Page 10 - AfrOil Week 29 2021

AfrOil POLICY AfrOil

“One of the greatest things that has happened, development work forward, he noted.
which is in the PIB, is the idea of ‘drill or drop.’ The “drill-or-drop” provisions of the PIB
We have had a history. Now, a lot of people get will help prevent a repeat of this problem, he
these licences or win these bids then go sell it off. declared. This, in turn, will help Nigeria’s oil and
They sell it off to those who lack capacity, and the gas industry focus on other urgent matters, he
whole thing stalls and we suffer as a country,” he said.
remarked. “We have two problems in the sector right
This is what happened to some of the site now: We have declining take from the barrel,
assigned to investors in Nigeria’s first licensing and we have declining returns from crude,” Adi-
round for marginal field, he said. The Depart- gun said. These two challenges have effectively
ment of Petroleum Resources (DPR) recently reduced the country’s oil production capacity,
revoked the licences issued for several of these he added. “Now we are limited to 1.45mn barrels
fields because it determined that the owners per day [bpd] by OPEC quota and [are] unable
were not doing enough to move exploration and to ramp up to 2.1mn bpd,” he commented. ™

APGC calls on NNPC to supply

natural gas to Nigerian gencos

NIGERIA THE Association of Power Generation Compa- Cs) issued by a commercial bank, she said. So
nies (APGC), a Nigerian industry association, far, though, NBET has not provided the neces-
has urged state-owned Nigerian National Petro- sary L/Cs since 2013.
leum Corp. (NNPC) to assume responsibility “[The] way the power sector is designed is
for supplying fuel to natural-gas fired thermal such that a value chain is as strong as its weakest
power plants (TPPs). link. So it is designed such that we have a bulk
Joy Ogaji, APGC’s executive secretary, said at trader, NBET, as a securitisation agent or an
a recent industry conference that the country’s obligor or a buffer for the gencos,” she said. “So
power generation companies, known as gencos, NBET is expected to provide a securitisation
had not been able to ramp up electricity pro- in the form of a bankable commercial letter of
duction as rapidly as anticipated since they were credit from a commercial bank to the gencos,
privatised in 2013. [which] in turn will now post it to the gas suppli-
One of the factors underlying the problem is ers. As you all know, we have not received that,
that TPPs have not been able to secure gas sup- and this is why we are not able to post it to the
plies that match their capacity, she said. Citing gas suppliers.”
data from the National Control Centre (NCC), She also argued that problems with gas sup-
which is responsible for grid operations, moni- plies had hampered efforts to implement the
toring and control of Nigeria’s transmission grid, government’s plans for expanding gas-fired
she noted gas-fired TPPs had only received 13% power generation. The Nigerian Electricity
of the fuel they needed to operate at their full Regulatory Commission (NERC) has issued 160
projected capacity of 28,000 MW. operating licences to power producers, but so far
She called on NNPC to cover the deficit, say- only 25 of these are operational, she said. Most
ing it was in a position to meet this need since it of these idle licences are held by TPP operators
had a 50% equity stake in the joint ventures that that might have added up to 30,000 MW of addi-
are supposed to supply the gas to the power sta- tional generating capacity, she added. ™
tions. “My proposition is [that] we want NNPC,
[which] has 50% of the JVs, to take up the gas
obligation of the generation companies, and we
will generate as [many] megawatts as you want,”
she remarked.
Currently, Ogaji said, the gencos often have
a difficult time securing adequate gas because
they cannot meet suppliers’ demands for “secu-
ritisation” – that is, some form of security –
before committing to a delivery deal.
Prior to privatisation, TPPs expected to
receive such security from Nigeria Bulk Electric-
ity Trader (NBET), the manager and adminis-
trator of the domestic electric power pool, in the
form of bankable commercial letters of credit (L/ Nigeria’s gas-fired TPPs need more fuel (Image: Siemens Energy)

P10 www. NEWSBASE .com Week 29 21•July•2021