Nigeria saw energy on the edge in 2009

Jan 01, 2010 01:00 AM

Despite the promises and assurances to boost power and oil supply in the country, the history of the sector is just being recycled.
Below are some of the events in the energy sector.

Petroleum industry
The year began with the controversial reduction by government of the petrol pump price from N 70 to N 65 in January in the name of extending goodies to Nigerian citizens due to the downfall of crude oil prices but the gift was attacked by organised labour unions and industry experts which they said was part of the plan to introduce deregulation policy.
As a result, the Major Oil Marketers Association of Nigeria (MOMAN) threatened to stop importation of Premium Motor Sprit unless the government addresses "some controversial issues" in the new pricing template, because according to them they were selling below cost. Members of MOMAN include African Petroleum, Chevron Nigeria, Conoil, Mobil, Oando and Total Nigeria, which together said they are responsible for 50 % of total petrol importation into the country.

The former Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Alhaji Abubakar Yar'Adua got his sack letter from the President Umaru Yar'adua and replaced with NNPC's Group Executive Director (Special Project), Muhammad Sanusi Barkindo. Yar'Adua also approved major changes in the top Management of the NNPC where the six Group Executive Directors were replaced with new ones.
One incident within the early part of the year was the vandal attacks on the PPMC major pipeline (system 2B) which moves products from Atlas Cove to Mosimi, Ejogbo, Ibadan, Ilorin and Ore. These effectively shut down PPMC capacity to move the product by about 30 %, a minimum of up to 380 trucks per day.

The Minister of state for Petroleum, Odien Ajumogobia, at the Nigeria Oil and Gas Conference in Abuja justified government's intention to deregulate the downstream oil sector. Soon after that the government announced subsidy removal on PMS otherwise known as Petrol.
Shocking news revealed by Mr Mohammed M. Ibrahim, Chairman of the OGIC, sub-committee on policy framework was that Nigeria is adjudged to be the largest importer of refined petroleum products in the world despite being among the top 10 oil producing nations in the world. Secretary General of the Organisation of Petroleum Exporting Countries (OPEC), Abdalla El-Badri, arrived Nigeria with his delegation and called on Nigeria and other OPEC member countries to work together to ensure that the Kyoto Protocol on Climate Change was sustained.

The Public hearings on the Petroleum Industry Bill (PIB) were conducted by both the Senate and House of Representative members. Senator Ike Ekweremadu, deputy senate president stated that members of the upper legislative chamber have resolved to pass the oil reform bill before the end of the year. He said so at a gala in honour of OPEC member Countries' visiting team led by His Excellency, Abdalla S. El-Badri, Secretary General of the organization.
Speaking also during a fact-finding visit to the Minister of Petroleum Resources and the Nigerian National Petroleum Corporation (NNPC) to understand the Petroleum Industry Bill before the National Assembly and the rationale behind it, the leader of the IMF delegation and the Adviser Fiscal Affairs Department, Mr Charles McPherson said the bill was professional and was properly done.

The Nigerian Petroleum Development Company (NPDC), the Exploration and Production arm of the NNPC discovered Oil from its Oil Mining Lease (OML) 64, otherwise known as Kukaku-1 well with potential of 1,285 to 3,110 bpd of crude oil. The well was drilled to a total depth of 11,150 feet and encountered six major hydrocarbon intervals, three out of which bear oil with a net thickness of about 50 feet.
The NNPC signed a "Modified Carry Agreement" to the tune of $ 1.69 bn with Shell Petroleum Development Company (SPDC), Total and Nigeria Agip Oil Company (NAOC) designed to finance their Joint Venture Upstream project in Gbaran-Ugbidie, in Bayelsa state.

International oil prices
The substantial parts of the year witnessed surges in international crude price after the early fall from $ 145 a barrel in the beginning of the year.
The crude oil price nearly hit $ 80 at the end of the year.

As part of the effort to revive the sector, the federal government promised to repair the turbines and other installation belongs to the Power Holding Company of Nigeria (PHCN) as a short term measures to at least generate 6,000 MW of electricity before the end of the year. The Federal Government announced the removal of the Chief Executive Officer and two other executive directors of the state power company, in what the government said was a move towards achieving its power generation targets.
The Executive Vice Chairman/CEO of the Power Holding Company of Nigeria (PHCN) Engr. Bello Suleiman was kicked out alongside the Executive Director in charge of Finance and Administration Engr. Isiaka Abdul Razak and his counterpart in charge of Operations, Engr. Simon Atakulu. Suleiman was replaced by Engr. Husein Labo, while Mr Pius Apuye is the new Executive Director (Finance and Administration) and Engr. John Ayodele is Executive Director (Operations).

