Determined to push enough gas to the power sector to ensure adequate generation of electricity, the Federal Government has laid and commissioned 1,000 kilometres of major gas pipelines with an additional 470km currently in construction phase, while a further 1,400km is intended for construction before the end of this year.
This is coming on the heels of the Nigerian National Petroleum Corporation (NNPC)’s strategic plan to deliver five billion standard cubic feet of gas per day (scfd) to the domestic market by 2020. The corporation says it plans to ensure that there is enough gas for the domestic market for power generation and other uses.
Confirming this in Lagos recently at the Society of Petroleum Engineers Conference, Group Managing Director of the NNPC, Dr. Maikanti Baru, said along with the development of physical infrastructure, commercial frameworks were being put in place to support the growth of the domestic gas market.
Baru said progress has also been made in the reduction of flared gas volumes from a peak of 2.5bscf/d a couple of years ago, to about a current volume of 700MMscf, adding that “we envisage a near zero flare in the not too distant future, as adequate infrastructure and frameworks are being put in place”.
He further said based on a projected domestic gas supply deficit of 3 billion scfd, the corporation identified seven critical gas development projects which can be delivered in the short and medium-term, to bridge the impending gas supply shortfall.
He said that at his recent meeting with stakeholders, he made it clear to them that funding for the identified projects would be provided, as government is determined to ensure there is gas support for the power sector.
“In the event that the Joint Ventures (JVs) or Nigerian National Petroleum Development Company (NPDC) as the case may be fail to raise the required funds, opportunities may be extended to third party investors to help finance the projects and the commitment received from various stakeholders who attended the event were quite impressive ,” he said.
The power generation level at the weekend, was put at 4,017 megawatts, while the country has an installed capacity of over 12,000 mw, but can only transmit a little above 4,000 mw, because of weak transmission lines.
The government, in renewed efforts to ensure steady generation of electricity, had in June this year, through NBET, released the first tranche of about N12billion to 10 GenCos from the N701b intervention fund.
However the second tranche of the money is expected to be released soon.
But, Acting President Yemi Osinbajo had promised that government would soon release a second tranche of the N701b for Power Assurance Guarantee, approved by the Federal Executive Council in March this year, for the Bulk Electricity Trading NBET, Plc.
Osinbajo said it was expected that the release of the funds would free up the value chain that had created several problems of its own.
He said government was exploring investment opportunities for revolving funds for solar and other renewable sources of energy, to break the deadlock of electricity market structures through competition and ensure that renewable energy becomes an engine of growth for Nigeria’s economy.
According to him, government will partner with the private sector, to create the framework for real-world business cases by developing standardised (and certified) technology packages, standardised contracts and a toolkits for energy cooperatives (with technical, institutional, financing and legal elements).
Osinbajo said, “We are also looking at several other reforms in the sector, hoping that the market can become self sustaining, independent and run on its own and free up all of the private sector energy that is waiting to come into the market.
“We want to embark on a broader restructuring of the electricity sector and strive to achieve a more systematic development power market design, especially for the renewable energy.”