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Need For Sustainable Power Supply

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The problem of poor power supply in Nigeria has been terribly lamentable  and the situation seems to have defied  all efforts by previous governments since in the 80s. one is tempted   to now  ask what  the present  administration under President Goodluck Jonathan can do to salvage  the country from the ugly trend.

From on-set, the Federal Governemnt has been matching words with action on how better to improve the power sector by ensuring that the mega watt rose to 150 from less than 50, even within the short period of this present dispensation. This was after the Chief executive officer of Olornrisogo Power Station was redeployed to the headquarters for efficiency.

The redeployment followed the warning by the Minister of Power, Professor Barth Nnaji that all managers of the different sections of the utility company –Power Holding Company of Nigeria (PHCN), from generation, transmission to distribution should either sit up or be prepared to be booted out. Nnaji first had a meeting with the Chief Executive officers of the different sections of the utility’s value chain when he stressed the need for them to show commitment to duty to give Nigerians the long expected power supply.

Although he agreed that the sector had suffered grave or gross neglect in a couple of decades ago, particularly under the military    administration, he was optimistic that if the capacity Nigeria currently has fully utilized, there would be considerable improvement in power delivery. The question now is, who is the cause of Nigeria’s predicament in the power sector. Is it the government or the authorities of the utility company?

With the efforts so far made by the government, one would think that the utility firm, PHCN is to be held responsible for the incessant epileptic power supply in the country. The helmsmen of the company just as the former  Nigeria Electricity Power Authority (NEPA), feel that their duties and at coming to defend  their budgets and collecting electric bills and  share same among themselves  and  sit back and seek frivolous reasons to justify spending such funds without practical evidence on ground.

Unlike in the past when all the funds that come to the different sections of PHCN pass through the headquarters, the CEOs of the different units currently go to government to defend their annual budgets and spend the money according to their discretions thereby and up at not utilizing the money to provide constant electricity for the people. Some utilize the money in providing poor service leaving undone what the money is meant for.

However, the Chief executive officers saw that it was no business as usual when the minister clamped down on four of their colleagues and that the ministry didn’t come to the combat in child’s gloves. Although, ever since that was done, the situation changed in terms of power supply but a lot needs to be done.  The minister needs to tour all the power facilities across the country including the South-South and Port Harcourt in particular to see for himself or have a practical feel of what the people of the area are suffering. All is not well with the PHCN formations across the country and for the Niger  Delta region that produces the bulk of the nation’s wealth, special attention should be paid to give the a sense of belonging and to compensate  them for the  long neglect.

The minister should extend his “Capacity Recovery” to Rivers State because from the look of things lack of commitment and human errors account for considerable power failure in the state. There is need to ensure sustainable electricity supply in Rivers State considering its population and economic contribution coupled with the fact that sustainable and successful business is bi-product of constant electricity supply.

An auto manufacturing company could not be built in Nnewi, Anambra State because of poor power supply in the country. According to the Minister of Power, his efforts as a key player in the do were fruitless as the planned power supply.

In a paper he presented during the 20th anniversary of Anambra State Nnaji said “it was the fledging auto industry in Nnewi which inspired me in the late 1990s to take steps to establish in Nigeria a state-of-the-art company to manufacture auto parts including engines, when I was the ALCOA foundation Professor of Manufacturing Engineering at the University of Pitts burgh”.

The only way to attract investment to Nigeria is for the government to ensure steady and uninterrupted electricity at all levels. The country is blessed with all kinds of natural resources which can attract foreign investors but because of the non-availability of uninterrupted electricity, investors are scared.

Most investors after carrying out feasibility study of the kind of investment they intend to bring into the country will end up being deterred because of the huge, cost of acquiring and fueling a generating plant that would be able to power their investment. Reports have shown that everyday industries and other manufacturing concerns are collspsing and unemployment rate rising as investors are not willing to come and do business in the country because of lack of sustainable power supply.

Sadly, an average Nigerian home spends more than the N18,000 minimum wage  which is yet to be paid, a month to power its generator  to have power. Much of the economic undevelopment in the country today is because of lack of power, at trend all patriotic Nigerians must not allow to continue. This power has risen to a point that the President, Dr. Goodluck Jonathan and all the state governors should make steady power supply their one-point agenda and do everything humanly possible to ensure that this is achieved before the end of 2012.

Obviously, the government at federal and state levels should partner with other stakeholders or establishments in ensuring that the power problem becomes a thing of the past because until  that is done, no matter how much we spend  on jingles and advertisements in the local and foreign media to woo investors to come and invest here, it will continue to be a mirage.

