A Review of the Nigerian Energy Industry

Huge debts owed gas suppliers stifling power production – Operators

 24 September 2015, Sweetcrude, Lagos – Operators in the Nigerian power sector are lamenting what they described as the huge debts still owed gas producers and suppliers by owners of turbines, blaming the debts for the decline in the production of gas, and  poor distribution channels, leading to instability in power generation.
Energy Crisis Threatens the Western Power GridsAccording  to Chief Executive Officer, Frontier Oil Limited, Thomas Dada, firms were owing gas producers and suppliers huge debts, a problem that has made it difficult for power generation companies, GENCOs, to access gas for production.
He stressed that gas supply was still a major problem in the industry, despite the relative improvement in power generation and supply in the country.
Dada cited poor gas distribution channels and low production as some of the problems in the industry.
He said: “If you ask the gas producers and suppliers how much they are being owed by owners of gas powered plants, they would tell you that it is a lot of money. Given this scenario, one would realise that gas problems cut across stakeholders in the value chain.
“By this we can see the problem is from producers to suppliers to the power plants that could not access the product for production due to pipelines vandalism and other infrastructural problems.”
Also speaking, the Chief Executive Officer, Egbin Power Plant, Mr Dallas M. Peavey remarked that the relative improvement in power generation and supply in the country recently does not negate the challenge of adequate gas supply faced by producers.
He noted that Egbin plant has not been able to meet the required capacity because of gas, despite that it increased its electricity generation from 300 megawatts to 500 megawatts (Mw).
“People are saying that gas supply to the turbines has improved, ditto electricity generation, but nobody has been able to tell Nigerians the volumes or extent to which gas suppliers have supplied the product to the power plants.
“Egbin plant has an installed capacity of over 1,000Mw. The plant has gone through rehabilitation in order to produce optimally. Despite this, the plant is yet to meet its capacity. We need to prioritise the issue of gas to power in this country for the growth of the industry.”
A Director of Sahara Energy Group, owner of Egbin Power Plant and Ikeja Electric (IE), James Ogungbemi, said the company, which has the capacity to distribute over 1000Mw of electricity, is distributing less than 500 Mw due to gas.
He said stable electricity supply would be a mirage, until power generation companies improve generation in the country.
He urged investors to invest in gas production and supply in order to meet the required needs of the turbines in Nigeria and further help in improving power supply.
Ogungbemi said when there are many gas investors in the sector, the issue of debt owed gas supply is going to reduced.


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