Power generation: Plans to import coal spark outrage in Nigeria

14 September 2014, Lagos – THE recent move by some Nigerian industrialists and electricity generating companies to import coal from South Africa, as a proactive measure against the lingering power supply crisis in the country, has reopened debate on the ‘abandoned’ coal deposits in some parts of the country.

This move, according to the firms, is to enable them switch over to coal-powered turbines, due to frustrations being experienced by operators in getting gas to fuel their respective power plants.

coalThe report of planned coal import for power generation, despite an inferred reserve of 2.75 billion tonnes of coal deposit in Nigeria, has drawn the ire of stakeholders.

The Guardian had, in an editorial, described the plan as unfortunate, noting that “Importing coal from South Africa or elsewhere, for that matter, underscores the unfortunate contradictions of Nigeria. Just as the country is a major crude oil producer but relies heavily on imported oil products, joining the league of coal importing countries is most unfortunate when the nation’s coal resources remain largely unexploited. Such mismanagement and poor attention to issues of national development planning is lamentable.”

Nigeria is assessed to have about the largest gas reserves in the world, but the parlous supply infrastructure has compromised distribution to various plants requiring the commodity. Yet, the nation’s coal reserves remain largely unexploited, even after the Federal Government has sold out the blocs to prospective miners.

Besides, some power generating companies (Gencos) are in the process of converting their plants to coal-fired turbines, in view of unabated crisis in securing gas to power their respective facilities.

Mostly affected by the gas paucity crisis are the Gencos that are located inland, which have not got the close proximity advantage to the gas supplying facilities, which are located in the Niger Delta region. One of the operators, who spoke with The Guardian on condition of anonymity, pointed out that lack of distribution facility had been the bane of several power generating plants that are not located close to the source of the commodity.

Only recently, the Minister of State for Power, Mohammed Wakil, disclosed that the government was disposed to developing alternative sources of energy, which abound in the country, and would include the exploitation of large deposits of coal for power in Gombe, Enugu and Kogi/Benue axis.

Leading the coal-import initiative from South Africa is Dangote Cement Plc, which has already placed an initial order of 30,000 tonnes of the commodity from the continent’s second largest economy to power its 60-megawatts plants, with another 30 megawatts generating facility on standby. The company has allegedly slated $250 million for power generating conversion, which would involve establishment of three plants at Dangote Cement’s facilities at Obajana in Kogi State; Gboko in Benue State; and Ibeshe in Ogun State.

Explaining the rationale behind the move, Group Managing Director of Dangote Cement, Devakupar Edwin, explained that the company had to be proactive in resolving the lingering power supply crisis in the country, as “we cannot afford to compromise the objectives of promoting value addition and job creation in Nigeria.”

Edwin stressed that ‘‘no business can survive in an atmosphere of energy crisis. If we don’t have power and fuel, our operations would become endangered.”

According to him, ‘‘Dangote Cement would be investing $250 million in coal-based power plants, due to increasing difficulties in getting gas supply to power our electricity generating plants. All our kilns will be powered by coal, with the new plants located in Obajana, Ibeshe and Gboko,” he said

Edwin, however, explained that the coal importation agenda was only scripted as a temporary measure, to forestall system collapse in their operations.

“We are aware of large coal deposits in Nigeria and the allocation of blocs to prospective miners. But we have to take urgent steps to safeguard our investments in the country, more so as exploitation of the commodity has not commenced on a scale that can sustain our operations. Currently, we don’t have either gas or black oil (low pour fuel oil) to run our machines fully. We even had to resort to importation of black oil to do our business,” he said.

He explained that the company have a plan to look inwards in respect of coal sourcing, as it expect the companies that have secured coal blocs to commence their respective mining operations in the country.

“We had hoped that the gas infrastructure challenges would be resolved, so that normal supplies can be resumed. But the reality on the ground now is that the crisis has persisted.

Government officials were not forthcoming on the rationale behind approving importation of coal for power, but Minister of Power, Prof Chinedu Nebo, said recently that the quantity of coal deposit in Nigeria could provide electricity for the nation for the next 20 to 30 years.

Nebo stressed that when fully explored, the coal-to-power initiative could increase the country’s power generation capacity, and assist in overcoming the current epileptic supply.

“Nigeria cannot depend solely on the thermal and hydro sources of power,” he said.

It is no secret that Nigeria’s coal deposit stretches across states and in reasonable quantity. These include Enugu, Gombe and Kogi/Benue axis. Cooking coal is also found in the Lafia-Obi bituminous complex. The proven coal reserve in the country is put at 639 million tonnes with another 2.75 billion tonnes inferred reserve.

Executive Director of the Citizens Center for Integrated Development and Social Rights, Emeka Ononamadu, is at a loss on the planned importation of coal for energy.

