“If we are serious about the economic development of the country, we need to solve the problem of gas supply today. We should look at the possibility of mandating the gas suppliers to price in naira,” a minister said.
The Nigerian government has set up a ministerial committee towards resolving the challenges associated with gas supply to power-generating companies (GenCos) in the country.
Bolaji Tunji, special adviser on strategic communication and media relations to the Minister of Power, Adebayo Adelabu, disclosed this in a statement on Thursday.
Earlier in the month, the Nigerian government attributed the main cause of poor power supply in the country to the low supply of gas to generating companies.
The Transmission Company of Nigeria (TCN) had in January said that there was a gradual decrease in available generation into the grid due to gas constraints.
The company said this impacted the quantum of bulk power available on the transmission grid for onward transmission to the distribution load centres nationwide.
On Thursday, the statement said in a bid towards finding a lasting solution to the challenges, the Ministry of Power in conjunction with the Ministry of Petroleum Resources (Gas) set up a ministerial committee towards resolving the crisis.
“In a bid towards finding a lasting solution to challenges associated with gas supply to power generating companies (GenCos) in the country and general improvement across the power sector value chain, Minister of Power, Chief Adebayo Adelabu in conjunction with the Ministry of Petroleum Resources (Gas) has set up a ministerial committee towards resolving the crisis,” Mr Tunji said.
He said the committee will consist of representatives from the two ministries, gas suppliers, the Nigeria Electricity Regulatory Commission (NERC) and stakeholders in the electricity value chain sector.
He explained that the two top government officials acknowledged the need for innovative thinking in resolving the gas supply challenge to the GenCos.
According to the statement, Mr Adelabu said the two ministries should work together to find a lasting solution to the problem, wondering why the issue of gas supply to the power sector was not prioritised in view of the importance of the sector to economic development.
He also suggested that payment for domestic gas supply should be denominated in naira instead of dollars.
“If we are serious about the economic development of the country, we need to solve the problem of gas supply today. We should look at the possibility of mandating the gas suppliers to price in naira. The domestic supply is just a fraction of what the gas suppliers supply to the international market, so paying in naira should not be a problem,” he said.
Mr Adelabu added that in order to further resolve the gas supply challenge, the GenCos must enter a contractual arrangement with the gas suppliers.
“With such contractual arrangements with gas suppliers, the minimum requirement that should be supplied to the generating companies would be clearly stated, thus eliminating the present situation where the generating companies are only operating at about 20 per cent of their installed capacity,” he said.
He also emphasised the importance of liquidity in the power sector value chain.
“We cannot overemphasize the importance of liquidity in the sector, the generating company has to cover their overheads, maintain and service their machinery and most importantly, pay for gas which is the raw materials needed for production. The only way to sustain production is payment,” he added.
Also speaking, Ekperikpe Ekpo, minister of state for petroleum resources (Gas), said the major challenge with the gas supply is due to the vandalization of the gas pipeline in the Niger Delta.
“This has affected production from the Nigeria Liquified Natural Gas (NLNG) company which is producing below capacity,” Mr Ekpo said.
He, however, assured that the OB3 line which supplies gas to the northern part of the country would soon be commissioned to enable supply to the northern part of the country.
“Knowing the importance of gas supply to generating companies and the industries, we held a stakeholders’ meeting on Tuesday with gas suppliers in order to know why there has not been an adequate supply of gas to generating companies, we need to work together to resolve this,” he said.
Mr Ekpo also agreed with the suggestion that payment for domestic gas supply should be in naira.
“However, this should be legislated on. We can both meet Mr President on this, once we agree on modalities as he is the only one that can give the directives,” he added.
He expressed grave concerns about the vandalization of the pipeline in the Niger Delta, noting that his major concern is to find a solution to the problem.