Hopes for stable power supply may have to be tempered for the foreseeable future as the failure of Power Holding Company of Nigeria (PHCN) to settle its N88.7 billion debts to gas suppliers is further worsening the crisis.
THISDAY had, in earlier reports, highlighted how security agencies were delaying different power projects across the country with the non-clearing of power equipment at the ports by Customs as well as frequent transportation delays at roadblocks mounted by soldiers.
The newspaper also reported how moribund and inadequate transmission facilities are further compounding the energy crisis across the country.
It has now emerged that the country stands to lose nearly 5000 megawatts as most of the power projects under construction are unlikely to get gas supply because of PHCN’s heavy indebtedness to the suppliers.
Apart from the 250mw capacity Gbarain Ubie Power Station in Bayelsa State, where gas supply will not be an issue, operations of newly-completed power plants will be hampered, THISDAY can report.
Though the Nigerian National Petroleum Corporation (NNPC) is making concerted efforts by laying massive pipelines through its gas marketing arm, the Nigerian Gas Company (NGC), these efforts would not successfully address the gas challenges because the oil companies are not keen on selling gas to PHCN again.
It was learnt that the oil companies, which produce the gas that will be piped to the power stations, are also reluctant to invest in domestic supply because the current pricing template does not guarantee adequate return on investment.
As things stand, PHCN owes Agip N60 billion for its power plant at Okpai in Delta State which produces 470mw.
It also owes Shell N12.48 billion for its power plant which generates 561mw at Afam in Rivers State, while the power utility company also owes NGC N10 billion for 700 million standard cubic of natural gas.
The National Integrated Power Project (NIPP) is being owed N6 billion for power supplied from its stations in Sapele in Delta State and Olorunsogo in Ogun State, while the Ibom Power is being owed N300 million for the 90mw generated from its plant at Ikot Abasi in Akwa Ibom State.
PHCN requires monthly revenue of at least N22.5 billion to ensure regular settlement of its obligations to power and gas suppliers like Shell, Agip and AES.
The monthly revenue, which was N11.8 billion in July 2011, moved up to N15.6 billion in December 2011, but declined to N12.8 billion in January 2012, due to the general strike against the removal of petrol subsidy.
It is however being owed about N100 billion by customers across the country.
The Federal Government, through the NNPC, is only responsible for the transportation of the gas from the well-heads to the power stations via pipeline infrastructure being put in place by the NGC.
NNPC spokesman, Dr. Levi Ajuonuma, told THISDAY that the NNPC had 60 per cent equity in the joint venture companies and to a large extent was responsible for gas production.
Ajuonuma noted that domestic gas price was also increased from four cents per standard cubic feet to one dollar per standard cubic feet to encourage the oil companies to boost domestic supply.
“The problem is that the Power Holding Company (PHCN) is not paying for gas and the oil companies are not happy about it. PHCN is hiding under the World Bank Partial Guarantee to dodge payment,” he said.
Apart from the worsening power supply situation, inadequate gas supply will also lead to loss of revenue as there will be 4802.5mw of idle capacity at the various stations.
For instance, the test-firing of the Alaoji Power Station in Abia State ought to be ongoing but it was gathered that even after the inauguration is successfully completed, there will not be enough gas to fire the four gas turbines, leading to loss of 504mw.
A source close to the station told THISDAY that without adequate gas to fire the four gas turbines, the turbines would not be able to generate enough steam to run the steam turbines, leading to another loss of over 400mw.
Alaoji Power Station, it was learnt, has both steam and gas turbines.
Also under the NIPP, Sapele Power Station in Delta State has been technically completed and one of the gas turbines was already running but had to be shut down on account of inadequate gas.
The country is losing 115mw from the station, which could have been added to the national grid.
In Olorunsogo Power Station in Ondo State, 375mw is currently idle because there is no gas to power the turbines.
The Calabar Power Station has five gas turbines of 112.3mw each, with a total capacity of 562.5mw.
