The Nigerian National Petroleum Corporation (NNPC) says it has gas volume that can sustain 5,000MW on daily basis but there are fears that the attitude of the DISCOs is creating problems as a result of their rejection of the supply from the Transmission Company of Nigeria.
According to the Maikanti Baru, Group Managing Director, NNPC, who spoke on the sideline of the Nigerian Gas Association conference in Abuja, said that gas supply to power plants has grown from 380mmscfd in 2010 to 850mmscfd in 2016 adding that the NNPC can sustain generation of about 5,000MW of thermal energy today.
However, stakeholders in the gas-to-power value chain have expressed concern over the low performance of the power sector since the privatization exercise. They attributed this low performance to lack of strong regulatory authority which is not able to enforce the contractual agreements entered into by stakeholders in the industry.
Joseph Makoju, former Managing director of defunct NEPA, while commenting on the poor performance of the power sector , however stated that there is no going back on the privatization of the power sector.
“Nobody is putting this on the table now. What we are saying is this; even though we are experiencing some disappointment in the power sector, what we should do is to go back to drawing table. I don’t think there is any fear that the power companies should go back to government ownership. At any rate there are still some power plants that are doing well”, said Makoju.
The bottom line is that performance is below expectations and this is a serious concern to everybody. Makoju, however, commended the Transmission Company of Nigeria for making great stride, adding that it has capacity on daily basis to wheel what is being produced but the power is being rejected at the receiving end (DISCOs).
The fear of those who reject it is that people may not pay for the power. This makes the system frequency high so they are constantly under tension and this has often led to system collapse. If there is low supply it leads to system collapse and if there is high tension it also would lead to system collapse. The only problem the transmission has now is that it does not get money to maintain its system.
Austin Avuru, Manaing Director, Seplat Petroleum Development Company, gave reasons why the DISCOs are not able to collect enough revenue from their customers.
“When the privatization was initially carried out, most of the companies were remitting revenue to the tune of about 80 per cent but when some of the DISCOs from certain part of the country began to complain that they cannot remit more that 20 percent of the revenue expected of them, those other ones that were active in payment began to renege and that was the beginning of crisis of short fall in revenue collection”, said Avuru.
The buoyant DISCOs could not see any reason why they were remitting 80 percent while others are remitting 20 percent.
For the sector realize the kind of revenue that is required of it, there must be a strong regulator that can enforce the sanctity of contracts entered into by the parties in the sector.
“We need strong a regulation; that is how privatized sectors can work. With a strong regulation you can’t do what you like to do but what the contract says”, the Seplat CEO said.
Lamenting on the state of the power sector, Saidu Mohammed, Chief Operating Officer/ Group Executive Director, Gas and Power at NNPC, said that neither the government nor NNPC has received any money from the operators of Okpai Power Plant since 2005
This is the price you have to pay if you engaged in the Joint Venture model that brought to life establishment of Okpai Power Plant.
“NNPC is not being paid for its gas supply and it is also not getting money for power supplied to customers because the power is not being paid for as the companies claim customers do not pay for power supply”, Mohammed said.
He added that NNPC had advised at the beginning of the privatization exercise of the power sector, that before anything is done in the power sector, they should ensure that the distribution subsector of the power sector is made to be efficient first “because we Know that is where the problem will come”.
In spite of all the issues associated with non-collection of revenue from customer, Nigerian Gas Company has consistently supplied gas to the power companies but wondered why the privatization exercise is not working