He said: “I prophesied it before, during and after the takeover of the power sector by private operators, that those who sold and those who bought were apparently not prepared for what they have undertaken to accomplish. The scramble was just to continue the whole mismanagement and over reliance on foreign imports, which has been one of the major factors responsible for our energy woes. That is why during the start of the dying days of PHCN, Nigeria became a dumping ground for all sorts of poor and substandard products at staggering costs that that were explainable and damaging to our economy. Even components, implements and parts that could be fabricated in Nigeria were quickly outsourced because of the juicy benefits derivable from those who are behind it.

“Today, Nigerians can see that nothing much has changed. Government keeps investing heavily in the sector that has already new owners or operators. This economics still remain explainable and worrisome. How can a country Like Nigeria, who has been blessed with most natural resources suitable for cheap energy production, to want to always experience scarcity more than countries that do not have a single resource to produce energy. First, we have petroleum and refineries and we are importing petrol, gas, diesel and kerosine. Up till now, Nigeria cannot sufficiently supply gas to numerous power plants built across the country in the last three years. Now, the new plan is to purchase coal.”

He went on: “Coal that Nigeria is one of the top countries with huge deposits of coal. The largest deposit of coal in Nigeria is in Enugu. It was mentioned by Nigerian Electricity Regulatory Agency as one of the options for new energy plans. Since all these years that Nigeria has been planning and investing in the energy sector, no one was doing anything to develop the large coal reserve in the southeast state of Enugu? Yet they want us to believe that the power reform plan is still on course. But when they commenced the building of gas turbines for power, they commenced plans to produce and supply gas.

“That did not materialise as many locations were judged as inaccessible for gas supply. We were told that the coal deposit in Enugu could serve Nigeria in the next twenty years. So what is the obstacle that stands between exploiting it and using it to improve our energy or electricity challenges?

“The subtle step to arm twist Nigerians will not be cheering. It is an arm twist because Nigeria has coal. It does not take much to excavate it and supply it to power plants across Nigeria. Nigeria and the independent power operators are indeed taking Nigerians for a ride. They have failed to be more on the part of the people than the independent power producers. ”

“I strongly oppose the importation of coal in Nigeria until it is certified that our coal is not in commercial quantity or good enough for that purpose. I strongly request government and the independent operators to provide to Nigerians the reasons why they opted for importation instead of developing our natural resources,” he stressed.

In an interview with The Guardian, former Head of Exploration Research, Research and Development Division at the Nigerian National Petroleum Corporation (NNPC), Prof Charles Ofoegbu, lamented the abandonment of coal electricity generation from Oji in Enugu State, a project, he recalled, supplied electricity to the majority of the South Eastern population.

“I also suggest that we look at coal-powered plants because we have a lot of coal in Nigeria that are not been used. The coal plan at Oji in Enugu is there and nobody has said anything about it. Some of us grew up knowing that plant to have supplied plant to almost all of eastern Nigeria, why did we allow it die as a consequence of the civil war, why is it not back on stream and the capacity enhanced? China takes up most of its power from coal,” he observed.

Former federal commissioner of the National Human Rights commission of Nigeria (NHRC), Emmanuel Onwubiko, described the move as a “charade and another misadventure.”

He told The Guardian: “This is also a policy faux pas for a country that has passed the Local Contents Act into operation by the national parliament of the Federation. What has happened to the extensive coal deposits in Enugu and Benue States and other parts of Nigeria, which are unexploited? Government through the electricity power sector regulatory agencies must protect our local industry by ensuring local contents in the direction of massive deployment of coal to power electricity plants in Nigeria. If I may ask, have the rich coal deposits dried up? Or are these clever- by- half portfolio carrying foreign ‘investors’ in the electricity power sector in the private sector embarking on these wild goose chase to enrich their home jurisdictions?

“In as much as I am sincerely not advocating trade embargoes for foreign coal, government must protect the integrity and interest of Nigeria, more so when Nigeria is endowed richly with coal mineral deposits that remain unexploited. The National Assembly must legislate to protect our local coal industry so these ‘economic mercenary’ and merchants parading around as foreign investors in the Nigerian private electricity sector don’t hide under the neo-colonial sobriquet of trade liberalisation to dump cheap and poor quality coal on us from their home countries when Nigeria is a respected global leader in coal deposits in huge commercial quantities.

“To allow the importation of coal to power electricity sector is like allowing the evil practices whereby foreign owners of hotel franchises like KFC and other Chinese restaurants import their tools such as toothpicks from their home countries to be replicated in the electricity power sector that is already besieged by monumental crises of supervision and/or regulations between NERC and certain powerful cabals embedded in the Power federal ministry. ”

He went on: “The National Assembly must immediately organize public hearing for Nigerians vastly knowledgeable in this issue to ventilate their views since the voice of the people is the voice of God. The local contents Agency must speak out in line with its statutory mandate to protect and guard jealousy our indigenous coal industry that has come under considerable attacks by foreign agents masquerading as investors.

“On the part of organised civil society sector, concerted and constructive effort must be made to challenge this sinister plot to destroy Nigeria coal industry and by so doing these elements will only be creating employment opportunities for other nations using Nigerian electricity power sector as a guinea pig or dumping ground. We say no to trade enslavement in this 21st century.”

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