty level will reduce. However, despite Nigeria’s large reserves of energy resources, the level of energy consumption and consequently GDP have remained low. In creating the NDPHC, the government aimed to merge the blessings of the country’s huge natural gas reserves with efficient power plants, which are to be turned on by gas. The intended result will be constant energy for accelerated development. But that has not been achieved.
OPPORTUNITY
But Nigeria’s low levels of energy consumption and power deficit actually present an opportunity for the NDPHC. According to the Advisory Power Team, Office of the Vice President of Nigeria, only nine per cent of gas produced in Nigeria is domestically utilised for power generation. The team said in its report that 41 per cent of gas produced is exported to the international market, while 10 per cent of the gas produced is still being flared.
In fact, more gas is flared than used for power generation. It will take strong government policies and an efficient body to handle its allotted gas, and provide power for Nigeria’s domestic energy needs. An optimal utilisation will lead to sustainable development.
FUTURE ROLE OF ENERGY
The NDPHC, which is now conforming to international best practices, is surmounting its challenges and working to achieve results. It is working on a well-connected and functioning gas pipeline network, with corresponding uninterrupted supply of gas, to deliver the benefits of energy as a springboard for economic growth. The company, Nigeria’s own Marshal Plan for the energy sector, is actively occupied with the optimal utilisation of the existing power plants built under the NIPP, funded by the three tiers of Nigeria’s government, to which the NDPHC is accountable under the board headed by Vice President Yemi Osinbajo. The company is working hard to meet the energy needs of households and the larger Nigerian economy’s demand for constant energy, especially for the major political and industrial cities.
In Abuja, for example, the aggregate infrastructural development since its inception over 35 years ago is put at about 25 per cent. Over 90 per cent of allocated plots are not developed. Getting to its full potential in terms of development will depend on energy. For modern infrastructure in transportation, telecommunications, hospitality, real estate, even the Abuja Industrial Park, to be optimally functional, power is key.
Since the amount of energy used determines productivity, the NDPHC has its work cut out and occupies a strategic place in the Nigerian political economy. The huge tonnage of goods produced by industries has to be carried by road, rail, water and air. The modern infrastructure for all these rests mainly on energy.
Nigeria has the proven gas reserves for adequate energy supply. But it requires the determination and collaboration of relevant stakeholders as well as political will on the part of the federal government to turn the enormous potential into a solution to the country’s huge energy deficit.