It was gathered that the test-firing of the plant is ongoing but concern has been raised that if that is successfully completed, there will be no gas to power the plants, leading to 562.5mw of idle capacity.
Investigation has also revealed that Addax Petroleum, which is committed to providing the gas from one of its nearby offshore facilities, said the gas would not be available until 2014.
The Omotosho Power Station Phase 2 in Ondo State is also technically completed but there is no gas to fire the plants, leading to loss of 451mw.
Ihovbor Power Station in Edo State has four units of 112.5mw each and a total capacity of 450mw.
The test-firing is also ongoing but even when that is completed, chances are that there will not be enough gas to fire all the turbines.
Chairman of the contractors handling the various NIPP projects, under the aegis of Electric Power Foundation of Nigeria, Mr. Otis Anyaeji, told THISDAY that right from conceptualisation of the projects, there were deliberate efforts by the Federal Government to ensure gas availability.
“The only reason for building the power stations where they are was because of nearness to source of gas supply. That there was no timely agreement to encourage oil companies to invest in domestic gas does not mean that government was not oblivious of the relevance of gas in gas turbine projects. You cannot build a hydro power in a desert,” he said.
Anyaeji stated that oil companies were dragging their foot because the current pricing structure was not appropriate to guarantee enough returns on investment.
“There is no private sector company that is going to get involved if they are not going to get commercial pricing in the investment. That is why those that were given licences to explore gas are not doing as fast as they should. You don’t expect oil companies to run ahead of you and invest billions of naira, without charging commercial rate to recover cost,” he added.
THISDAY gathered that laying gas pipelines is not the only issue but piping more gas to the new lines.
For instance, the Escravos Lagos Pipeline (ELP) was designed to pipe gas to the 1320 mw capacity Egbin Power Station in Lagos.
The line is also currently supplying gas to the West African Gas Pipeline and there is ongoing effort by the NNPC to extend the lines to service Olorunsogo and Omotosho Power Stations.
The project is expected to be completed by May 2012 but there is no clear commitment yet from the International Oil Companies (IOCs) supplying gas to the lines to increase gas production to meet the additional demand.
THISDAY had, in earlier reports, highlighted how security agencies were delaying different power projects across the country with the non-clearing of power equipment at the ports by Customs as well as frequent transportation delays at roadblocks mounted by soldiers.
The newspaper also reported how moribund and inadequate transmission facilities are further compounding the energy crisis across the country.
It has now emerged that the country stands to lose nearly 5000 megawatts as most of the power projects under construction are unlikely to get gas supply because of PHCN’s heavy indebtedness to the suppliers.
Apart from the 250mw capacity Gbarain Ubie Power Station in Bayelsa State, where gas supply will not be an issue, operations of newly-completed power plants will be hampered, THISDAY can report.
Though the Nigerian National Petroleum Corporation (NNPC) is making concerted efforts by laying massive pipelines through its gas marketing arm, the Nigerian Gas Company (NGC), these efforts would not successfully address the gas challenges because the oil companies are not keen on selling gas to PHCN again.
It was learnt that the oil companies, which produce the gas that will be piped to the power stations, are also reluctant to invest in domestic supply because the current pricing template does not guarantee adequate return on investment.
As things stand, PHCN owes Agip N60 billion for its power plant at Okpai in Delta State which produces 470mw.
It also owes Shell N12.48 billion for its power plant which generates 561mw at Afam in Rivers State, while the power utility company also owes NGC N10 billion for 700 million standard cubic of natural gas.
The National Integrated Power Project (NIPP) is being owed N6 billion for power supplied from its stations in Sapele in Delta State and Olorunsogo in Ogun State, while the Ibom Power is being owed N300 million for the 90mw generated from its plant at Ikot Abasi in Akwa Ibom State.
PHCN requires monthly revenue of at least N22.5 billion to ensure regular settlement of its obligations to power and gas suppliers like Shell, Agip and AES.
The monthly revenue, which was N11.8 billion in July 2011, moved up to N15.6 billion in December 2011, but declined to N12.8 billion in January 2012, due to the general strike against the removal of petrol subsidy.
