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FG to boost gas supply to improve power

FG to boost gas supply to improve power
August 03
10:46 2014
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The federal government has concluded arrangements to boost gas supply nationwide by 370 million metric cubic feet per day (mcf/d) to generate 5,000 megawatts within five months, officials said on Saturday.

The minister of petroleum resources, Mrs Diezani Alison-Maduke (pictured), announced the plan in Abuja  at a joint press briefing with the ministry of power and the central bank.

Alison-Maduke said the collaborating agencies with Nigerian National Petroleum Corporation (NNPC) was working assiduously to find lasting solution to gas and power problems.

The minister said  NERC had approved a new benchmark price of 2.50 dollars per mcf for gas supply, and 0.80 dollars per mcf as transportation cost for new capacity from 2014.

“We have developed additional interventions that will address outstanding issues around gas pricing, fast track additional gas supply development, particularly in the short term.

“It is expected that barring unforeseen developments, these interventions will add at least 370 million   mcf/d of gas and assure a generation capacity of at least 5,000 MW within four  to five months,” she said.

Alison-Madueke said a review of gas pricing was now being implemented to further reflect market value.

According to her, the ministry of petroleum resources is deliberating with NERC to ensure that the pricing mechanism of gas to power will reflect market value.

“In the short term, it is anticipated that this will quickly boost gas supply and in turn power output.

“In the medium to long term, this new price regime should trigger additional investment in the infrastructure for gas to power,” she said.

According to her the  benchmark will rise with the U.S. inflation annually.

The minister said the suppliers needed to be committed to supplying the agreed quantities of gas to generation companies as long as payment terms were  met.

She said NERC was concluding the review of the Aggregate Technical Commercial and Collection loses studies submitted by the distribution companies.

The minister said this would be followed up by a review of the revenue requirement for the power sector that would be covered by a revised MYTO (Multi Year Trarrif Order) path.

Alison-Madueke said while the detail tariff was being worked out, NERC had reaffirmed its commitment to ensure cost recovery for all prudent and efficient operators.

She said the CBN was set to clear up the most recent gas related debts of power sector as it was  looking at the banking sector led measures to pay off N250 billion debts owed to gas supplier.

 

“This will be subject to reconciliation efforts and adequate provision for this support in a revised MYTO that ensure repayment within five years.

“CBN will play a key role in financial arrangement that guarantee payment for gas supply by the power sector,” she said.

Alison-Madueke said the ministry was targeting a number of gas supply projects that would help cushion the effect of supply shortage in the short-term.

She said these included Utorogu Field expansion with expected impact of 60 million mcf/d, expansion of  Oben Gas Plant and drilling of new wells to add 100 million mcf/d

Others include re-entry of Odidi Field and revamping of the processing plant and lowliness to deliver 40 million mcf/d. and hooking up of already drilled oil wells in Pan Ocean’s OPL275 to add 40 million mcf/d.

“Collectively, these projects will add 240 million mcf/d. All these are in advance stages of delivery and progressive impact should be felt steadily from October till year end,” she said

According to her, on the eastern Axis, Nigerian Gas Company is building a six kilometre bypass line to enable alternative supply of 60 million mcf/d to Alaoji in Abia.

This line mitigates slippage in the Northern Option Pipeline line originally planned to supply Alaoji’s requirement for gas is expected to be met by year end.

“In the east, Seven Energy will be delivering 30 million  mcf/d in the first instance to Calabar NIPP. It is expected that Gbaran and Omoku Power plants will be completed by end of Q1 2015.

“When this happens it will make available a future mmcf/d of gas to be utilised,” she said.

The briefing was attended by the minister of power, Prof. Chinedu Nebo, CBN governor, Mr Godwin Emefiele, the Nigerian Electricity Regulatory Commission (NERC) chairman, Dr Sam Amadi and the new NNPC group managing director, Dr. Joseph Dawha.

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