• Friday, May 24, 2024
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New gas projects promises more electricity for West Africa

Accessing the Performance of Nigeria’s On-Grid Power Sector

With over 600 million people in Sub Saharan Africa living without power according to a World Bank data, new gas projects including the planned extension of the West Africa Gas Pipeline (WAGP) to Cote d’Ivoire, the East-West Offshore Gas Gathering System in Nigeria and the Trans Saharan Gas Pipeline if delivered could add more capacity to the region’s ability to provide electricity for its people.

Valued at over $15billion, the projects will assist West African countries to ramp up new power projects and provide feedstock for plants currently offline due to unavailability of gas. The extension of the 678-kilometre pipeline West Africa Gas Pipeline (WAGP) from Ghana to Cote d’Ivoire will reduce power constraints for 26 percent of Ivorians and even serve export markets in Ghana, Mali, Togo and Burkina Faso.

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The country plans to add 150 megawatts to the grid every year until 2020 while seeking to cut reliance on hydroelectric power which has become unstable due to droughts. It has licensed private firms: Ciprel, Azito Energie, and Aggreko to develop IPPs.

The pipeline, built at the cost of $1billion is connected to Escravos-Lagos pipeline from Itoki area of Ogun State and goes through Agido near Badagry in Lagos, passing through 33 Nigerian communities and thereafter goes offshore to the three countries.

The EWOGGS being developed by Dangote Industries Limited and First E&P, an upstream oil and gas company seeks to connect gas resources in the East with the domestic gas demand in the West through a three billion cubic feet per day of open-access offshore gas pipeline system. The EWOGGS gas pipeline system will have provisions for seven offshore gas injection connection points and two offshore gas discharge connection points.

Dangote said the gas pipeline project could supply fuel to central power plants to generate electricity for households and would save over $7.5b for Nigeria annually, through import substitution. The $12 billion Trans Saharan Gas Pipeline is a 4,401 kilometres natural gas project to be constructed from Warri, in Delta State, Nigeria to Algeria through Niger Republic, and from Algeria to Spain.

The proposed gas pipeline, to be built through a partnership between the NNPC and Algeria’s Sonatrach, would stretch 1,037 kilometres from Nigeria to the Niger border, 841 kilometres from Niger to Algeria, 2,303 kilometres across Algeria and 220 kilometres from Algeria to Spain and would have an estimated annual capacity of 30 billion cubic litres of natural gas. It is expected to be operational from 2020.

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Analysts at EcoBank research believes that given the largely negative long term outlook for oil, gas offers sub Saharan African countries an opportunity to diversify government revenue, strengthen their economic base and improve power for its citizens. “We’ve seen regulatory moves in Nigeria, Ghana, Mozambique and others to support investments in gas,” Oni said.

The projects would cut the huge cost required to set up LNG infrastructure to ramp up gas-to-power projects in West Africa but success will depend on the ability of the people in the region to pay for power delivered. Gas-to-power will be the main anchor sector for the development of a domestic and regional gas economy in sub-Saharan Africa (prior to such time as domestic gas resources can be unlocked to supplant LNG) says a study by South African based Standard bank.

But this can only succeed with the right attitude towards electricity payment. “West Africa’s domestic electricity market is an obvious first choice consumer for the region’s gas but electricity tariffs are not cost-reflective enough to encourage investment in gas infrastructure,” said Dolapo Oni, Ecobank’s head of energy research.