How gas shortage delayed N1tr power projects

The over five billion dollars (about N1trillion) electricity stations built under the National Integrated Power Projects (NIPPs) are almost idle over lack of concrete gas supply terms, Daily Trust gathered.

According to the pioneer Chairman of the Nigerian Electricity Regulatory Commission (NERC) Ramson Owan the over $5billion invested in the NIPPs, they are down as gas is not there to power them. The projects cannot come to a financial close because there is not enough gas for the plants.

Owan who is now the Group Managing Director on Power for AITEO Group spoke yesterday at the Discussion Session for Sustainable and Profitable Gas Sector at the Powering Africa Nigeria Summit in Abuja.

The NIPP generation projects include ten medium-sized gas-fired power plants. They have a combined design capacity of over 5,453megawatts (mw) at International Standard Organisation (ISO) conditions and 4,774mw as installed capacity.

So far four plants have been commissioned while six on the queue were not ready before the previous government handed over on May 28, 2015. 

The commissioned plants include, 434mw Geregu plant in Ajaokuta, Kogi State and the 500mw Omotosho Plant in Ondo State commissioned in October 2013. 

Two others, 750mw Olorunsogo plant in Ogun State and 504mw Alaoji plant Phase I in Abia state became active officially in March 2015, resulting in 2,188mw added capacity. However Alaoji plant, a combined cycle gas turbine project has a design capacity of 1,131mw but only 504mw is completed and may not be firing at that capacity due to gas constraint.

“The Nigerian Bulk Electricity Trading Plc (NBET) cannot sign their Power Purchase Agreements (PPAs) unless they answer these two things: do you have gas and can you evacuate power? And the seller, which is the government, cannot answer the questions,” Owan said.

He maintained that the federal government should take the risks for supplying gas to power companies because it is a major play with International Oil Companies (IOCs), owe the Nigerian Gas Pipeline and other infrastructure.

President of the Nigerian Gas Association and CEO of Oando Gas & Power, Mobolaji Osunsanya said “the NIPPs were designed to fail. Nobody builds that size and scale of power plants without being sure of dispatch and gas supply. The solution of gas supply risk will be a federal government backed instrument but the IOCs, the gas transporter and other parties must also give assurance of supply within their purview.”

Advocating a single gas regulator, Owan further said “To gasify our economy, we would need to have a sector regulator to set a foundation, the rules and regulation for the market. This was done in the power sector. 

Audrey Joe-Ezigbo, Executive Director, Falcon Petroleum said the start point for this is for the new government to look at the gas regulating agencies and collapsing them. 

“Gas is a critical resource in this country it is the implication of power for any economy. For the agencies that government will retain the processes should be reviewed. Ultimately, we must get to a point where there is a Ministry of Gas in Nigeria,” Audrey noted.