Nigeria records 400 mm cf shortfall in gas supply

Jul 13, 2010 02:00 AM

The Federal Government said that Nigeria was currently recording a shortfall of about 400 mm cf per month in gas supply for electricity generation. This is because of the about 1.2 bn cf it requires on a monthly basis to generate adequate electricity, it produces only about 800 mm cf.
The 800 mm cf of gas supply, the government however pointed out, "tallied" with the level of electricity currently generated for Nigerians. But the figure is lower than the 1 bn cf given, last May, by the Minister of Petroleum Resources, Mrs Dieziani Allison-Madueke, as the level of gas supply available for electricity generation when she visited members of the Senate and House of Representatives Joint Committees on Gas Resources.

The government put the level of electricity generation at between 3,500 MW and 3,700 MW. Minister of State, Power, Nuhu Wya, who disclosed this shortly after the opening of a Stakeholders' Forum/Workshop on Partial Risk Guarantee in Abuja, however said the ministry was working closelywith the Nigeria National Petroleum Corporation (NNPC) and international oil companies (IOCs) as well as the World Bank to establish a commercial framework -- a Partial Risk Guarantee (PRG), that will ensure adequate and continuous gas supply for electricity generation.
"In accordance with our programme, we will need about 1.2 bn cf of gas on a monthly basis to generate enough electricity in the country. We are currently getting about 800 mm cf, which is tallying with our production capacity at the moment. And we are working very closely with NNPC and international oil companies and the World Bank. With the commercial framework put in place, that is, the Partial Risk Guarantee, suppliers will be assured of payment for gas supplied. We are also rehabilitating our plants and coming up with the new plants of the NIPP. These plants are being put together so that when this gas is coming in at the correct time, the plants are being put on stream," he said.

Wya noted that the Federal Government was already implementing a gas supply agreement with Pan Ocean Company with a view to boosting the level supply.
"That is one of the exciting moment of the power sector where a proper commercial agreement was signed to ensure that both parties play their own role as at when due. If we do not take up the gas, we will have to pay for it and if they don't supply the gas, they will have to pay for the loss in power. So this is something that is very good for the nation and it works all over the world," he added.

Wya said, what the Federal Government was striving to achieve, in the interim, was to sustain the available gas supply for electricity generation.
According to him, "We are ensuring that gas is available to the plants that are working and we are making sure that the power that is generated is being distributed in a sustainable manner so that we have less of system collapses and less of disruption in the power supply. The little we are getting we are distributing it in a sustainable manner and we are recording steady growth in generation."

Senior Energy Specialist, World Bank, Mr Erik Fernstrom, who also spoke, submitted that, "the power problem in the country is difficult to solve because is a link of different chains of interlinked centre of activities."
Given this scenario, he added: "What this project wants to address is upstream issues, meaning: How do we get the fuel to run the power plants? And how do you make sure that the companies that running the power plants get enough funding from the clients to be able to pay for the fuel in a sustainable manner?"

Fernstrom said the World Bank was working with the Federal Government on a guarantee programme that ensures the payment liability of the PHCN toward the gas supplier, which are essentially the oil companies.
Essentially, he disclosed that, "the contribution of the World Bank is on three levels: One is the provision of partial risk guarantee which backs up the payment liability of the PHCN and minimises the contingent liability that government will have to incur. Secondly, it also provides the needed transmission investment to make sure that power generated is able to flow. The third one is that it commits the bank to a deeper involvement to serve as broker between the suppliers and the buyers."

Source / This Day
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