A Review of the Nigerian Energy Industry

Flared gas can generate over 800MW of electricity – NERC boss

Sam-Amadi, NERC*Says nation finally on track to sustain power supply

Oscarline Onwuemenyi

04 November 2014, Sweetcrude, Abuja –
The Chairman of the Nigerian Electricity Regulatory Commission, NERC, Dr. Sam Amadi has called for smart and sustainable policies towards harnessing so much of the gas which is currently flared for power generation in the country.

The World Bank has said there has been a minimal reduction in gas flaring in many countries, including Nigeria, even as it announced that it will soon propose a target of zero routine gas flaring by 2030.

Around 140 billion cubic metres of gas is flared or burned annually worldwide, equating to some 350 million tonnes of carbon dioxide emissions. This is equivalent to the entire electricity consumption of the African continent, according to Anita George, a director of the World Bank’s International Finance Corporation, with a special focus on the energy and extractive industries.

According to the World Bank, Nigeria has invested over $3 billion towards the reduction of gas flaring which has seen the gas flaring reduced by 4 Bcm over the past five years

Amadi, who was speaking in an interview with Sweetcrude Reports in Abuja, said effective and robust policies must be put in place to minimize gas flaring, and to convert the flared gas into a source of power generation.

Amadi noted, “The problem of gas flaring has to do with policy, pricing and project management. In terms of policy, gas flare should have been turned to gas for power many years ago if we had been consistent in our policy on ending gas flaring.”

He added that, “Now, with what is happening with privatization, we can now monetize gas or, better still, monetize the flaring of gas. The flare started parted because there was no value found for gas. For those processing oil, it was much more economical for them to flare gas, but with the regulations we now have in the industry, small developers can convert the flare to power and we have seen a few projects coming up in the Niger Delta area targeted at converting flared gas to power.

“The quantity of gas flared could actually generate more than 800 megawatts of power if all could be harnessed appropriately. We couldn’t be thinking about this except for the reform that has taken place in the industry over the years.”

The NERC boss noted that in the past, the gas economy was wasted, but with the Gas Masterplan and the reform programme on power, the country has some assurance that in the medium and long term, adequate gas will be available to fire the power plants and the dream of developing adequate power supply can be realized.

According to him, “What the reform has done is that it has created commercial incentive that drives that kind of thinking because the bottom line is that people do this to make money. In the past, there was no market for flared gas.

“Now, we are doing a value -chain approach so people can find where they can plug and play within the value-chain. Overall, the question of gas commerciality and pricing comes to play.”

He observed that in the past, because power plants were not paying the right kind of price and they were not paying their bills, the incentive to supply gas to power plants was minimal. “Now, however, with the fiscal framework highly improved with the bankable contracts for gas to power and much more credible off-takers of the gas, long term planning for gas is now a commercial reality,” he stated.

Amadi noted that although there was need for urgency in planning and executing reforms in the nation’s power sector, it was important to apply deliberate care and systematic planning, as well as putting up the right kind of policies.

According to him, “The solutions may not be as immediate or as significant but I believe if we intensify our efforts, get smarter, the infrastructure we have erected is strong enough to support a sustainable energy future for the country.

“For many years, we got the model wrong and now we are having the right model. So what remains now is to intensify our efforts and work smarter and consistently to improve on what we have and ensure sustainable and adequate power for national growth.”

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