A Review of the Nigerian Energy Industry

Govt trailing behind pipeline vandals

17 March 2015, Lagos – Recurring vandalism of critical oil and gas pipeline networks and subsequent disruption of gas supply to end users, especially electricity power stations, suggest that pipeline vandals are steps ahead of government in this nasty game. This shameful development is worsened by the lazy excuses spewed out by government officials on why the act continues to fester.

Prof. Chinedu Nebo
Prof Chinedu Nebo, Minister of Power

At an official function in Kainji, Niger State, recently, the Minister of Power, Prof. Chinedu Nebo stated that Nigeria has gained for herself, “an informal and worthless recognition as the only country in the world with the highest number of breaks and vandalism of its key petroleum pipelines.”

Pointing out that no country in the world currently records the number of petroleum pipeline breaks like Nigeria, the minister said gas flow through the country’s critical gas pipelines is unstable with few days of consistency in flow and more on disruptions.

On the average, records from the Nigeria Gas Company (NGC), the gas transportation subsidiary of Nigerian National Petroleum Corporation (NNPC) indicate that each break on any section of the 678 kilometres Escravos Lagos Pipeline System (ELPS), majorly around the Niger Delta areas, results in the loss of 200 million standard cubic feet (mscuf) of natural gas production and supply per day.

Such volume loss in natural gas supply also means that approximately 1500 megawatts (MW) of electricity production is cut from the national grid every day further resulting in 1.5 million kilowatt hour (kwh) of electricity loss for consumers in the value chain.

Often described as sabotage, vandalism of pipelines in Nigeria is not entirely new. Petroleum pipelines conveying liquid products such as crude oil and refined products have often come under attacks by vandals chiefly for economic benefits, but breaks on pipelines conveying gas may suggest otherwise.

In trying to appreciate reasons for the recent surge in vandalism of gas pipelines, the government has rather concentrated its efforts on conversations that do not properly define the recent surge in breaks on gas pipelines in the country to enable it counter the acts with proactive measures.

Irrespective of government’s constitution of a joint task force made up of the military, police and civil defence, to keep watch over key pipelines and oil facilities in the country, breaks on gas pipelines in the Niger Delta hinterlands have continued unabated.
Vandals having upper hand

In the absence of known and verifiable intelligence reports from the joint security task force deployed to police the pipeline network, to deal with the threats, the government has often been found groping in darkness as to what the real motives of the vandals are.

Similarly, government’s attempts to profile the ugly phenomenon has also flatly failed on grounds of no scientific proof. Usually, talks of sabotage of power sector reform have dominated conversations on gas pipeline bursts, yet no known intelligence report exists to lay credence to such claims.

Considering analysts’ judgement of government’s talks with minimal actions against vandalism of gas pipelines as a smokescreen, Nebo was recently asked by journalists if the government was losing the war against vandals.

The minister in his response noted that a multi-dimensional approach to the issue was thought out by government. Such approach, he said will include the deployment of digital surveillance technology to the difficult Niger Delta terrains where these pipelines are laid.

The minister’s position was however notwithstanding new breaks recorded at Inikorogha and Egwa axis of the ELPS, just hours after recent breaks on one of them was repaired and commissioned for gas flow.

“As we speak, we have only four days that are vandals free. We have 53 days of vandalism.  We have only had four days of free flow of gas without vandalism. That tells you how horrible the situation with vandalism is.
Vandalism is affecting our capacity to generate electricity. We are hoping that in the next two weeks, with the other pipelines that are being repaired and the ones that are being serviced are put in use, we will have been back to, an even beyond where we are,” Nebo said during the launch of an interactive platform for electricity consumers.

He further said: “When you are talking about thousands of kilometres on one stretch, to police this is not easy, because when these things were instituted or installed, nobody thought that Nigerians would hate themselves enough to directly vandalise the pipelines.

What we are now trying to do using the various security agencies, especially the
Nigerian Security and Civil Defence Corps, the Navy, Army, Police, and so on, is to make sure that these places are garrisoned. But this will not stop the problem.

