Introduction
This is September. The year is on the home stretch. As individuals, organisations and nations struggle to meet the targets they set for the year, Nigerians everywhere wonder at the feasibility of the country’s 6000 mega watts power generation target set by the federal government.
The electricity supply situation in the country could be described at the very best as precarious. Only last month, a near-fatal blow was struck at the heart of the power agenda of the federal government when militants bombed the Utorogu Gas Plant, seriously undermining the county’s electricity generation capabilities. That attack further worsened Nigeria’s power situation, which had hitherto improved slightly to about 2,400 megawatts. The national power generation promptly dropped to 1,400mw.
To everybody’s relief, the gas plant has been repaired and gas supply from the plant restored.
This relief, though, did not solve the problems in the power sector. Industry reports put the current power generation in the entire sector at around 2200 mega watts, a far cry from 6000-mega watts figure. Operators, however, believe that the odds are still staked high against the realisation of the government target as the sector is bedevilled by inadequate distribution and transmission lines, poor state of existing facilities, vandalism of gas pipelines, gas shortage, human capital shortage, banks’ refusal to fund power projects and so on.
Infrastructure problems
The sorry state of power infrastructure in the country is well known. The dearth of generation, transmission and distribution grid continues to stall any meaningful progress in the sector. Sadly, even the existing facilities on ground continue to deteriorate.
Electricity can only be used after it has been generated, transmitted and distributed. If, therefore, there were inadequate distribution and transmission lines, even generated electric power would simply amount to a wasted effort.
Poor distribution and transmission lines are major contributing factors to the power problems in this country. Not many transmission lines, according to energy experts, were built in the past. There has been a pronounced lack of commitment of government in the past to building more transmission lines. As a result, the National Electric Power Authority, now Power Holding Company of Nigeria (PHCN), continued to lose a considerable quantity of power generated as a result of inadequate transmission and distribution facilities required. The situation, which has not changed much, could, no doubt, derail the year-end power target.
Vandalism of gas pipelines
Nigeria relies heavily on natural gas to generate electricity. If there are no gas supplies electric power generation would suffer. It is that simple. That simple truth came to the fore while the drama involving the damage to the Utorogu power plant lasted.
Gas pipelines that carry the natural gas to power plants has been the target to vandals and militants in the last couple of years. Their unrelenting action has further weakened the power generation capability of the country. The little respite that came in the wake of the amnesty deal has brought a relief to the sector suggesting that, perhaps, the 6000-mega watts target could still be attainable.
One believer in that prospect is Mohammed Barkindo, group-managing director of the Nigerian National Petroleum Corporation (NNPC).
His hope was expressed last week in Delta state during a tour of the restored Utorogu Gas Plant.
Barkindo noted with optimism that the corporation alongside its Joint Venture Partners is determined to meet the country’s gas supply need in order to boost electricity generation by December 2009.
“Let me state without any doubt that Mr President has stated that he will do everything possible to support our desire to meet this target and we are ready to go the whole length to ensure that this dream becomes a reality”, he said.
Citing the positive impact of the amnesty deal, he said, “For the first time in over seven months, our total crude oil and condensate production has gone up to 2.3million barrels per day. While crude oil production as at yesterday stood at 1.7million barrels per day and that of condensate came to 600,000 bpd. All these wouldn’t have been possible without the amnesty package which has made the operating environment friendlier’’.
That Utorogu is on stream once again does not, however, mean that the problem of gas supply is over. Gas shortages continue to be a major problem in power generation. To arrest this situation the federal government, in its gas master plan, stipulated that gas producers allocate a percentage of their total production to domestic market. This is aimed at providing enough gas to the power plants as well as for domestic gas use.
State of the NIPP and IPP
The government planed to execute multiple power sector capital projects and programs during the Obasanjo administration. The programme is centred on the construction of additional power plants and rehabilitation of existing ones including transmission and distribution infrastructure networks. These projects are collectively termed National Integrated Power Projects (NIPP) and Independent Power Projects (IPP). The later was supposed to be driven by the private sector as 28 companies were given licence to set up power plants. The question is: what is the state of the NIPP and IPP projects?
Industry reports show that out of the 28 companies granted licence to build independent power plants, only two, Ibom Power Plant and Geometric Power, have completed construction work. While transmission is still delayed at Ibom Power Plant as the transmission line is still under construction, Geometric Power is still delayed by technical issues that bother on distribution.
Industry sources reveal that only a few of the IPPs have done any meaningful job on site due to problems ranging from the technical to the financial.
What about the NIPP? It can be recalled that in a widely publicized hearing on the state of the power sector, the country was informed that over $10 billion were expended on these projects between 2000 and 2007 with little result.
Aniette Okon, former senator and chairman of Rockson Engineering Limited, the company handling four out of the nine ongoing power projects under the NIPP, said recently that foreign firms involved in the manufacturing of equipments for the power projects have suspended actions over fears that Nigerian banks were distressed.
“The foreign manufacturers have said that they would no longer supply equipments for the projects and this will affect their completion dates. They are holding letters of credit from the banks that CBN is saying have problems. No banks will fund government projects anymore. If you present CBN letters of credit, they would not honour it,” he said.
The difficulty is funding the power projects were also pointed out by Mr Biodun Ogenleye, managing director of PowerCap Limited in a chat with the media recently. “A lot of IPPs cannot go to the market to source for funds because of what is happening.” he said.
He put the country’s minimum electricity needs at100, 000 mega watts, saying that the figure should be the target of the country, not 6000 mega watts.
“The minimum that Nigeria should be talking about now is 100, 000 mega watts of electricity. Why should we be talking about 6000 mega watts?” According to him Nigeria has all it takes to power the country even if there were no gas reserves in the country. “There are countries without gas supplies that enjoy power supply. There are a variety of ways you can generate power. It all depends on how you want to generate your own power. May be if we did not all the gas supply, we would have been more focused. Ghana, for example, until recently, had no gas yet they have been focused and been able to power their systems.”