Minister of Power President Goodluck Jonathan
•FG targets 15,000 megawatts by 2015, inaugurates gas projects
THE precarious power situation in the country has taken its toll on the entire economy, as the Central Bank of Nigeria (CBN) yesterday, revealed that companies spend N93.6 trillion yearly to generate their own electricity, while individuals spend N1.56 trillion (about $13.35 billion) to fuel their generating sets, totalling N95.16 trillion.
CBN Deputy Governor, (Financial System Stability), Dr. Kingsley Chiedu Moghalu, who disclosed this at a workshop organised by the National Association of Energy Correspondents (NAEC), with the theme, “Gas to Power: Prospects and Challenges,” specifically stated that inadequate energy and poor infrastructure had contributed significantly to the country’s economic woes.
Moghalu, who represented the CBN Governor, Malam Sanusi Lamido Sanusi, said: “The Manufacturers Association of Nigeria (MAN) and the National Association of Small-Scale Industries have estimated that their members spend an average of N1.8 billion on power generation weekly and that the major problem facing the manufacturing sector in Nigeria is lack of power.
“At the individual level, it is estimated that about 60 million Nigerians now own power generating sets for their electricity, while the same number of people spend a staggering N1.56 trillion (about $13.35 billion) to fuel them annually.”
This revelation emerged as the Federal Government disclosed that in the next three months, it would inaugurate about 315 million standard cubic feet per day gas projects to power the nation’s thermal plants to improve generation capacity.
The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, who disclosed this, also at the workshop, stated that of the 315 million standard cubic feet per day, 65 million standard cubic feet would come from Pan Ocean, 185 million from Chevron and 65 million from the Nigerian Petroleum Development Company (NPDC).
This was coming as the Minister of State for Power, Mr. Nuhu Wya, equally said that gas transportation agreement must be in place before any molecule of gas under the new regime would be sent out.
Wya, while stating that the Federal Government anticipated the negotiation of the agreement to begin as soon as possible, stressed that it was necessary that this was resolved to enable investors in the power sector deal with the various intricacies associated with gas management.
He said: “It is also imperative to introduce a transition programme to accommodate the new supply environment. This is an important aspect of the ‘gas to power journey’. There is the need to provide gas infrastructure for such areas and the policy should take cognisance of this fact and provide the required investment climate for this to happen. It is understood that plans are underway to address these concerns.”
Moghalu explained that the CBN Power Intervention Fund was conceived to provide the much-needed long-term financing to investors in the power sector, pointing out that the refinancing window would enable power industry operators to bring the project to fruition.
According to him, the fund would also ensure that some of the non-performing power industry-related loans that have taken the books of the deposit money banks were refinanced to improve the balance sheets of the banks.
The CBN boss disclosed that electricity generation in the country in 2008 was 7,011.6 megawatts, consisting 72.9 per cent of thermal power and 27.1 per cent of hydro-power.
Besides, he explained that while the Power Holding Company of Nigeria (PHCN) accounted for 85.3 per cent of the total generation, Independent Power Projects (IPPs) accounted for 14.7 per cent.
Also, total electricity consumption was 2,108 megawatts per hour (Mw/h), which showed a drop of six per cent from the 2007 figures of 2245.5 megawatts per hour (mw/h). The oil and gas industry actually declined by 4.76 per cent and had a negative contribution to Gross Domestic Product (GDP) of -0.93 per cent in 2008.
Other notable challenges of power supply, according to him, were the transmission and distribution networks, which had been poorly maintained and inefficiently operated, making it difficult to move power from generation sites to consumption points.
The low tariffs coupled with high level of losses in the system, he said, pointed to the fact that the sector was not financially viable, which made the apex bank to use monetary policy to fast-track the development of the power industry.
Moghalu added: “In other words, this is to ensure that Nigeria has an electricity supply industry that can meet the needs of its citizens and power our economy into the 20 top economies of the world by the year 2020.
“This is in tandem with the goals and objectives of the National Electric Power Policy (NEPP), which include, among others, to improve the efficiency and affordability of power supply, encourage private sector participation and competition, attract investment and provide a conducive environment for long-term development of the sector.”
The minister pointed out that the aspiration of the country to be one of the world’s top 20 economies by 2020 would require a significant increase in electricity supply and availability.
While recognising this need, the Federal Government, Mrs. Alison-Madueke said, had massively invested in power, which has made the power sector to undergo unprecedented growth from 3,500 megawatts in 2005 “to possibly as high as 15,000 megawatts by 2015 based on projection”.
She said: “The growth in thermal power plants translated into massive increase in gas demand. From a modest gas demand of about 650 million standard cubic feet per day in 2005, the power sector requires about 114 million standard cubic feet per day by the end of this year and 3000 million standard cubic feet per day by the end of 2015.
“This represents a growth rate of 16.5 per per annum compared with global average of about three per cent. This growth has been a significant stretch for the relatively young Nigerian domestic gas sector.”
Wya also stated that the infrastructure that would bring gas to the power at various areas of the country should be able to supply power to both existing and intended power plants in these areas.
He said: “This is not limited to the transportation pipelines but also includes the gas processing facilities to ensure that our gas which is said to be rich in liquids will be processed to bone dry quality and hence reduce the risk posed to power plants.
“The availability of this quality of gas, which only Chevron currently supplies to the West African Gas Pipeline, will reduce the cost of balance of equipment and maintenance in the running of a power plant.
“I am aware that the Ministry of Petroleum through the Nigerian National Petroleum Corporation (NNPC) and its partners is developing strategies to address this issue. It is hoped that these issues will be resolved and delivered in time to meet the aspirations of the power plants presently under construction.
