Engr. Abdullahi Kassim, Executive Director of NDPHC

…GenCo needs liquidity to sustain its operation with availability of gas.

…Huge debt being owed hampers smooth running of the power sector.

…NDPHC battles with infrastructure vandalization.

-Felix Douglas

Speaking at a panel session during the Nigeria Energy Summit, ‘Power Generation in Transition Integration and Growth in Nigeria’s Energy Future’ the Executive Director of Niger Delta Power Holding Company (NDPHC), Engr. Abdullahi Kassim, said the role of the company in Nigeria electricity supply industry is to boost the power sector.

“When the federal government of Nigeria took strategic step to invest in infrastructure through National Integrated Power Projects (NIPP) about 10 power plants were conceived from this program with total capacity of almost 5000 megawatts.”

From these 10 power plants of the Generation Company (GenCo) about 7 are fully completed. The other remaining three are still undergoing construction which will give rise to the completion of the remaining 1000 to make it 5000.

NDPHC is peculiar because it is like a hybrid of all the contributions that come out from Geometric, Azura and Egbin.

According to Engr. Kassim, taking a look at portfolio of the seven power plants that are connected to the grid generating electricity to Nigerians, one of the power plants has similar gas arrangements with Azura, which is Calabar power plant and is the only plant that has dedicated gas supply infrastructure.

Unfortunately, there’s no guarantee off-take. It is the same issue across the value chain for all the thermal units.

Concerning the generation numbers in Nigeria, Engr. Kassim was of the view that about 80% is coming from thermal and that will require a significant volume of gas. Apart from Calabar power plant, the remaining six power plants, five of them are located on the western axis. They are also connected to Excarvos Lagos pipeline system, where Egbin is getting its gas.

NDPHC has a gas requirement of about 580 million scuffs. But what is available for the GenCo in terms of gas supply is not up to half. Most time it gets less than 100 million scuffs. It has to make arrangement for prepayment of gas. The gas suppliers are only able to supply if it is available. “The issue is, if the market is able to pay for the gas? A GenCo that is generating from a gas thermal plant with almost 60% of its cost on gas, and the market is not able to pay fully the amount of energy sold; it has a way of truncating any arrangement made with gas suppliers.”

These are key issues GenCos are confronted with apart from infrastructure. Most of these power plants in terms of available infrastructure to supply, gas molecule is a challenge.

“In all the portfolio that I mentioned, we only have about two power plants that are being supplied from the IOCs under the domestic supply obligation, and even those ones is not a guaranteed supply because there’s no GSA.”

The main issue is liquidity, if the sector can get sufficient funds to be able to sustain its operation, the gas will be available.

According to Azura, out of the number of years of operation, it only has maximum of two days that it had issue with gas supply because the company has security on payment and GSA in place to get gas.

Every other player in the sector, without a security in place for gas supply, it will not be able to sustain any significant supply of gas.

The bottom line is the issue of debt because a lot of money is being owed in the sector and there is no incentive for the gas suppliers to continue supply.

Engr. Kassim disclosed that NNPC and the Nigerian Gas Company (NGC) are still working on the OB3 pipeline that will be connected with availability of gas to power plants.

Although there is a lot of gas but there is still infrastructure challenges.

Notwithstanding, NDPHC, has invested massively as part of its mandate in the tune of about $500 million to build gas infrastructure.

The Alaoji power plant which is in Abia State, NDPHC has a dedicated gas supplier, TotalEnergies supplying one of the power plants.

But unfortunately, because of under capacity of the infrastructure coupled with challenges and complications in metering of gas that is being off-take through other off-takers, the company has shut down the power plant for over two years. It also affected Geometric supply but the GenCo is embarking on modification of the line which cost the company almost $2 million to fix.

These are some of the key issues where there is sufficient gas molecule that’s supposed to flow for the power generation, but are restricted due to infrastructure requirement.

NDPHC is working on decade of gas framework where about 60% of the country’s natural gas is being exported. It’s only meager of less than 40% that is being shared among all the big off-takers like Egbin and others.

“Even if there is money, in some instances you want to pay for gas, the molecules may not be sufficiently available.”

In Calabar power plant, where Akugas is the dedicated supplier, Engr. Kassim stated that NDPHC is struggling with infrastructure vandalization. Recently, the gas line was vandalized and the company was out of power generation for over six months because of the terrain where the line was vandalized. The supplier has to mobilize an emergency repair which took it some time to fix.

There is lot of challenges in terms of infrastructure that must be addressed.

On the aspect of renewable as a competition to conventional power system, Engr. Kassim said renewable cannot compete rather it is just to power homes, but it cannot power the economy.

“There’s no economy that is being powered from disintegrated isolated mini grids. Every strong economy in the world is being powered from the grid. Renewable is like makeup, there has to be foundation and base.”

Every developed economy in the world is still using the other conventional ways of generating power, renewable is add on. It’s not a threat or replacement for base energy generation.

However, Engr. Kassim believes the future is bright since Nigeria is more of a gas nation than oil. Gas is being recognized as a transition fuel and it will remain. The only challenge is infrastructure expansion and government policies are trying to bridge the gap to create opportunities for investment.