Fixing weak links in gas-to-power value chain will generate 32,000mw of electricity
The issue of gas supply to the power sector has dominated discussions in the country at several fora because of the significance attached to the generation of electricity which forms the backbone of any economy in the world.
It is believed that if there is steady gas supply to the power sector, the power plants scattered across the country can presently generate about 10,000 megawatts if all the power current installed have access to gas supply. Further improvement on a lot of the components that make up the gas- to- power value chain is believed by the stakeholders can produce more gas which would increase the megawatts that can be generated by electricity firms.
Concerned by the tremendous opportunities that can be available through steady and uninterrupted gas to power, the Nigeria Gas Association (NGA) has called on the government to urgently fix the dysfunctional gas to power value chain to attract the required investment in the sector, especially legacy debts and the mismatch in the investment and revenue currency as well as the sanctity of contracts and agreements in the communiqué issued at the just concluded conference of the Nigerian Gas Association NGA conference held in Abuja.
The association in a communiqué stated that the gas producers in the country at their current level of production can deliver 32,000 (32GW) megawatts of electricity, and said it would continue to work with Government and all stakeholders to harness gas as a catalyst for sustained economic development which requires the right regulation and policies.
The illiquidity of the Power market was also a source of worry to the participants who said the issue requires urgent attention and then suggested a rethink of the quality and capitalization of current players and a readjustment of the tariff structure may be required.
“Without a doubt, we must find creative securitization mechanisms that improve bankability,” stated in the communiqué.
Some other problems that were germane to the industry include the need to nurture the willing buyer-willing seller commercial model that will encourage and sustain the gas value chain from the reservoir to the consumer
The stakeholders saw the need to encourage investment in exploration for gas to increase national proven reserves and facilitate access to such reserves by competent operators.
Of utmost concerns to the stakeholders is the level of insecurity in the Niger Delta. They agreed that the sector must join hands with Government to support intelligence based security arrangements to create an enabling environment.
On the Joint venture funding which has almost brought the industry to its knees and constrained development, the stakeholders say they support the efforts towards finding alternative funding mechanisms.
As regards gas Investment and gas Infrastructure Financing, they are of the view that financing is possible if the right conditions for success such as fixing the gaps in the value chain, avoiding policy summersault, honouring sanctity of contracts, stabilization of the exchange rate, long term view of fiscal policies are in place.
According to them, there exists the need for approximately $51 billion in investment in the sector to cover gas exploration, processing, transportation and general infrastructure. But want it to be government led even while acknowledging the funding constraints of government at this time.
“We still agree that such investments must be Government led. It might require creative schemes to leverage the existing assets and infrastructure. The need to establish a Gas Promotion Council that will address investment opportunities in the sector was raised”, the association said.
The emerging gas roadmap by Government is seen by the association as a welcome development that could provide much needed clarity on the issues of ownership, infrastructure development, gas gathering and pricing.
Olusola Bello