$23.9bn Needed for Investment in Power

Fri, Feb 14, 2014
By publisher

Energy Briefs

THE Bureau of Public Enterprises, BPE, has said that the power companies in the country require $23.9 billion in capital expenditure over the next five years. Benjamin Dikki, director-general, BPE, said the electricity distribution companies alone would require about $1.8 billion in capital expenditure in the next five years for optimal performance going by the post-acquisition investment plans submitted to the privatisation agency by the core investors that bought into the distribution companies.

He also said the Transmission Company of Nigeria, TCN, required about $2.4 billion to increase its power transfer capacity, make the network more stable and reliable, and improve efficiency of electric power transfer by reducing transmission technical losses. Dikki said the money would also enable the TCN to increase its transmission capacity to 16,843 megawatts by the end of 2018.

“The sum of $11.7 billion is the CAPEX funding requirements for the privatised PHCN successor generating companies to ramp up and expand capacity. This does not include the requirements of prospective Greenfield and ongoing Integrated Power Projects. Gas industry sources estimates that $1.5 billion will be required annually for the next five years if we are to address gas challenges in the power sector. In other words, a total of $7.5 billion is required in the next five years for gas infrastructure,” he said.

Giving the breakdown of the funding requirements of the different generating companies as proposed by the core investors, Dikki said Ughelli Power Plc required $604m; Sapele Power Plc, $394m; Geregu Power Plc, $200m;  Afam Power Plc, $850m; Kainji Hydro, $456m; Egbin Power Plc, $1.7bn; and Greenfield IPP, $7.5bn.

The BPE boss said the cardinal objectives of the federal government’s power reform programme included reducing the cost of doing business in Nigeria so as to attract new investments through the provision of quality and dependable power supply; and improving the overall efficiency of the distribution, generation and transmission networks.

Danger of Neglecting NEITI Report


THE Nigeria Extractive Industries Transparency Initiative, NEITI, has expressed shock at the alleged non-remittance of $20 billion oil revenue by the Nigerian National Petroleum Corporation, NNPC. The agency attributed the development to the neglect of its audits and recommendations. Ledum Mitee, chairman, NEITI, said “I find the controversy unfortunate because it is an issue that ordinarily falls under the NEITI statutory mandate and the controversy would have been needless and unnecessary had relevant agencies, officials and institutions taken the NEITI audit recommendations more seriously.

“The NEITI audit report contains credible data and information on the production figures, payment received and amounts recommended to be due to the Federation Account, among others, for a covered period. It equally contains recommendations on remedial issues expected to address identified gaps and weaknesses in the entire value chain. “We have consistently made the point that with adequate funding and support, we could automate our data collection processes to enable us to get real time data, which can be resorted to when there is a controversy,” he said.

Mitee was, however, optimistic that the ongoing controversy over the unremitted funds would make all relevant agencies and institutions to give NEITI and its audit recommendations the deserved seriousness and support. He noted that the agency had commenced the 2012 industry audit process to examine the flow of revenues from the oil, gas and mining sectors within the period. According to him, the 2012 audit report is important because “it is coming at a time in our national history that the nation is embroiled in a very unfortunate controversy over allegations of non-remittance of oil revenue to the Federation Account.”


NPDC’s 4-Year Development Plan

THE Nigerian Petroleum Development Company, NPDC, the upstream subsidiary of the Nigerian National Petroleum Corporation, NNPC, has rolled out its oil and gas production targets between now and 2018 as well as setting aside a sum of $3.6 billion for capital expenditure for 2014 and 2015. Victor Briggs, managing director, NPDC, who unveiled the company’s programmes and targets, said that currently, the company produces 140 barrels of crude oil per day, bpd, and it is expected to increase it to 160,000 bpd by end of this year, while it delivers 410 million standard cubic feet of gas per day and plans to raise it to 600 by end of the year.


He stated that from the operational projections, capital expenditure from 2016 would decrease by 50 percent from the current budget of $1.8 billion per year for 2014 and 2015 to between $700 million and $800 million despite projected increases in oil and gas outputs. The reason for this, Briggs explained, was that a lot of investments were going into the newly acquired assets to optimise their production and connect the well to where crude could be piped to the export terminals through the flow lines, flow stations and trunk lines. He  pointed out the extent of work done on oil mining licences (OMLs), 26 4340 42 34, their current levels of production, plans and timelines to increase their outputs.

“The company started in 1988 with few assets. At that time, the company was producing less than 1000bpd. The NPDC then was very active in exploration and production. Most of the fields that Total Plc is controlling now were discovered by the NPDC as well as some of those controlled by Conoil, but because the NPDC did not have the funds to continue with the development phase of these assets where the bulk of the money was needed, they were taken away and given to other companies to develop. We started with OMLs 65 and III, but today the NPDC is involved in several OMLs ( about 28) with some in deep offshore where we are not operators but equity partners. One is shallow offshore (OML119), which we are operating, some in swamp where we have OMLs 40 and 42, which we also operate. The remaining OMLs are on land. Currently, we are concentrating on swamp, land and offshore, which we have been doing over a long period.

“Today the NPDC has the capacity to produce about 140,000bpd. Production varies each day depending on absence of any issue. If there is any breach on our pipeline or flow line, the safe thing to do is to shut down. The main impact on our production is really when there is a breach on a trunk line, which is a big pipe that carries production from different companies’ pipe to the terminal. The essence of the trunk line is that it is cost-effective for the oil companies. Therefore, if there is a breach on such line, all the companies using it will be forced to shut down,” he said.

Compiled by Anayo Ezugwu

— Feb. 24, 2014 @ 01:00 GMT