Stakeholders in the gas to power value chain have said that overlapping debts in the industry are contributing significantly to the sluggish pace of development in the power sector.
The inability of the electricity distribution companies to collect revenue due them from consumers has made them heavily indebted to generating companies which are also at the mercy of gas suppliers because of unsettled financial obligations.
This has consequently affected gas supply to the generating stations, resulting in inefficient power supply to Nigerians.
The stakeholders, who converged at the Nigerian Gas Association (NGA) business forum yesterday in Lagos, blamed all these on lack of cost reflective tariff .
Bart Nnaji, former minister of power, while delivering the key note speech at the event, with the theme ‘Embracing New Realities: Resetting Our Gas to Power Industry’ urged the government to meet its obligations before holding the electricity distribution companies accountable for the woes of the industry.
According to Nnaji, “The major obligation expected of government, is to allow the strategic implementation of cost reflective tariff, and the payment of subsidy for poor electricity consumers.”
Nnaji said that transmission constraints in the power value chain would continue until government supports segmentation of the transmission system. When this is done, it would engender competition among the segmented units and improve the efficiency of the system.
He urged DisCos not to hold on tight to their assets but allow investors to come on board, adding that it is the only way it can work.
He further observed that the lack of knowledge on the part of government officials on the legal issues within the power space, also hampers potential growth. He said there needs to be the political will by government to honour agreements in order for things to work.
David Ige, former executive director, Gas and Power, Nigeria National Petroleum Corporation (NNPC) in his presentation at the event, said to address the issues around gas to power, there is the need to confront head on, tactical challenges such as infrastructure; cost reflective tariff; aligning the value chain and creating a gas regulator.
Ige insists that there is the need for generation, transmission and distribution companies to align their investments, so that the job that goes into each of loop of the chain actually manifests in improved megawatts at the end of the day.
According to him, “For us to get things right, there is the need to have a gas regulator. There is also the need to regulate market behaviour. What we have now does not support a willing buyer, willing seller situation, which should be what is operating.”
Dada Thomas, president of the Nigerian gas Association in his opening remark, said the shortfall in natural gas supply, further excerbated by pipeline vandalisation, is indeed as great a problem to the nation, as is the impact of cost-reflective electricity tariffs, unworkable power purchase agreements (PPAs) and over regulation of gas price.
Thomas observes that “by necessity, we have no choice now but to take whatever steps that are possible and equitable, to deal with the situation and break the unending cycle of inadequate gas and power supply and unrealised economic potential that has been the lot of our nation for so long.”
George Etomi, principal partner, George and Etomi and Partners, said absence of a cost reflective tariff remains the main factor inhibiting the growth of the power sector, and that investors would continue to shun the sector because of their clear inability to recoup their investment.
He said that investment would remain elusive in the power sector, owing to the lack cost reflective tariff which has adversely affected gas supply to the sector.
OLUSOLA BELLO, FRANK UZUEGBUNAM, KELECHI EWUZIE, ISAAC ANYAOGU
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