The Economic and Financial Crime Commission (EFCC) descended on the Chairman of the Nigerian Electricity Regulatory Commission (NERC), Ransome Owan and six other commissioners on alleged N 1.54 bn fraud perpetrated by them. The Minister of Power, Lanre Babalola shortly after that announced their suspension and at the same time announced the appointment of a new administrator without seeking the consent of the presidency, thereby generating another controversy in the sector.
President Umaru Musa Yar'Adua sent a bill to the National Assembly asking for the repeal of the Rural Electrification Agency (REA) Act after the fraud incident allegedly perpetrated by some law makers, Permanent secretary of the ministry of power and the Director General of the Agency of about N 5.6 bn.

The Federal Government later scrapped the REA through a letter from the minister of State for Power, Nuhu S. Wye even though the bill sent for the repeal of the REA establishment Act 2005 is still hanging in the National Assembly.
The representative of the International Atomic Energy Agency (IAEA)'s nuclear regulation expert, Anthony Evans, said at the IAEA regional Regulatory Infrastructure for Safety in Abuja that Nigeria had been a role model in nuclear regulation in Africa and if work went according to plans, the Nigeria's Nuclear Power programme will be the best in the continent.

PHCN workers threatened to go on strike to press home their demands including salary increment and unbundling of PHCN. Riot as a result of poor power supply led to the death of five people in Zaria, Kaduna state on May 25th, 2009, but PHCN said the riot has nothing to do with power supply in the town.
The country's natural gas reserves of 185 tcf were not properly explored within the year due to absence of enabling regulation. The domestic gas obligation by the International Oil Companies remained in coma throughout the year due to issues concerning pricing and payment.

The plans to raise earnings from natural gas exports to 50 % of oil revenues by 2010 remained in papers throughout the period but some efforts were made to increase the level of gas production. NNPC estimated that $ 15 bn in private sector investments is necessary to meet its natural gas development goals by 2010. Still within the period, Nigerian gas flaring accounts for 20 % of the world total which could be ended by 2010 by collecting associated natural gas and processing it into LNG.
NNPC and Gazprom signed an agreement in Abuja to form a new gas company called Nigaz. At the same time the Nigeria government hosted Algeria and Niger Republic to conclude the 4,000 km-long Tran-Saharan Gas Pipeline project agreement. The talks about the $ 7 bn Nigeria-Algeria (NIGAL) project planned to be finished by end of 2009.

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr Mohammed Sanusi Barkindo said the corporation put in place a short term gas supply plan to deliver about 1.2 bn cf of gas to the domestic market by the end of this year. The federal government warned all International Oil Companies (IOC's) operating in Nigeria not to fail in meeting their domestic gas supply obligation designed to meet the 6,000 MW target for domestic power supply before the end of the year.
Geometric Power signed a gas supply agreement with Shell Petroleum Development Company and the Nigerian National Petroleum Corporation for the generation of about 188 MW of electricity. This was the first time an IPP signed such agreement. The gas shortage was blamed for the failure to achieve the 6,000 MW of electricity by the end of the year by both the minister of power and the managing director of the PHCN.

Royal Dutch oil giant Shell Petroleum Development Company (SPDC) was fined N 1 mm over failure to clean up oil spill sites which resulted in an inferno that destroyed some part of Peremabiri community, in southern Ijaw Local government Area of Bayelsa state in 2008.
The financial penalty was imposed by the National Oil Spill Detection and Response Agency (NOSDRA). The main militant group in Nigeria's Niger Delta attacked an oil facility. Royal Dutch Shell stopped some production as a precaution after reports of an attack on two oil well clusters near its Forcados terminal.

Also some militant groups threatened to blow up Kaduna Petroleum Institute if government continues to go ahead with its agenda of moving the Federal University of Petroleum Resource from its present location at Effurum to Kaduna.
The federal government officials said there are no plans like that.

Source / Daily Trust
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