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Gas to power gap to be bridged by 2015

Gas to power gap to be bridged by 2015

The enormous gas to power demand, projected to grow sharply as National Independent Power Plants (NIPPs) come on stream, will be bridged by 2015, Diezani Alison-Madueke, minister of Petroleum has said.

The minister, represented by David Ige, an official of the ministry, was speaking on Monday at a one-day roundtable session in Abuja, organised by the Nigerian Economic Summit Group (NESG).

Minister of power, Chinedu Nebo, also informed that the power sector’s gas debt has dropped from its estimated N30 billion in 2012 to “a little over N20 billion” today as the government continues to pursue its undertaking to settle all liabilities.

It is estimated that by year end, gas demand by NIPPs will grow by 340mmcf/day, coming notably from Geregu and Ihovor power plants. Current demand by NIPPs is about 260 mmcf/day in the western area.

Madueke said, “Several efforts are being taken to assure gas supply growth, in line with this demand. In the short term to end 2013, about 130 mmcf/d is expected in the west. However, between 2014/15 almost 1,000mmcf/d is forecast to be added. This will bridge the gap in demand by NIPP.

Read also: Low prices remains obstacle to closing $55bn investment gap in Nigeria’s gas industry             

“In the East, the short-term objective will be to utilise already available gas for which either delays in completion of the power plants, or other infrastructural projects, prevent gas usage. These are expected to be addressed through 2014/2015 bridging shortfalls in the East. In essence, with our current supply plans, there is confidence that NIPPs demand can be met by 2015,” she assured.

According to the petroleum minister, progress made on gas infrastructure means all NIPPs are being fed with permanent gas supply pipelines. Notably, the pipelines to Geregu, Olorunshogo, Alaoji and Omotosho, have all been completed and are providing permanent supply arteries to the plants, enough to meet “both current and future demand requirements.”

She however warned that given the scale of the ongoing infrastructure projects, the sector is vulnerable to the usual challenges of project slippages and contractor related issues. She observed also, that these were being addressed to ensure minimal impact on the supply agenda.

“One key disincentive to supply growth is the payment performance of the power sector broadly,” Madueke said, “Whilst NIPP has had a relatively better performance in terms of paying for gas, the power sector still owes about N22 billion for gas supplied. For sustained growth in supply, there is need for improved payment performance,” she said.

In this vain, Nebo lamented the huge gas debt accumulated over the years by the power sector, saying this was “not encouraging to new investors.

“The market operator commenced the payment of 100 percent of NGC (Nigerian Gas Company) invoice in August 2012 and we expect the trend to continue. In other words, we know about this debt and we are working to ensure the right things are done. As at the second half of last year ,the debt was about N30 billion and now it has been reduced to just above N20 billion,” Nebo said.