A Review of the Nigerian Energy Industry

Pipeline vandalism: Govt ready to diversify sources of power generation

Prof Chinedu Nebo, Nigeria's Minister of Power.
Prof Chinedu Nebo, Nigeria’s Minister of Power.

Oscarline Onwuemenyi

17 March 2015, Sweetcrude, Abuja – The Minister of Power, Prof. Chinedu Nebo has sought to reassure potential investors of the immense profitability in the Nigerian power sector despite recent drawbacks experienced due to vandalisation of gas pipelines across the country.

Nebo, who was speaking during the 2015 edition of Nigeria Power Forum, in Abuja, said efforts are underway to diversify the sources of fuel for power generation in the country.

“Obviously gas is a very important fuel for the power generation industry in Nigeria.

“However, it is not the only fuel available to us in Nigeria and the administration of President Goodluck Jonathan is not sparing any efforts to achieve a healthy fuel mix for power generation.”

The Minister highlight a few of the efforts in this regard to include the 700MW Zungeru Hydro Power Plant under construction; 17 small & medium Hydro Power Plants including the 40MW Kashimbilla and 34MW Dadinkowa Dam.

“Also, we have commenced development of the 3050MW Mambilla Hydro Plant; Final Investment Decision is imminent.

“There is renewed thrust in the development of Coal to Power with projects underway to develop bankable Feasibility Studies to facilitate private sector participation. Government has entered into a Memorandum of Understanding with Zuma Energy for a coal-fired power plant in Enugu. Project plans have been developed to fast track the deployment of solar energy solutions with the roll out Operation Light-Up Rural Nigeria project across all the states of the Federation,” Nebo added.

He lamented that “incidents of vandalism of oil and gas pipelines have blighted many of the achievements that have been recorded in increasing the supply of gas to power.

“These acts by their sheer savagery and regularity have constrained the generation of power to much less than the current system capacity of about 5,500MW,” Nebo said.

He added that whilst government is leaving no stone unturned to bring these incidents under control and the perpetrators to book, it remains open to partnerships aimed at achieving lasting and sustainable solutions.
Nebo assured of government’s support in making the sector very profitable for investors.

He said, “I would also like to use this opportunity to assure our new and prospective investors, local and international, of the Government’s continued support and interest in making the emerging Nigerian Electricity Supply Industry a very profitable investment destination.”

The Minister listed some of the power privatization gains and achievements under his administration to include:
“appreciable increase in Generation Capacity by the new private sector owners of GENCOS with the following additions: Ughelli: from 160MW to 610MW (eventually to 1610MW) Egbin: from 1080MW to 1320MW

“Kainji Hydro: from 80MW to 230MW (eventually to 470MW) Jebba Hydro: from 450MW to 546MW6. In addition, two National Integrated Power Projects (NIPP) Power Plants, namely Alaoji (960MW) and Calabar (563MW) were completed.”l

According to Nebo, “The intervening year has seen unprecedented collaboration between the ministries of Power and Petroleum Resources. This by itself is a very commendable development given the obvious dependency of the Nigerian Power Industry on gas. I am also very pleased to highlight a number of achievements of this collaboration.

“The increase in the price of gas-to-power from$1.50/mmBTU to $2.50/mmBTU with a maximum allowable gas transportation price of $0.80/mmBTU. The appreciable increase in the quantity of gas available for power generation to levels that can support the generation of up to 5, 500MW.”

He noted the remarkable milestone of the first supply of gas from a marginal field producer, Frontier Oil, to Ibom Power. “Also, there was the settlement of legacy gas debts owed to gas producers by the erstwhile PHCN generation plants under the Central Bank of Nigeria (CBN) Intervention Facility for the Nigerian Electricity Supply Industry.

“The most recent execution of the long outstanding PRG for the Gas Supply Agreement (GSA) between Chevron and Egbin Power Plant,” the minister pointed out.

He said it was worthy of note that all the 10 NIPP Power Plants have now achieved gas supply. “All these Power Plants are now on the way to being privatized with preferred bidders already announced. We expect in the coming months to have the transfer of the assets to the new private sector owners concluded.”

Nebo said it is evident from the foregoing that a lot of progress has been made.

“These achievements are a demonstration of what is possible and can be said to have set the scene for the way forward which will see Nigeria well on the path of meeting its target of generating 20MW by 2020.”

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