Ghana and other industrialized countries did not advertise in international media before virtually multinational and local companies were attracted to invest there. The issue of power supply is however, over-flogged because it is the main key to industrialization and  self-reliance in any country and any country without steady electricity remains impoverished with its people.

It has become necessary to suggest that Nigerian governments should send delegations to China and other countries and engage energy companies that will give the country steady power supply so that we can become economically viable, as that is the only way to generate to generate employment for our teeming youths.

In pursuance of its regulatory functions, the Nigerian Electricity Regulatory Commission (NERC) in collaboration with the Standards Organization of Nigeria (SON) and the National Environmental Standards and Regulations Enforcement Agency (NESREA) has approved standards and guidelines for the issuance of clearance certificates for importers of generating sets and broken-down parts. This is to ensure that all generating sets to be imported into the country meet all the approved standards and quality and to stop the indiscriminate importation of generating sets into the country.

There has been little or no difference in the state of power supply in the country since the power reform was initiated by former president Olusegun Obasanjo’s government in 2005. This is why the Nigerian Electricity Regulatory Commission (NERC) has embarked on a process of consulting with stakeholders over the need or otherwise to increase electricity tarriff in the country. Chief executive officer of NERC, Dr Sam Amadi, at a workshop on major Review of the Multi-year Tarriff Order (MYTO) urged the shareholders to be objective over the review process, noting that “public power supply in the country is still a standby in most homes and offices, as it was in 2005 when the reform in the power sector began.”

If we must achieve the goal of giving every citizen access to stable, reliable and fairly priced electric power, a reliable and sustainable framework must be put in place to ensure the robust interaction of market forces with social policy to attain equilibrium. This we can do by establishing a pricing regime that will sustain massive private sector investment and guarantee a positive return on investment, while also being fair to underprivileged consumers.  The power industry is characterized by lack of a transparent price determination process and abysmally low tariffs, all based on the political whims and considerations of the PHCN, as opposed to the economic principle of full cost recovery.

Shedie Okpara

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Oil & Energy

Nigeria Earns N2.7trn From Domestic Crude Oil Sales In 2019

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The latest report by the Nigeria Extractive Industries Transparency Initiative (NEITI) has put Nigeria’s earning from domestic crude oil sales in 2019 at N2.7 trillion.
According to NEITI’s 2019 Oil and Gas Industry Audit report, the country earned N2.72 trillion from just domestic crude oil sales.
It added that of this figure, N518.07bn was deducted for Petroleum Motor Spirit, PMS, under-recovery by the Nigerian National Petroleum Corporation, NNPC.
This figure is N213.07bn above the approved sum of N305bn for under-recovery in 2019.
Similarly, the sum of N126.66bn was incurred by the corporation as costs for pipeline repairs and maintenances, which showed a difference of N96.38bn from the approved sum of N30.29bn for the purpose.
The report also pointed out that N31.84bn was deducted for crude and product losses due to theft and sabotage in 2019.
The sum of $34.22bn was recorded as revenue from the oil and gas sector in 2019.
The $34.22bn revenue represented an increase of 4.88 percent over the $32.63bn garnered from the sector in 2018.
A breakdown of the earnings showed that payments by companies accounted for $18.90bn, while flows from federation sales of crude oil and gas accounted for $15.32bn.
The report showed that 10-year (2010-2019) aggregate financial flows from the oil and gas sector to government amounted to $418.54bn, with the highest revenue flow of $68.44bn recorded in 2011, while the lowest revenue flow of $17.06bn was recorded in 2016.
According to NEITI, the total crude oil production in 2019 was 735.24 million barrels, representing an increase of 4.87 per cent over the 701.101 million barrels recorded in 2018.
Production Sharing Contracts contributed the highest volumes of 312.042 million barrels followed by Joint Venture and Sole Risk, which recorded 310,284 million barrels and 89.82 million barrels respectively.
Others include Marginal Fields and Service Contracts which accounted for 21,762 million barrels and 1,330 million barrels respectively.
The report also showed that total crude oil lifted in 2019 was 735.66 million barrels, indicating a 4.93 per cent increase to the 701.09 million barrels recorded in 2018, with companies lifting 469.01 million barrels, while 266.65 million barrels was lifted by the Nigeria National Petroleum Corporation on behalf of the federation.

