The Managing Director/Chief Executive Officer of the Niger Delta Power Holding Company, Chiedu Ugbo, speaks with Okechukwu Nnodim on the challenge of gas shortage as the company steps up efforts to generate more electricity.
What is your view on gas as fuel of choice for Nigeria than renewables?
The truth is that we have serious demand for electricity across the country. We also have gas in the ground across the country; we also have gas thermal power plants. Therefore, we must as a matter of principle and policy optimise the use of this gas to provide electricity for Nigerians. There is no two ways about that. Out of the 14,000 megawatts contracted to power generation firms by NBET (Nigerian Bulk Electricity Trading Plc), well over 85 per cent of that are for gas thermal power plants. So what are you going to do with these plants if you are going to cut down to renewables? Also, where are we with regards to renewables? Again, I know it is government policy to increase renewables over time. But as at today, about 85 per cent of the contracted 14,000MW is supposed to be fueled by gas and we need to harness this gas, get electricity to consumers, develop our country and then begin to increase other sources of electricity. It has been stated that our electricity demand is somewhere around 28,000MW, perhaps we can then use other sources of renewables such as solar, small hydro plants and wind to develop the rest amount of electricity that is required.
Does the NDPHC also face gas constraint as often raised by other power generation companies in Nigeria?
The NDPHC is positioned to be the biggest consumer of gas in Nigeria but I don’t know if we are the biggest consumer of gas in Nigeria at the moment. And this is essentially because we are constrained so much by lack of gas. The truth is that we have about 4,000MW installed capacity of electricity. At every point in time, that 4,000MW should give you at least 3,500MW to 3,600MW based on good site conditions. Also, at every point in time we have at least 2,500MW available during maintenance and other situations. But as it is we are severely constrained by lack of gas, which means there is a need and market for domestic gas to produce this quantum of power. But there are other commercial issues in the market also. However, a lot of investments is required for gas, but more importantly the concerns have to do with commercial issues along the line between the gas producers and, of course, the power companies and the electricity consumers as well. So there is a whole range of issues, especially commercial issues that we need to address to make domestic gas available, particularly to the power plants.
Are you discussing with the Nigerian National Petroleum Company, being a gas producer, to assist you in addressing the NDPHC’s gas constraint?
With our existing capacity at NDPHC, we need close to 1BCF (one billion cubic feet) of gas, or around 825 million standard cubic feet for now. But how many of that do we have? We have just 325mmscf and out of this I have strong commercial arrangement for only 140mmscf and that is the so called Acu-gas. Also, that is the only gas contract you can depend on for now because they are available and always provide gas. So I can talk about 140mmscf, others are not available and this again is due to the commercial issues in the value chain. However, we have not stopped there, we are engaging the NNPC. Just a few months back, we were able to reach some arrangements where they would help us find about 225mmscf more. This is because for all our power plants in the West, about five of them, we need about 560mmscf to run them. Meanwhile we only have access to about 110mmscf. We have 60mmscf coming from Chevron, but we have been in discussions with the NNPC and the officials have been very magnanimous in terms of the way they respond to us. So we are working on getting extra 225mmscf from the NNPC. The discussions are ongoing.
People at times say infrastructure is also a constraint to gas supply. Do you share this view?
Yes, because we have more gas in the Eastern axis and so our other major constraint is infrastructure. If we had the transportation infrastructure across, we probably would be able to move some of our gas, particularly from Acu-gas. Our power plants are stranded because of gas constraint in the West. So these are some of the issues, but we are working towards resolving them. Like I said earlier, we are discussing with the NNPC and they’ve been quite responsive to our requests.
Are there some other challenges you may want to share?
Just like I said earlier, we have about 4,000MW but not all of this is taken in the grid due to systemic problems. If you check, some of the days we do between 500MW and 700MW on the grid. That is not to say our machines are bad, it is because of transmission and distribution challenges. This is another reason why the NDPHC has to also invest in transmission and distribution to help in the evacuation and distribution of electricity. In those areas too, NDPHC has done significant work. We pride ourselves as having invested about 50 per cent of the transmission assets across the country. We have invested heavily in transmission and distribution assets all over the country, in every state.
For the purpose of our readers, can you tell us a little about the NDPHC as a power firm?
The NDPHC is a company that belongs to the federation. It is owned by the federal and state governments, as every state government is a shareholder in the NDPHC. We are funded from the Excess Crude Account and so we belong to the federation. We are named Niger Delta Power Holding Company because the first set of projects we wanted to do were gas thermal power plants located near the sources of gas. So this was based on the need to optimise our resources, so the plants were sited all across the Niger Delta states, except, of course, Akwa Ibom, where the Federal Government and the state seem to have some relationship in Ibom Power. But we are in the nine Niger Delta states, plus Olorunsogo in Ogun State and Geregu in Kogi State. So, we are not just in the Niger Delta states. As a matter of fact, our office is here in Abuja and we have projects in transmission and distribution all over the country. I doubt if there is a state or local government where we do not have a distribution project implemented since 2005. So we generate electricity and sell to the grid. Our commercial relationship is with NBET and, of course, the transmission company which has the infrastructure to evacuate the power and then send to various distribution companies.
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