Gas distribution firms, Gencos in talks

Gas-line07 October 2013, Lagos – Following the privatisation of the power sector, natural gas distribution companies are discussing with power equipment manufacturers for the manufacture of small power generating plants that run on gas for captive power supply to the electricity distribution companies now owned by new investors.

The Managing Director of Falcon Petroleum, Prof Joseph Ezeigbo, told The Nation that his company was discussing with Mantrac Limited, manufacturer of Caterpillar power equipment, for private power generation for Ikorodu in Lagos State.

He commended the privatisation, noting that it was time for Nigerians to expect stable power supply. He also noted that the power the company would generate will not be supplied through the grid because it is wasteful due to weak infrastructure.

“We don’t intend to take it into the grid because our grid is so wasteful. We lose about 15 per cent of electricity that go to the grid because of the inefficiency of the transmission infrastructure.

“What we aim to do is be in consent with the distribution company (DISCO) for Ikorodu that we will generate electricity and give it to them. What they will do is ensure that the distribution system is organised and retooled to be able to take electricity without losses and get it to homes,” he said.

Falcon Petroleum owns the franchise for natural gas supply within the Ikorodu industrial axis and Mantrac has just introduced a new power generating plant that runs on gas, which can generate more than five megawatts (MW).

He said with the captive generation, the residents of Ikorodu Town will have 24-hour supply of electricity every day.

Ezeigbo said: “We are negotiating with the government and hopefully when the distribution companies (DISCOs) take over the stations, we promise the people light 24/7. What we intend to do is generate electricity with natural gas and sell to the DISCOs.

“ We are holding meetings with Mantrac to purchase between 2.5MW and 5MW of gas stations and deploy them in Ikorodu and pipe natural gas to them to generate electricity that will supply Ikorodu light 24/7, that is the promise we are giving the nation. Once the discos takeover, we will be running smoothly.” This can also be replicated in other areas.”

On the ability of the new investors to efficiently run the DISCOs and the cooperation of consumers, he said that once a thing is privatised, the tendency is for people to actually live up to expectations. “Once they take over, there are some innovations that can come to play for them to take advantage of, to ensure that there is stable light in the country. I believe that will happen and with Mantarc coming up with gas engines at the moment that will make things a lot easier,” he said.

On impact of high tariff, he said the tariff will be nothing when compared to what Nigerians spend on generators. He said: “The poorest man in the country at least would have “I pass my neighbour,” which is regarded as the least and cheapest generator set in Nigeria. I pass my neighbour uses petrol and if you convert the cost of petrol to the amount of money he will pay with the increased tariff in electricity, it is a chicken change. There is a company we converted to natural gas a couple of years back that spends N100 million a month on diesel and when they converted to gas they were using N38 million and was saving over N61 million. Imagine what it saves for the company.

“I use about 2,000 litres a month in my house, which is over N200,000, so if I have steady light and pay N50,000 a month , that means a lot of savings. Whatever we do once there is steady supply of electricity; the increased tariff can be afforded by Nigerians because the benefits are so high.”

He said the control and management of the power sector by the private sector, with the diversification of government’s funding system, government will make more money to maintain the services they actually suppose to get involved with and leave businesses to business men to run and that will mean more money for everybody, and the more efficient the system will be. In anything government people think they are going to share national cake and nobody is ready to work. Privatisation will improve the economy, make more money for the government, and more money for the investors, he added.

– Emeka Ugwuanyi, The Nation

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