Despite reduction in gas to power price, generation is still very poor, a development, which has resulted in irregular supply of electricity, writes AKINOLA AJIBADE
Recently, the Federal Government announced a reduction in the price of natural gas needed by power generation companies to produce electricity from $2.50 to $2.18MMBtu.
MMBtu is an acronym for Million Meters British Thermal Unit. It is the measurement used in calculating the volume of natural gas globally.
Coming at a time, in which the price of natural gas fell from all high of $15.78 in 2005 to $2.80 in 2021, the reduction in the price of gas to power by the Federal Government is not much enthusiasm to power generation companies (GenCos).
Reason being that GenCos are in dire need of gas, which they sometimes struggle to access because of its huge price, as against gas suppliers, that are attracted to the market by rising prices of the product.
Recalled that the country’s electricity megawatts
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(MW) has for years been hovering between 3,800 and 4,000 or at most 4,500, a development, which has far reaching consequence on more than 200million people in the country, which in most cases are denied regular supply of electricity.
Of note is the dire state of the nation’s electricity industry, as past and successful governments are unable to address it.
Not only this, capacity utilisation has dropped significantly in the economy, with the manufacturing sector operating below 50 per cent capacity utilisation.
Sadly, the issue has dominated headlines in Nigeria and beyond, as investors are wary of coming to Nigeria to establish their businesses.
This is evident from the Foreign Direct Investments (FDIs), which decreased from $154.76 in the second quarter of 2020 to $77.97milion in the same period of 2021, in response to the poor economic climate in Nigeria.
In light of this, the New Telegraph decided to examine issues, which have become bottlenecks to the production and distribution of power to consumers across the country.
Domestic gas supply to power companies has recorded a significant reduction in recent times.
For instance, the country in February 2021 supplied 825mmscfd of gas to power plants to generate 3,380 Mw of electricity, against 669mmscfd pro vided to generate 3,064 Mw in the corresponding year of 2020.
In March 2021, similar records were obtained as 844mmsfd of gas was delivered to power firms to generate 3,530 megawatts of electricity, against 661mmsfd delivered to plants to provide 2,856Mw recorded in the corresponding year.
In April, a total of 795mmscfd was delivered to plants to generate an average power of 3,416Mw in January, against 778mmscfd supplied to power plants to generate 2,873 mw in the corresponding year of 2020.
The trend continues in the subsequent months, as volumes of gas supplied to the power plants differed from one month to another.
For instance, gas supplied to power generation firms from April to December 2021, was not the same. In most cases, the supply was either in increasing or decreasing.
Though the volume of gas supplied to thermal plants to generate electricity is yet to be ascertained, nevertheless, there was no uniformity in the volumes of gas supplied in December.
Operators have, however, described the statement blaming gas suppliers as the cause of the crises in the power sector as false.
The Executive Secretary, Association of Power Generation Companies (APGC), Dr Joy Ogaji, said that Nigerian gas was sufficient to generate 10,000 megawatts of electricity.
APGA is the umbrella body of power generation companies in Nigeria.
She said that the problems associated with power crises was not a deliberate act of sabotage from gas suppliers.
According to her, the challenges are more of funding and contractual aggrement, adding that there is enough gas to generate 10,000 Mw of electricity without disruptions.
She said that gas suppliers were business people and fund has to be given to them in order to get the product for electricity generation or else, nothing would happen.
She said that gas supply constraints was the major problem facing GenCos, arguing that the proissue was responsible for the drop in supply of electricity in Nigeria.
She said the issue regarding a decline in generation of electricity could be remedied by the Nigerian National Petroleum Corporation (NNPC), which has promised to supply 60 per cent of gas to GenCos, stressing that the idea would move generation to 30,000 Mw, with 3,000 from renewables and 27,000 from power plants, if all goes as planned.
Electricity generation, she added, was not adequately utilised by the power distribution companies (DisCos) for certain reasons.
Nigeria’s gas reserves
The country’s gas reserves stand at 204 trillion cubit feet (TcF) from 187 TcF few years ago, while unproven gas reserves remain at 600 TcF, a development, which makes Nigeria one of the highest producers of natural gas in the world.
Besides, the country generates huge revenue from gas export, while at the same time, supplying domestic markets for production activities.
Under this group are power generation, fertiliser and other companies, that rely on natural gas for production.
Hike in the prices of meters
The decision by the Federal Government to increase the prices of single-phase meters and three phase meters, on account of unfavourable foreign exchange caused by the decreasing value of naira against the dollar and other macro-economic issues, may have compounded the woes of Nigerians, who are currently coping with the dismal failure of the power sector.
The government increased the price of a three-phase meter from N82,855.19 to N109,684.36, while the price of single-phase meter moved from N44.896.17 to N58,661, 69, through a circular issued by Nigerian Electricity Regulatory Commission(NERC) and addressed to the Managing Directors of all Distribution Companies and Meter Assets Providers( MAPs).
The circular dated November 15th directed that consumers should comply with the new prices of meters with immediate effect.
Expectedly, the issue has ignited reactions from stakeholders, as they are condemning the government over the increase in the prices of meters in the country. They said the increase in the cost of meters does reflect the precarious situations in the sector.
The General Sector, Nigeria Electricity Consumers Advocacy Network, Uket Obonga, said the increase was not in the interest of consumers, who are battling with poor supply of power in the country.
He said: “How do you differentiate between the meters provided by MAP and those meters that were supplied by NMNA that is being funded by the Central Bank of Nigeria (CBN)? I asked because there is no difference.”
He said many of the power distribution companies are allegedly selling the free meters to the consumers, a development, which he said, is totally unacceptable.
While speaking on the impacts, which the issue would have on Nigerians and the entire power sector, he said the development would further affect the confidence, which people have in the country.
Also, the National Coordinator, Coalition for Affordable and Regular Electricity (CARE), Comrade Bosah, said the increase in the cost of meters by the Federal Government had shown that the government is not considering the plight of Nigerians at all.