The Federal Government has concluded arrangements to boost gas supply nationwide by 370 million metric cubic feet per day to generate 5,000 megawatts within five months, officials said on Saturday.
The Minister of Petroleum Resources, Diezani Alison-Maduke, announced the plan in Abuja at a joint press briefing with the Ministry of Power and the Central Bank of Nigeria.
The briefing was attended by the Minister of Power, Prof. Chinedu Nebo; the CBN Governor, Godwin Emefiele; the Chairman of the Nigerian Electricity Regulatory Commission, Dr. Sam Amadi; and the Group Managing Director of the Nigerian National Petroleum Corporation, Dr. Joseph Dawha.
Alison-Maduke said the collaborating agencies with the NNPC was working assiduously to find a lasting solution to gas and power problems.
The minister said NERC had approved a new benchmark price of $2.50 per mcf for gas supply and $0.80 per mcf as transportation cost for new capacity from 2014.
She 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 5,000mw within four to five months.”
Alison-Madueke said a review of gas pricing was now being implemented to further reflect market value.
According to her, the Ministry of Petroleum Resources is deliberating with NERC to ensure that the pricing mechanism of gas to power will reflect market value.
She said: “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.”
According to Alison-Madueke, the benchmark will rise with the US inflation annually.
The minister said the suppliers needed to be committed to supplying the agreed quantities of gas to generation companies as long as payment terms were met.
She said NERC was concluding the review of the Aggregate Technical Commercial and Collection loses studies submitted by the distribution companies.
The minister said this would be followed up by a review of the revenue requirement for the power sector that would be covered by a revised Multi Year Trarrif Order path.
Alison-Madueke said while the details of the tariff was being worked out, NERC had reaffirmed its commitment to ensure cost recovery for all prudent and efficient operators.
She said the CBN was set to clear up the most recent gas related debts of the power sector as it was looking at the banking sector-led measures to pay off the N250 billion debts owed to gas suppliers.
She said: “This will be subject to reconciliation efforts and adequate provision for this support in a revised MYTO that ensure repayment within five years.
“CBN will play a key role in financial arrangement that guarantee payment for gas supply by the power sector.”
Alison-Madueke said the ministry was targeting a number of gas supply projects that would help cushion the effect of supply shortage in the short-term.
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.
She said: “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.”
According to Alison-Madueke, on the eastern Axis, the Nigerian Gas Company is building a six kilometre bypass line to enable alternative supply of 60 million mcf/d to Alaoji in Abia State.
This line mitigates slippage in the Northern Option Pipeline line originally planned to supply Alaoji’s requirement for gas is expected to be met by year end.
She said: “In the east, Seven Energy will be delivering 30 million mcf/d in the first instance to Calabar NIPP.
“It is expected that Gbaran and Omoku Power plants will be completed by end of Q1 2015.
“When this happens, it will make available a future mmcf/d of gas to be utilised.”
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