Why Nigeria may not have sustainable energy supply

Nigeria may never achieve a sustainable power supply until it diversify her energy sources and reduce the over reliance on gas energy, experts have warn.

This energy mix, according to experts, requires involvement of alternative energy sources like solar, wind and coal, which are in abundance in several regions of the country.

Analysts in the energy sector caution that Nigeria’s over 70 percent dependence on gas supply to power plants, which is subject to vandalism, has now made it expedient for government to look at harnessing other sources.

Report indicates that currently Nigeria depends on an estimate of 1.1 trillion standard cubic feet of gas per day from Escravos Lagos Pipeline System, which serves as a backbone of power supply.

“Nigeria needs to look at harnessing other sources of power; we need to diversify our energy base because 70 percent concentration of gas as a major energy base is too much, as it renders us vulnerable whenever there is an attack on gas trunk lines,” says Dolapo Oni, head, energy research, Ecobank Development Company (EDC) Nigeria Limited.

Most countries around the world don’t allow a particular source of energy to control more than 50 percent of their power output, Oni observes, stressing that Nigeria needs to consider the option of actually burning light crude oil in place of gas as is applicable in neighbouring Ghana.

Oni says that the option of burning light crude will cushion the effect of gas shortage whenever there is gas problem, as “this is something we can look at because we have adequate oil that we are not able to sell in the first place, so why don’t we use them for power.”

He highlights further that a country like Germany get 47 percent of their power from wind while they rely on nuclear for 30 percent of power, noting, “Various countries around the world try to segment their source of energy output without allowing one source to control larger percent.”

Wale Shonibare, managing director, investment banking, United Capital, opines that a step into achieving this aspiration should start with the introduction of the domestic gas obligation, which imposes an obligation on the oil companies to assign certain percentage of the gas being produced for domestic uses.

Shonibare sees a significant opportunity for the country to use her gas domestically for power purposes, “Looking at what is going on in the industry, the future is selling our gas domestically because the international prices are in decline.”

Commenting on the prospects of the gas-to-power value chain during an energy-financing forum, Shonibare posits that there are quite a number of weak links that have to do with policy position, stressing that government needs to implement the right policy in order to attract investment financing to the sector.

Meanwhile, analysts in the energy sector are optimistic that Nigeria electricity generation output will receive a 15,000 megawatt increase once the Federal Government and its other joint venture partners intensive investment commitment to gas gathering projects, which will further achieve zero gas flaring in the country.

They observe that when the estimated figure of 211.836 billion SCF of gas been flared are converted into power, Nigeria could be generating a sizeable amount of electricity for domestic use.

At least, $20 billion will be needed to develop gas infrastructure in Nigeria over the next few years, Rolake Akinkugbe, head, energy/natural resources, FBNQuest, observes.

“The current situation in global oil and gas markets also necessitates urgency for Nigeria to focus on creating domestic markets for her gas, given the muted demand in our traditional exports markets including Asian emerging markets,” she points out.

Akinkugbe reiterates that Nigeria is extremely rich in natural gas reserves, and the main thrust appears to be the delivery of gas in sufficient volumes that will boost Nigeria’s power generation capacity.

“I think that level of production is quite achievable, but it’s going to require significant capital investment and a strong and water-tight regulatory framework to drive it,” she says.