Looming Electricity Blackouts

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Nigerians are to brace up for increased disruptions in electricity supply nationwide between now and the end of September

By Anayo Ezugwu  |  Aug. 25, 2014 @ 01:00 GMT

THERE is every likelihood that Nigerians may experience increased disruptions in electricity supply between now and September. This will be brought about by the planned maintenance of plants that supply gas to power companies. Senior management personnel of power generation firms have said the disruptions would be more pronounced in selected locations across the country, while it might be lightly felt in a few other places.

According to them, the disruptions would be well managed in order not to severely impact on businesses negatively. “It is going to be well managed in order not to severely impact on businesses negatively. As you are aware, this disruption is to ensure stable electricity supply as the petroleum minister said. It will last for about two months during the period that the gas plants are being maintained. So, Nigerians should not think that this is caused by the Gencos or the power distribution companies,” said the power generation companies.

The federal government, through Diezani Alison-Madueke, minister of petroleum resources, in a document put together by the ministries of petroleum, power, Nigeria Electricity Regulatory Commission, NERC, and the Central Bank of Nigeria, CBN, said the gas plants would be maintained between August and September this year.

Alison-Madueke
Alison-Madueke

Alison-Madueke said her ministry was focusing on a number of gas projects that would help cushion the effects of supply shortage in the short-term, adding that the projects were at various stages of maturation and would be concluded before the end of the year.

“These projects should unlock an additional 370million cubic feet per day of gas, assuring us of a total of 5,000megawatts (inclusive of hydro) within the four to five months to the year-end. In order to minimise disruptions to supply, the Nigerian National Petroleum Corporation has also concluded a harmonisation plan of the maintenance schedule of all gas plants from various suppliers. Therefore, between August and September, all planned maintenance activities will be carried out. Whilst this will create temporary disruption in supply, it will ensure that from October, disruptions due to planned maintenance activities will be minimal, enabling supply of power to Nigerians,” she said.

The minister, according to the document, explained that some typical challenges had affected gas supply to power plants. “These include rapid reservoir decline, continuous pipeline vandalism, community disruptions of project schedules and funding. These are all being continuously and progressively mitigated through various schemes, such as a more aggressive drilling campaign to bridge decline, alternative funding schemes and a holistic government approach to pipeline security.”

The document listed other projects being done by the Federal Government in a bid to boost power supply to include the Utorogo field expansion, comprising work-over of some wells and completion of the new gas plant. It said the expected impact from the Utorogo project is 60mmcf/d. The government said it was expanding the Oben gas plant and drilling new wells that would add 100mmcf/d, and that there was a re-entry of the Odidi field and revamping of its processing plant and flowlines to deliver 40mmcf/d.

According to the document, the government was hooking up already drilled oil wells in Pan Ocean’s OPL275 to add 40mmcf/d and noted that collectively, these projects would add 240mmcf/d. “All these are in advanced stages of delivery and progressive impact should be felt steadily from October till year end,” it added.

It further noted that on the eastern axis, the Nigerian Gas Company was building a 6km bypass line to enable alternative supply of 60mmcf/d to Alaoji. It said the line would mitigate slippage in the Northern Option Pipeline originally planned to supply Alaoji, adding that with stabilisation of supply of 40mmcf/d from Shell, “all Alaoji’s requirement for gas is expected to be met by year end. In the East, Seven Energy will be delivering 30mmcf/d in the first instance to Calabar National Integrated Power Plant. It is expected that the Gbaran and Omoku power plants will be completed by the end of first quarter of 2015. When this happens, it will make available a future of 130mmcf/d of gas to be utilised,” it said.

Meanwhile, the federal government has revealed that its plan to generate above 6,000MW by December 2014 was no longer feasible. Consquently, its new target by the end of the year is now 5,000MW. It also stated that the CBN would clear up the N25bn gas-related debts of the power sector in order to boost stakeholders’ confidence in the industry.

It said electricity tariff across the country might rise as the government had approved a new benchmark price for gas to power plants of $2.5 per million cubic feet, and $0.8/mcf as transport costs for new capacity from 2014. The benchmark, it said, would rise with the United States inflation rate annually.

Alison-Madueke, who disclosed this at the headquarters of the NNPC, stated that about 750mmcf/d of gas was currently supplied to the power sector and this would result in an aggregate generating capacity of about 4,000MW. “It is expected that barring unforeseen developments, our interventions will add at least 370mmcf/d of gas and assure a generation capacity of at least 5,000MW within four to five months.”

After the power sector was officially privatised, government functionaries had, on several occasions, reeled out various projected power generation targets for Nigeria before the end of 2014. Of all the figures given by them, none was below 6,000MW of power by the year end.

But Alison-Madueke has argued that the various outages always reduced the actual availability of power. However, according to her, there had been sufficient gas supply because the current generation capacity would have crossed the 6,000MW target. The minister said the government agencies were working assiduously to find a lasting solution and had collectively developed additional interventions that would address outstanding issues around gas pricing and its supply in the short term.

To give confidence to stakeholders in the gas sector regarding the willingness of power firms to settle their outstanding debts for gas, Alison-Madueke said the CBN would support initiatives to clear up the most recent gas-related debts of the power sector. “Specifically, the CBN is looking at banking sector-led measures to pay off N25bn of debts owed to gas suppliers. This will be subject to reconciliation efforts and adequate provision for this support in a revised Multi Year Tariff Order that ensures repayment within five years. The CBN will also play a key role in financial arrangements that guarantee payment for gas supply by the power sector.” The minister said that the NERC would require firm commitments from gas suppliers that they would supply the agreed quantities of gas to generation companies as long as payment terms were met.

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