It is however being owed about N100 billion by customers across the country.
The Federal Government, through the NNPC, is only responsible for the transportation of the gas from the well-heads to the power stations via pipeline infrastructure being put in place by the NGC.
NNPC spokesman, Dr. Levi Ajuonuma, told THISDAY that the NNPC had 60 per cent equity in the joint venture companies and to a large extent was responsible for gas production.
Ajuonuma noted that domestic gas price was also increased from four cents per standard cubic feet to one dollar per standard cubic feet to encourage the oil companies to boost domestic supply.
“The problem is that the Power Holding Company (PHCN) is not paying for gas and the oil companies are not happy about it. PHCN is hiding under the World Bank Partial Guarantee to dodge payment,” he said.
Apart from the worsening power supply situation, inadequate gas supply will also lead to loss of revenue as there will be 4802.5mw of idle capacity at the various stations.
For instance, the test-firing of the Alaoji Power Station in Abia State ought to be ongoing but it was gathered that even after the inauguration is successfully completed, there will not be enough gas to fire the four gas turbines, leading to loss of 504mw.
A source close to the station told THISDAY that without adequate gas to fire the four gas turbines, the turbines would not be able to generate enough steam to run the steam turbines, leading to another loss of over 400mw.
Alaoji Power Station, it was learnt, has both steam and gas turbines.
Also under the NIPP, Sapele Power Station in Delta State has been technically completed and one of the gas turbines was already running but had to be shut down on account of inadequate gas.
The country is losing 115mw from the station, which could have been added to the national grid.
In Olorunsogo Power Station in Ondo State, 375mw is currently idle because there is no gas to power the turbines.
The Calabar Power Station has five gas turbines of 112.3mw each, with a total capacity of 562.5mw.
It was gathered that the test-firing of the plant is ongoing but concern has been raised that if that is successfully completed, there will be no gas to power the plants, leading to 562.5mw of idle capacity.
Investigation has also revealed that Addax Petroleum, which is committed to providing the gas from one of its nearby offshore facilities, said the gas would not be available until 2014.
The Omotosho Power Station Phase 2 in Ondo State is also technically completed but there is no gas to fire the plants, leading to loss of 451mw.
Ihovbor Power Station in Edo State has four units of 112.5mw each and a total capacity of 450mw.
The test-firing is also ongoing but even when that is completed, chances are that there will not be enough gas to fire all the turbines.
Chairman of the contractors handling the various NIPP projects, under the aegis of Electric Power Foundation of Nigeria, Mr. Otis Anyaeji, told THISDAY that right from conceptualisation of the projects, there were deliberate efforts by the Federal Government to ensure gas availability.
“The only reason for building the power stations where they are was because of nearness to source of gas supply. That there was no timely agreement to encourage oil companies to invest in domestic gas does not mean that government was not oblivious of the relevance of gas in gas turbine projects. You cannot build a hydro power in a desert,” he said.
Anyaeji stated that oil companies were dragging their foot because the current pricing structure was not appropriate to guarantee enough returns on investment.
“There is no private sector company that is going to get involved if they are not going to get commercial pricing in the investment. That is why those that were given licences to explore gas are not doing as fast as they should. You don’t expect oil companies to run ahead of you and invest billions of naira, without charging commercial rate to recover cost,” he added.
THISDAY gathered that laying gas pipelines is not the only issue but piping more gas to the new lines.
For instance, the Escravos Lagos Pipeline (ELP) was designed to pipe gas to the 1320 mw capacity Egbin Power Station in Lagos.
The line is also currently supplying gas to the West African Gas Pipeline and there is ongoing effort by the NNPC to extend the lines to service Olorunsogo and Omotosho Power Stations.
The project is expected to be completed by May 2012 but there is no clear commitment yet from the International Oil Companies (IOCs) supplying gas to the lines to increase gas production to meet the additional demand.
Source: Thisdaylive
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