NERC Urges FG to Review Gas Deals

Chairman-of-NERC-Dr.-Sam-Amadi

The Nigerian Electricity Regulatory Commission NERC has charged the in-coming Government of General Muhammad Buhari (rtd) to review and separate the supply of gas to power generation plants from the Nigerian National Petroleum Corporation, NNPC.

It insisted that for electricity supply to stabilised and distributed judiciously across the country, the incoming Government needs to do the needful, by reviewing the gas supply agreements.

This was contained in a statement to journalists recently by the Chairman and Chief Executive Officer, CEO NERC, Dr. Sam Amadi, who said there was no strong coordination between the two sectors, thus resulting in poor project management.

The CEO affirmed that gas was the most vital feedstock for power generation, but that Nigeria had no decision authority regarding its availability.

Mr. Amadi added that gas supply to the plants had been the downfall of the power sector, stressing that the fundamental problem was that the regulatory regime for gas transport was different from that of electricity.

“In other jurisdictions like in the United Kingdom and the United States, where we borrowed our model, the regulator of electricity regulates gas transportation and supply to power plants. This makes for coordination and efficiency in the various pricing points. The new government has to review that situation,” he said.

Amadi also stressed on other issues hampering the effectiveness of power supply in the country, saying that commercialization of the product was another elementary cause of the problem.

He explained that until recently, there was little incentive for gas suppliers to dedicate more of the product to power plants or build gas infrastructure to cope with the growth in electricity demand.

The NERC boss said the power sector was not competitive because gas supply was not based on enforceable contracts.

He however disclosed that with the commencement of the Transitional Electricity Market, the value chain of electricity supply would be based on bankable contracts, adding that gas suppliers would now enter into gas supply contracts that would expose them to liability if they did not provide the contracted quantities of gas to the power plants.

Amadi also suggested that government should embark on policy interventions such as, put in place proactive measures to tackle pipeline vandalism and enforcing domestic supply obligations as well as full commercialisation of the gas market and separation of gas from the NNPC, adding that when this is done, only then would the nation have steady and ordered procurement of additional power generation.

He added that the country had not been able to achieve the 6,000 megawatt target largely because of the unavailability of gas supply to the power plants.

The other reason for missing the generation target, according to the NERC boss, is the non-completion of the National Integrated Power Projects, NIPP. He stressed that this was a problem of project management.

“So, if we have all the NIPP plants fully completed with full and bankable gas agreements, we would be doing more than 6,000MW by now,” Amadi said.

He stated that the commission was responding to these problems with regulatory tools.

SOURCE

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