Despite boasting of one of Africa’s biggest reserves, most of the Nigeria’s gas-fired power plants which are responsible for over 70 per cent of the energy being generated continue to suffer gas shortages as the country records huge gap between installed capacity and operational capacity.
Nigeria has around 181 trillion cubic feet of proven gas reserves plus much more in undiscovered gas resources. But despite having the largest gas reserves in Africa, only about 25 per cent of those reserves are being produced or are under development.
Data from Nigeria Association of Petroleum Explorationists (NAPE) revealed the country is endowed with large oil, gas, hydro and solar resource, and it already has the potential to generate 14,000 MW of electric power from existing plant which consist of hydro- 1938 MW and Thermal 12,200 MW), but most days is only able to operate around 4,000 MW, which is insufficient.
“It’s a sad story and a combination of several factors which cut across the value chain; apart from the fact that there is no enough gas to power those plants, there is transmission and distribution infrastructure problems so until we solve that we won’t be able to bridge the operational and installed capacity gap,” Luqmon Agboola head of energy and infrastructure at Sofidam Capital said.
Agboola noted that the cost of bringing gas to the market is as expensive as the cost of bringing oil to the market unfortunately the price of gas equivalent to barrel of oil is not as high as oil so everybody will prefer producing oil rather than gas.
“Incentives to produce gas and being to the market is not there because the people who are supposed to be using it don’t have money to pay,” Agboola noted.
Agboola explained that the solutions is in a combination of factors such as consistent regulatory laws, more foreign investment, boarder technical capacity and incentives to attract private funds.
“When the price is low or not commercially viable no one would do business with you, for a long time we have always have the problem of gas infrastructure most especially pipelines installations,” Ayodele Oni energy partner at Bloomfield Law practices said.
Reacting on how to bridge the gap between Installed capacity and operational capacity, Oni said, “The key is having the right reflective price and enabling environment for quality investment.”
“A lot is being done like the Ajaokuta-Kaduna-Kano (AKK) pipeline, Government need to be consistent with his policy and also enhance the grid system,” Ayodele Oni told BusinessDay.
Recall early this year, NNPC awarded the Engineering Procurement Construction (EPC) contract for the $727 million Ajaokuta – Abuja portion of the Ajaokuta-Kaduna-Kano (AKK) pipeline project to Axxela Limited, formerly known as Oando Gas & Power, and Oilserv Limited.
The AKK Pipeline Project was the first phase of the gas transmission system conceived under the Trans-Nigeria Gas Pipeline (TNGP) initiative to evacuate natural gas from Qua Iboe Terminal in Akwa Ibom State and Cawthorne Channel in the Niger Delta region.
The AKK project, when completed, will be the largest gas pipeline in Nigeria, and is expected to improve connectivity between the eastern, western and northern regions of Nigeria.
Apart from pipeline infrastructures; Nigeria also still flares significant quantities of gas, sufficient to fuel 6 GW of power at a 70 percent load factor.
According to the Nigerian National Petroleum Corporation’s (NNPC) latest monthly report, total gas supply for the period August 2017 to August 2018 stood at 3,093.71BCF out of which 465.84BCF and 1,325.28BCF were commercialized for the domestic and export market respectively while Gas –Injected, Fuel gas and Gas flared stood at 1,302.59BCF.
The corporation said the daily average natural gas supply to gas power plants scaled at 668mmscfd, equivalent to power generation of 2,510MW.
NNPC’s monthly report also noted that National Gas production for August 2018 stood at 251.44BCF translating to an average daily production of 8,381.29mmscfd. This represents 9.16percent increase compared to the previous month of July 2018.
Nigeria’s inability to harness additional gas resources to solve domestic or regional power generation deficiencies as other Africa countries with relative low reserves looks set to overtake Nigeria despite accounting for 81 percent of proven reserves identified in 14 countries in sub-Saharan Africa.
According to data from a Norway based independent energy research and business intelligence institution Rystad Energy; in Africa’s market share, Nigeria’s LNG production will shrink to a less than 10 percent by 2029 from having a huge junk of 50 percent in 2019, while another Africa country Mozambique by 2029 will dominated the market share with at least 65 percent by 2029 from absolutely nothing in 2019.
Although, data from the Norwegian based research institute showed Africa’s production capacity is almost expected to double over the next decade, however the data also revealed North Africa and the Middle East which include Djibouti, Egypt, Libya and Algeria are also expected to miss out in the market share from 50 percent in 2010 to less than 10 percent in 2019.
Leading consulting firm PricewaterhouseCoopers (PwC) in its Power and Utilities Roundtable note explained that delivering energy indiscriminately through the value chain without a conscious plan around optimizing energy mix and geographic coverage will create challenges of over-reliance on one fuel source and an unfairly skewed power delivery map. As such, diversification needs to be focused by enhancing the development of renewable energy alongside the gas-to-power program.
PwC explained that delivering energy indiscriminately through the value chain without a conscious plan around optimizing energy mix and geographic coverage will create challenges of over-reliance on one fuel source and an unfairly skewed power delivery map. As such, diversification needs to be focused by enhancing the development of renewable energy alongside the gas-to-power program.
“The solutions that will enable the Nigerian power sector’s turnaround are a complex web of interconnected initiatives that require careful and deliberate planning and implementation across a myriad of stakeholders,” PwC said in its note.
DIPO OLADEHINDE