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Egbin Power Plant Plans 1,900MW Boost

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A boost for electricity generation is on the horizon.
This indication comes on the heels of a planned additional 1,900 megawatt (MW) to the country’s power generation capacity by the Egbin Power Plant.
Its Chairman, Temitope Shonubi, made this known while unveiling expansion plans for the Egbin (Expansion) Phase 2 Investments, which is expected to add between 1,750MW  and 1900MW to power generation.
Shonubi, conducting a delegation of the NNPC led by its Chief Operating Officer (COO), Gas and Power, NNPC, Yusuf Usman, an engineer, through the plant’s post-privatisation, said the plant has gone through major overhauling, which he said has helped to increase its generation from the low capacity it had before 2013.
“Egbin has 1,320 MW capacity. As at the time we took over, the plant was generating 300MW which is an abysmal 22 per cent. As at today, our generation capacity has surged and we do 89 per cent. We have reached 970 MW, the peak generation for the year and we are working hard to ensure sustainability of this feat. The 970MW we hit is the highest for the year and based on our core value of sustainability, we are working round the clock to make sure that we sustain the gains we have made,” Shonubi explained.
Listing challenges being faced by the company to include, grid limitation, gas constraints, and liquidity, Sonubi added that stakeholders, including the NNPC, Central Bank of Nigeria (CBN), and the Transmission Company of Nigeria (TCN) have been trying to solve the problems.
He called on the NNPC to keep exerting efforts towards gas development and supply of the product to keep turbines at Egbin working productively at optimal capacity.
Responding to the call and obviously satisfied with efforts put in so far in the thermal plant, Usman assured of the corporation’s commitment towards gas optimisation and supply for gas to power.  He said NNPC will be joining the Egbin Power Plant to deepen gas supply for power generation.
He maintained that the NNPC was impressed with the turnaround at the thermal power station.

By: Tonye Nria-Dappa

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Rising Oil Prices’ll Create Problems For Nigeria – NNPC

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Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, has warned that rather than being a positive development, the rising prices of crude oil in the international market could cause major challenges for resource-dependent nations like Nigeria.
He spoke just as the International Monetary Fund (IMF) expressed concern over the re-emergence of fuel subsidy in Nigeria in the face of the country’s low revenue mobilisation.
The Washington-based institution, however, welcomed recent moves by the Central Bank of Nigeria (CBN) to unify exchange rates, certifying Nigerian banks as being liquid and well-capitalised.
Kyari, at the virtual Citizens Energy Congress, tagged: “Securing a Sustainable Future Energy System through Strategy, Collaboration and Innovation,” yesterday described the rising price of crude oil as a “chicken and egg” situation.
He added that oil prices had started exiting the comfort zone set by the NNPC, and becoming a burden.
The forum was organised by DMG Events, a London-based Public Relations company, which said the occasion was to provide an opportunity for players to reset the energy agenda post- COVID-19 and connect the divergent and polarising perspectives.
Kyari put the comfort zone globally at $58-$60, saying that for the NNPC, anything above $70-$80 will create major distortions in the projections of the corporation and add more problems to the company.
Brent crude, Nigeria’s oil benchmark, is currently selling for over $74 and is likely to increase further in the coming days as the NNPC continues to battle the dilemma of shouldering the payment of petrol subsidy, which has made it unable to contribute to the Federal Account Allocation Committee (FAAC) on two occasions.
Kyari expressed the concern that as the commodity prices rise, buyers of Nigeria’s crude may be compelled to accelerate their investment in renewable sources of energy, thereby leaving the industry in a quagmire.
He said: “In a resource-dependent nation like Nigeria when it gets too high, it creates a big problem because your consumers shut down their demand. Demand will go down and obviously even as the prices go up, you will have less volume to sell.
“So, it’s a chicken and egg story and that’s why in the industry when people make estimates for the future, they always make it about $50 to $60. Nobody puts it beyond $60.
“But for us as a country, as prices go up, the burden of providing cheap fuel also increases and that’s a challenge for us but on a net basis, you know, the high prices, as long as it doesn’t exceed $70 to $80, it’s okay for us.”
According to him, Nigeria will have no problems supporting the restoration of about 5.8 million barrels a day that the Organisation of Petroleum Exporting Countries (OPEC) still has offline since the pandemic, due to the curbs in production quota imposed by the oil cartel.
He said adding that number to demand will stabilise and probably bring oil prices down to about $60 level or a little below $60, stressing that that’s a comfort zone for every producing company or country.
“I don’t see them (Nigeria) having any difficulty agreeing to add additional volume to cushion the effect of these high prices for this period,” he said.
He stated that Nigeria is already producing well below its capacity, because in early 2020, the country actually produced up to 2.4 million barrels of oil per day for both oil and condensates.
With declining investments in the oil sector, Kyari stated that in a short time, most likely the next five years, the world may experience an energy crisis if the current situation is not properly managed.

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