Gas Challenges: NNPC, CBN, Power Ministry partner to achieve 5000MW electricity generation by Dec

By Etuka Sunday

The Nigerian National Petroleum Corporation (NNPC) in collaboration with the Central Bank of Nigeria (CBN) and the Ministry of Power jointly disclosed that efforts are in top gears to boost gas supply to power plants by 370 million metric cubic feet per day (mcf/d) to generate 5,000 megawatts by December end.

 Briefing Energy Correspondents at the weekend shortly after the joint meeting by the agencies of government, the Minister of Petroleum Resources, Mrs Diezani Alison-Maduke said the efforts would be directed towards addressing persistent gas supply challenges in the country.

Diezani who spoke alongside the Minister of Power, Prof. Chinedu Nebo, CBN Governor, Mr Godwin Emefiele, the Chairman, Nigerian Electricity Regulatory Commission (NERC),  Dr Sam Amadi and the new Group Managing Director, NNPC, Dr. Joseph Dawha said, “We have developed additional

interventions that will address outstanding issues around gas pricing, fast track additional gas supply development, particularly in the short term.

“It is expected that barring unforeseen developments, these interventions will add at least 370 million   mcf/d of gas and assure a generation capacity of at least 5,000 MW within four  to five months,” she said.

She disclosed that, “a review of gas pricing is now being implemented to further reflect market value, adding that the Ministry of Petroleum Resources and NERC are in ongoing deliberations to finalise work to ensure that the pricing mechanism of gas to power will reflect market value. In the short term, it is anticipated that this will quickly boost gas supply and in turn power output. In the medium to long term, this new price regime should trigger additional investment in the infrastructure for gas to power,” she said.

According to her, NERC has approved a new benchmark price of $2.50/mcf for gas supply, and $.80./mcf as transportation costs for new capacity, from 2014, adding that the benchmark will rise with US inflation annually therefore, NERC would require firm commitments from gas suppliers, that they will supply the agreed quantities of gas to generation companies as long as payment terms are met.

 The minister said CBN would support initiatives to clear up the most recent gas related debts of the power sector.

“Specifically, CBN is looking at banking sector led measures to pay off N25 billion debts owed to gas suppliers. This will be subject in a revised MYTO that ensures repayment within five years.”

 She said the Ministry of Petroleum of Resources is focusing in a targeted manner on a number of gas supply projects that will help cushion the effect of the supply shortage in the short term. These

projects are at various stages of maturation, but will all conclude before the end of the year, adding at least 370mmcf/d of supply.

She said these included Utorogu Field expansion with expected impact of 60 million mcf/d, expansion of  Oben gas plant and drilling of new wells to add 100 million mcf/d Others include re-entry of Odidi Field and revamping of the processing plant and lowliness to deliver 40 million mcf/d. and hooking up of already drilled oil wells in Pan Ocean’s OPL275 to add 40 million mcf/d. “Collectively, these projects will add 240 million mcf/d.

All these are in advance stages of delivery and progressive impact should be felt steadily from October till year end,” she said

According to her, on the eastern Axis, Nigerian Gas Company is building a six kilometre bypass line to enable alternative supply of 60 million mcf/d to Alaoji in Abia.

This line mitigates slippage in the Northern Option Pipeline line originally planned to supply Alaoji’s requirement for gas is exp