Lingering gas supply issues undermine efforts to power Lagos

The city of 20 million plus people probably accounts for up to 20 percent of the economic activity taking place in Nigeria, meaning it has a nominal GDP of roughly $100 billion or a fifth of Nigeria’s rebased output of $510 billion.

This huge economic activity taking place in Lagos means the city needs about 10,000 MW of electricity to power its homes, offices and industries.

However the state only receives about 1,000 MW from the grid on a good day and less than half of that on a day that grid out falls due to vandalisation or network failure.

Eko Disco has the capacity to distribute 700 MW, but currently gets a maximum of 240 MW from the grid, while Ikeja has a distribution capacity of 950 MW; however only an average of 406 mw is currently being received from TCN.

Lagos has tried to bridge this gap by constructing three operational Independent Power Plants (IPPs) – Akute power, Island power and Alausa power, with a total combined output of 32.55MW.

The efforts to construct these plants while admirable are however grossly inadequate for Lagos’ power needs.

Lagos State is Nigeria’s largest city and its most important economic hub.

Gas everywhere however shortages persist

The easiest and cheapest way to power up Lagos and its industries would be through the use of gas powered plants, with the gas piped into Lagos from the Niger Delta.

Nigeria has the world’s ninth-largest proven gas reserves at 188 trillion standard cubic feet (scf) and potential gas reserves of 600 trillion cubic feet (TCF), however much of that gas is currently being flared.

It is estimated that 7 trillion scf of gas would be required over a 10 year period to power Lagos for 24 hours a day, which is a drop in the bucket compared to Nigeria’s gas reserves.

The problem of a lack of gas supply to Lagos however lies in lack of infrastructure, and planning by earlier economic managers of the country who squandered an opportunity to turn Nigeria into a gas based manufacturing hub.

Currently the only pipeline that brings gas into the Lagos axis is the Escravos-Lagos (EL) pipeline which can carry up to 1.1 billion standard cubic feet a day; however all of that supply has already been taken up by industrial demand in the Lagos and Ogun axis as well as commitments to West African countries.

The Nigerian Gas Company (NGC) is planning to double the E-L pipeline by building another one parallel to it with the same capacity called E-L 2.

That is about 75 percent complete, but will not come on stream until at least late 2015.

In the meantime Lagos remains stranded and short of gas.

Options to get more gas to Lagos include potentially building an LNG import terminal or floating barge/ship on the shores of Lagos, as well as a re-gasification plant.

However that may also take up to 2 years or more to complete, although the CEO of Oando gas and Power mentioned that they were looking to do that at the Lagos state economic summit held last week.

Other options include building an offshore gas pipeline to get gas to the Lekki free trade zone, which might be considered by Dangote Industries Limited which is building a $9 billion refinery, Fertilizer and petrochemical plant in the zone.

The quick commercialisation of gas discovered in oil fields offshore Lagos is also a viable option.

The upside to getting gas to not just Lagos but the other industrial zones especially in Northern Nigeria will be the equivalent of an industrial revolution for Nigeria.

 

PATRICK ATUANYA & BALA AUGIE