Africa Energy Nigeria Electricity – FG Gas Producers Meet Over Power Generation Slump

Source thisdayonline: Oyebuchi Ezugbo, 9 February 2010

In a bid to arrest the slump in the country’s power generation, the federal government yesterday met with chief executives of oil and gas companies in Abuja, to see how to resolve the gas supply crisis which has led to the shutting down of power generation facilities of the Power Holding Company of Nigeria, and a fall in the national generating capacity from 3,700mw to 2,700mw.

The meeting, which came under the auspices of the Domestic Gas Supply Steering Committee came on the heels of an expression by the European Investment Bank to assist Nigeria in the development of gas pipeline facilities.

A source at yesterday’s meeting held at the headquarters of the Nigerian National Petroleum Corporation (NNPC), said discussions centred on how to speed-up action on the various gas projects as well as other issues inhibiting stable supply of gas to power stations.

“We are here to strategise and consider various options to achieve sustainable supply of gas for the domestic industry”, he said.
The source said government is worried over the crisis that has engulfed the country energy sector and was prepared to adopt similar hard-stance measure that led to the issuance of a deadline to the management of NNPC to halt fuel shortage.

It was gathered that based on the complaints by the Power Minister Lanre Babalola over gas shortage and the subsequent deterioration in national electricity generation capacity, government summoned the meeting of the domestic gas supply steering committee to at least try an do something in the interim to restore gas supplies to PHCN gas turbines.
Issues such as efficiency and operational Issues, commercial elements such as the Securitisation arrangement, Power Purchase Agreements, Vesting Contracts, Gas Supply & Aggregation Agreement (GSAA) and Gas Transmission Agreement (GTA)s are among the key factors in gas supply chain.
Officials of the Ministries of Petroleum Resources, Power PHCN and oil companies were involved in yesterday’s strategy meetings.

The Minister of Power Dr. Lanre Babalola had during last week’s Ministerial press Briefing said the target of 6,000MW of electricity was made in anticipation that the Chevron and Panocean gas projects as well as the gas facility developed by the Nigerian Petroleum Development Corporation (NPDC) were going to come on stream as scheduled but that they could not be completed.
According to Babalola, the inability to acess the much needed gas supplies from these facilities contributed to a large extent to the non-realisation of the December 2009 power generation target of 6000MW.

“Only one gas plant is presently working and that is the Oturogo while others are still being worked. our last year’s target of 6000MW was made in anticipation that Chevron gas project, PanOcean gas plant and the NPDC gas facilities were going to come on stream but that did not happen”, he said.

THISDAY gathered that the effort of government is now focused on seeing that on-going gas projects, especially the ones being implemented under the Joint Venture with oil companies are fast-tracked and completed not later than March this year.

Aggregate installed available generation capacity of the PHCN plants as at the end of 2009 was put at about 5272.2MW with the gas-fired plants contributing about 73% of the generation mix.
There are 1000mw idle capacity due to gas shortfall to power plants in December 2009, which made peak generation to fall to about 2709MW from over 3700MW that was supplied on 24 December 2009. The table below shows the gas shortfall experienced in December 2009.

Meanwhile the Vice President, European Investment Bank, Mr. Plutarchos Sabellaris has declared the readiness of the bank to enter into technical and financial cooperation with the Federal government for development of gas supply pipeline.

Africa Energy Nigeria Electricity