Tougher times lie ahead for the country as the economy is expected to record negative growth as it slides into recession, due to the outbreak of the coronavirus pandemic and the crash in crude oil prices.
The global economy continues to quiver in the face of the threat posed by the novel coronavirus which has severely impacted crude oil prices. But, as key stakeholders in the Nigerian economy seek innovative ways to cushion the effect of the pandemic, it has become imperative for Electricity Distribution Companies (Discos) to improve power supply to Nigerians who were compelled to stay at home.
The need for other far-reaching measures aimed at guaranteeing uninterrupted electricity to homes, offices and industrial areas through adequate gas supply is urgently needed now to reflate the country’s fragile economy which is currently under severe threat.
The COVID-19 lockdown announced by the Federal Government on March 29, 2020, increased the need for stable gas supply to enhance power generation and distribution across the country.
According to the World Health Organisation (WHO), ‘without electricity, many life-saving interventions simply cannot be undertaken’. The fight against Covid-19, according to medical experts requires joint efforts from all stakeholders – the government, energy, oil and gas companies, businesses and individuals. Unfortunately for Nigeria, the electricity supply chain is beset with difficulties.
The Nigerian Electricity System Operator, commonly referred to as SO, put the nation’s installed generation capacity at 12,910.40MW, available capacity at 7,652.60MW, transmission wheeling capacity at 8,100MW, and the peak generation ever attained at 5,375MW. This is against an estimated peak demand forecast of 28,570.00MW.
Highlighting the importance of gas supply in the power sector, the Executive Secretary, Association of Power Generation Companies (APGC), Dr Joy Ogaji, described gas shortage as the major handicap of power generation in Nigeria. Ogaji called on the government to help improve the supply of gas to enable stable electricity generation.
In the same vein, energy experts have continued to advocate for collaborative efforts to resolve the major issues such as obsolete and insufficient infrastructure and gas shortages, among others, hampering stable power supply.
Taking a bold step
Undoubtedly, the lockdown has further exposed the nation’s precarious energy situation. Indeed, there is a yawning gap between available power and demand. Unfortunately, the 11 Discos which were charged by the government to ensure improved availability of power could not deliver because of constraints within the value chain which include gas shortages and defective grid infrastructure.
Despite the COVID-19 pandemic, some gas producers in Nigeria have sustained gas supply to power generation companies. An example of such an organisation is Accugas, a subsidiary of Savannah Energy Plc. Accugas’ performance during the lockdown illustrates the company’s commitment to domestic gas supply for the growth of the Nigerian economy.
Commenting on the company’s effort with regard to sustaining gas supply to power firms in Nigeria especially during the COVID-19 lockdown, Andrew Knott, CEO of Savannah Energy, said: ‘Power is an essential service for any country. Accugas is responsible for the provision of gas supplies to providers of over 10 per cent in Nigeria’s current power generation capacity, a responsibility we take very seriously.
In this time of global uncertainty, it has been widely reported in the local media that many companies have struggled to supply gas-for-power in recent months, which has led to significant power outages in the country. In stark contrast, Savannah, working closely with our principal customer- Niger Delta Power Holding Company (NDPHC) and the Transmission Company of Nigeria (TCN) – who we thank for their strong cooperation – has increased our gas production levels by 34 per cent since completing the acquisition of the Nigerian Assets.’
Interestingly, as a non-associated gas producer, with dedicated processing and transportation infrastructure for the domestic market, Accugas has spare capacity to increase production at short notice to meet additional customer demand.
Knott stated that Accugas plans to increase production levels further this year as it added new customers, such as First Independent Power Limited that was announced early in 2020.
‘We continue to expect to increase production levels further during the course of this year as we add new customers, such as First Independent Power Limited, who we announced earlier this year. Savannah is, and will continue to be, the partner of choice for customers seeking reliable gas-for-power in Nigeria”, he said.
The company has demonstrated its capacity to sustain gas production and ensure that the customers’ demand is adequately met. From the end of March when the lockdown commenced in Nigeria, Accugas supplied a daily average of 114mmsfd and a daily peak of 123mmscfd to its customers. The portion supplied to its grid-based power customers has enabled the generation of 470MW of electricity daily.
According to Oge Peters, Head of Commercial, ‘Savannah has been producing gas at an increasing rate throughout this crisis to our current customers and is currently speaking to other power stations about Accugas stepping in to meet their current gas volume deficiency. We’ve proven ourselves to be a very dependable source of gas supply through this crisis.’
Investment in domestic gas production
A stable power supply is impossible without investment. Savannah Energy and its subsidiaries, including Accugas, have invested over $1.2 billion in upstream non-associated gas production, midstream gas processing and transportation through its 260-kilometre pipeline network for the Nigerian market. It built a gas processing and transportation infrastructure network comprising a 200 million standard cubic feet per day (mmscfd)processing with the capacity to transport 600 mmscfd of gas.
Accugas operates the 200 mmscfd Uquo gas processing facility located in Esit Eket, Akwa Ibom State, processing gas from the Uquo and Stubb creek fields where it has license interests. The facility is the single largest privately-owned gas supply system in sub-Saharan Africa. The Uquo facility is the only source of gas for Ibom Power Plant, Ikot Abasi. The Ibom Power plant at peak load can generate 190 MW of electricity.
As part of its commitment to the gas-to-power initiative, Accugas built a 68 km, 24-inch Uquo to Creek Town gas pipeline. The pipeline currently provides a continuous flow of gas from the Uquo field to Calabar NIPP, Cross River State which has the capacity to deliver 560 MW to the national grid. When operating at full capacity, the Calabar NIPP contributes over 10 per cent to the national power generation.
Construction of the pipeline included completion of one of the longest horizontal directional drilling (HDD) river crossing projects in Africa, all done using local contractors. This project added to the economic integration of the region and assures the sustainability of the gas-to-power policy of the federal government of Nigeria.
Savannah Energy has shown that it has the capacity to raise the necessary capital to execute projects, and with the cooperation of the government, help to make the gas-to-power initiative a success in Nigeria. The company is committed to the commercialisation of gas for domestic consumption and continues to invest in infrastructure expansion to deliver gas to new customers.
Indeed, the future of Nigeria’s energy lies in its vast gas reserves. The infrastructure that is required to harness this vast resource is still not fully in place. However, a few companies, including Savannah Energy, have taken bold and brave steps to make investments to harness this resource. Such commitment should be encouraged by government and other critical stakeholders in the power sector value
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