Nigeria may be at the verge of losing its chances of becoming West Africa’s natural gas hub as countries along the sub-region’s shoreline have started seeking alternatives in liquefied natural gas to replace the West African Gas Pipeline (WAGP), which has consistently performed below half its capacity.
Benin is in earnest to reverse a 750-megawatt shortfall and plans to build two Independent Power Producers (IPPs), one of which is being developed by Enterprise Power, backed by the African Infrastructure Investment Managers (AIIM) and wants to use liquefied natural gas regasification to ensure supply reliability, Upstreamonline, an oil and gas platform reported.
An independent power producer (IPP) or non-utility generator (NUG) is an entity, which is not a public utility, but which owns facilities to generate electric power for sale to utilities and end-users. NUGs may be privately held facilities, corporations, cooperatives such as rural solar or wind energy producers, and non-energy industrial concerns capable of feeding excess energy into the system.
Enterprise Power is a Seychelles-registered energy infrastructure developer run by founder and partner Nikolai Germann, who has worked on tank farms, oil jetties, pipeline networks and even bio-energy power initiatives with Addax and Oryx in Benin, Ivory Coast, Ghana, and Sierra Leone.
In the spirit of Economic Community of West African States (ECOWAS), four West African countries, Benin, Ghana, Nigeria and Togo in February 2000, signed an Inter-Governmental Agreement to build a gas pipeline, which will supply Nigerian natural gas on West African markets.
The WAGP was designed to pump 474 million cubic feet per day via a 20-inch diameter pipe with full compression but has never supplied even half of the contracted volumes, averaging less than 100 million cubic feet per day with throughput boosted only when Nigerian Independent Power Producers fail to pay producers that then switch gas for export if they can.
Twelve months ago, Ghana signed a 12-year deal with Russia’s Gazprom for liquefied natural gas (LNG) supply boycotting the WASP and its inefficiencies.
“The gas that will come from Russia to Ghana’s regasification plant will cost $12 per standard cubic feet (SCF). I can put gas at $3 per SCF into the West African Gas Pipeline if it was efficiently managed and with an extra cost of $2 per SCF for transportation cost I can deliver gas to Ghana at $5 per Scf less than half of what the Russian gas will cost” said Austin Avuru, chief executive officer of Seplat, an independent indigenous Nigerian oil and gas exploration and production company in an earlier BusinessDay’s report.
Already, Seplat Petroleum is talking to private-sector investors interested in extending the West African Gas Pipeline all the way to Senegal, a proposal the company sees as a better solution than liquefied natural gas regasification projects.
Barry Morgan, an analyst at Upstreamonline has said that getting off-grid ventures in gas-fuelled power into development in Africa means leveraging networks to sustain traction with government agencies and national utilities, persuading politicians to back incentives and convincing financiers that you have structures in place to ensure profitability.
In July 2016, Walt Perez, managing director of the West African Pipeline Company Limited (WAPCo) stated that the company faced significant risks because of its financial health engendered by low gas volumes, huge indebtedness totaling about $179 million and dwindling cash flows.
