02 November 2016, Abuja — The Nigerian Gas Association, yesterday, lamented that they are currently being owed more than N110 billion. Speaking at the 10th International Conference and Exhibition of the Nigerian Gas Association, NGA, in Abuja, President of the NGA, Mr. Dada Thomas, also called for the conclusion of the privatisation of the power sector, as this would rub on positively on the gas sector.
According to him, majority of the debts are owed by power firms, while he added that the intervention by the Central Bank of Nigeria, CBN, was not enough to address the huge indebtedness of the power firms.
Thomas disclosed that the power sector is faced with a serious illiquidity challenge which if not tackled would lead to the total collapse of the sector.
He said, “For instance in this conference, every session has talked about the illiquidity in the power sector and that illiquidity is virtually terminal. By terminal, it means the patient is already collapsing and if pushed a little bit, that is its end. The problem in that sector needs to be fixed. Gas producers are owed more than N110bn right now.
“You heard of the CBN intervention, but it was just a drop in the ocean. So we have a serious problem and that is nothing but the truth. It is important to state that all power generation companies, Gencos, who run thermal plants in Nigeria get their gas from gas producers. You can’t run a thermal power plant without gas.”
He further stated that 80 per cent of domestic gas produced by gas companies in the country is sold to power plants, while he bemoaned the fact that these power firms are still in the hands of the Federal Government because of the yet-to-be- completed privatisation exercise, which had also made it difficult to compel the power firms to pay their debts.
Thomas said, “We want the privatisation of the power sector to be fully concluded so that every power plant will be in the hand of a private investor. That is when we can talk properly as business entities.
“For if you are a private investor I will not give you my gas on credit. You must pay me to get the supply going. But with the government, it is such a different ball game. When there are disruptions, they accuse you of economic sabotage and owe you all kinds of money.
“If you are a private investor and you buy this power plant today and I sold you gas for one month and I say where is my money and you keep telling me stories, after two months, I will have no choice but to shut you off. You are a profit making organisation and so why should l be subsidising your business?”
Also speaking, the immediate past President of the NGA, Mr. Bolaji Osunsanya, called for the immediate resolution of the challenges hindering the growth of the power sector.
According to him, the cash collections in the system must be adequate to support any development in the sector including gas development and supply, power generation, transmission, and distribution.
“The regulators and other government agencies, such as the Bulk Trader and the Ministries of Finance, Power, and Petroleum, must come to a common understanding of the imperatives of the sector so that we begin to solve the problem. A top priority would be the securitisation of investments in the sector and appropriate pricing of the building blocks,” he said.
Osunsanya noted that Nigeria’s current gas production can deliver 32 gigawatts (GW) if fully deployed for power, adding that gas-fuelled generation accounts for only about 2.5 GW of the current generation. He maintained that due to poor planning, a further 2.0 GW of generating plants are stranded with no gas supply, explaining that this would seem to underscore the size of the opportunity that exists to fill this obvious gap.
He said, “Gas supply has been highlighted as the weak link in the development of the power sector. While we would not debate how we got here, we will rise up to the challenge of ensuring that gas is made readily available for the development of the electricity supply industry.
“It is clear that with a focused development, domestic gas can be harnessed to fuel the entire power demands of the country and beyond.”
*Michael Eboh – Vanguard