“The most critical is what Mr. President is trying to do now, deploy resources to digitally survey the pipelines. It is very expensive. But we have to do that. Until that happens, we still have to worry about vandalism,” the minister added.

Economic consequences

Shortly after an inspection of a recent break at Inikorogha, the NGC disclosed that an average of 200mscuf of natural gas was lost daily from the development.
Going by the reviewed pricing regime of $2.80 per mscuf for natural gas to the country’s electricity industry, the average cost of the break to gas suppliers amounted to N112,000,000 million ($560,000) daily revenue lost on deferment of gas production and supplies.

The NGC explained that this cost however varies, depending on the end users. It said between January and beginning of this month, it has recorded three breaks on the same line while it takes approximately two weeks to fix the line.
Further calculation indicates that before the line is back in operation within three weeks, an approximately N2.3 billion of potential revenue from gas production and supplies on the line would have been lost, in addition to NGC’s possible expenditure of N150 million to repair the line, going by its average expenditure on repairs of similar breaks on the ELPS.

The cost of the break on the electricity industry is also huge; shaving off 1500MW of electricity from Nigeria’s daily generation figure of 4000MW can exert a lot of impacts on her socio-economic life as electricity operators will have fewer options to meet consumers’ demand.

Commenting on the recent break at Egwa near Gbaramotu, Nebo said: “It had become clear for all to see, that the vandals who perpetrate these acts are intent on crippling the power sector and bringing untold hardship to the generality of Nigerians, for either political or financial gains, or both.”

Policing the pipelines

While not ruling out the prospects of communities’ knowledge of the acts, the NGC disclosed that it has intensified its engagement with host communities of pipeline networks in the Niger Delta region, with the intention to get their buy-in on policing the asset.

“I must tell you that we have had several engagement with the stakeholders and communities and about a week ago we had meetings where we brought in all the communities in Delta State and we had a fruitful meeting on this.

We are also engaging specific communities, we had another meeting with the leaders and youth from Gbaramatu kingdom and from the commitment we got from them we will have a better relationship going forward,” said NGC’s Executive Director Services, Joseph Olisa.

Similarly, the NNPC last week announced its renewal of contracts with communities to protect its long stretch of pipelines across the country.
The corporation hinged its decision to renew the pipeline policing contract on increase in vandalism. It explained that the choice became necessary as it seeks to effectively combat the growing scourge of pipeline sabotage that has impacted negatively on its operations.

NNPC’s Group General Manager Public Affairs Division, Ohi Alegbe in a statement, explained that the contract, which was first awarded in 2011 had to be renewed because of noticeable increase in the spate of attacks on crude oil, products, and gas pipelines since the expiration of the first community-based contract in 2012 and thus leading to frequent production shut-ins and deferrals of gas supply to power plants.

“The pipeline protection contract is part of our community engagement programme across our host communities aimed at getting community members to help in the task of protecting the pipelines around their communities,” Alegbe said in the statement.

He noted that while the earlier pipeline protection contract to the communities which lasted from 2011 to 2012 subsisted, breaches to the corporation’s pipelines were minimal which conduced to the rise in production.

Alegbe added: “The recent rise in the frequency and intensity of willful attacks on our pipelines dictates that we step up our community engagement programme to help stem the tide of the pipeline vandalism scourge.

In the current programme, we have not only renewed the contracts for the three initial community-based companies involved in the 2011 contract, we have extended the programme to five other community-based companies in other states where we have a high concentration of pipelines stretching from the Niger Delta to the Ondo, Ogun, Oyo and Lagos States.”

The NNPC spokesman explained that the “contracts do not in any way obviate or undermine the responsibility of the police and other security agencies to protect the pipelines.”

“They are actually designed to complement the work of the security agencies by raising the alarm and drawing the attention of security agencies to any suspicious movements around the pipelines right of way,” Alegbe clarified.

With its seeming adopted rule of thumb on the causal factors, it has almost become impossible for government to turn the tide on vandalism of gas pipeline in the country. With these weak excuses of economic or political sabotage made by day,  the government may as well kiss goodbye to any hope of containing pipeline vandalism and improving electricity supply in the country

– Chineme Okafor, This Day

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