Buhari flags off $2.8 billion gas pipeline project, biggest in Nigeria’s history

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Energy

The project will boost domestic gas consumption, power generation, and industrialisation.

President Muhammadu Buhari will be making history as he flags off the construction of the $2.8 billion 614km Ajaokuta-Kaduna-Kano (AKK) natural gas pipeline, the single biggest gas pipeline project in Nigeria’s history, by Tuesday June 30, 2020, in Ajaokuta (Kogi State) and Rigachikun (Kaduna State).

Presidential Flag-off of the Construction Phase of the #AKK Gas Pipeline Project Holds Tuesday, 30th June 2020 in Ajaokuta (Kogi St) & Rigachikun (Kaduna St). The project will boost domestic gas consumption, power generation & industrialisation. @MBuhari @FemAdesina @BashirAhmaad pic.twitter.com/3LZou37EdK
— NNPC Group (@NNPCgroup) June 27, 2020

The project, which is taking off after months of discussions in and out of the country, will boost domestic gas consumption, power generation, and industrialization.
The AKK pipeline project, which will carry gas between the southern and northern parts of the country, will eventually extend to North Africa.

The Nigerian National Petroleum Corporation (NNPC) initially announced tenders for this project in July 2013. A project proposal was submitted to the Infrastructure Concession Regulatory Commission (ICRC) in June 2017, and the Federal Executive Council subsequently granted approval in December 2017.

The 614 kilometers-long natural gas pipeline is Phase One of the Trans-Nigeria Gas Pipeline (TNGP) project, to be done on a build-and-transfer Public Private Partnership (PPP) basis. It will transport 3,500 million metric standard cubic feet per day of dehydrated gas from several gas gathering projects located in southern Nigeria.
The project will be in three phases:

The first phase is 200 kilometers long and is between Ajaokuta and Abuja, at a projected cost of $855 million.
The second phase is 193 kilometers long, between Abuja and Kaduna. It is estimated to cost $835 million.
The third phase is 221 kilometers-long, between Kaduna and Kano, at a projected cost of $1.2 billion.

It will eventually reach North Africa in subsequent phases.

The AKK gas pipeline project will create steady and guaranteed gas supply network between the Northern and Southern part of Nigeria, and enhance power generation capacity. The industrial sector will be strengthened, local usage of gas will be promoted and increased, and the country’s revenue generation boosted through export of natural gas.
Nigeria, currently ranked the 7th most endowed natural gas country in the world, sits on about 180 trillion cubic feet of natural gas deposits, which can be utilized as gas to power, gas to petrochemicals, liquefied natural gas (LNG), liquefied petroleum gas (LPG), and compressed natural gas (CNG), among others.
Over the years, Nigeria has exploited its oil resources more, to the detriment of gas, which incidentally fetches more revenue although more expensive to prospect.

One big advantage the average Nigerian can look forward to is the evolution of compressed natural gas (CNG), which is still at pilot stage in the country.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team.
You may contact him via his email- [email protected]

Energy

The absence of a market reflective tariff had continued to have a negative impact on the sector.

Published 6 hours agoon June 27, 2020

Electricity Distribution Companies (DisCos) have pleaded with the Federal Government to intervene in gas pricing for power generation, as this has been a major challenge in the power sector. This is to help ensure effective and efficient delivery of service to consumers.
This was disclosed in a statement by the Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors (ANED), Sunday Oduntan, on Saturday, June 27, 2020, in Abuja.

He pointed out that the cost of gas was a major determinant of the electricity tariff in Nigeria, adding that it was high time the Federal Government found a way to help bring down the price of gas in the interest of the sustainability of the power sector.
READ MORE: Ban on generators: Throwing the baby with the bath water?
Oduntan stated, “Most of Nigeria’s power generating plants are thermal plants. They use gas as their fuel and as long as the price of gas is high, the cost of generation and the eventual tariff to the end user will also be high.”

He said, “At present, the energy generation mix is around 80% thermal and 20% hydro. More so, the cost of gas is also affected by fluctuations in Foreign Exchange (Forex). So while the cost of gas and generation will rise due to forex fluctuations, the tariff is fixed in Naira and may not account for this difference. Especially because of the absence of a commitment to adhering to periodic tariff reviews.”
It was noted that the absence of a market reflective tariff had continued to have a negative impact on the sector and had been a major contributor to the N1.5 trillion liquidity gap in the sector.

He said that a new performance driven increased tariff structure would be implemented with effect from July 1, 2020, as a step towards narrowing the liquidity gap.

READ MORE: Minister of Power states the impact of COVID-19 on power sector
Nairametrics had reported that the National Electricity Regulatory Commission (NERC), had postponed the take-off of the new electricity tariff by the DisCos, which was supposed to commence on April 1, 2020.
This was due to claims that 60% of electricity customers were unmetered nationwide, the coronavirus pandemic which has significantly impacted the ability of the DisCos to meter customers, need for network and infrastructure upgrades by the DisCos and Transmission Company of Nigeria, and so on.

Energy

The review is in accordance with regulatory policies to reflect current macroeconomic realities of the country.

Published 13 hours agoon June 27, 2020

Ikeja Electric, Eko Electricity and other Distribution Companies have announced that their customers would pay more for power consumed from July 1, 2020, as the DisCos are set to increase their tariff in line with  regulatory policies aimed at improving service delivery.
This was disclosed by the duo in statements published via their Twitter handles on Friday.

In the statement, they explained that the review is in accordance with regulatory policies that permits a periodic tariff review to reflect current macroeconomic realities of the country.
It stated, “The objective is to ensure a service reflective tariff that will enable our companies the required Performance Improvement Plan for Electricity Distribution Companies in Nigeria and achieve financial and fiscal sustainability in the Nigerian power sector.
“The tariff review becomes imperative considering the need to improve quality service to our esteemed customers. The new tariff will be strictly service reflective as customers are expected to pay tariff based on the electricity supply available to them.

“We understand the inconveniences this may pose to our customers especially during the Coronavirus pandemic period but wish to reiterate this was done to improve the quality of service provided by DisCos.”

PUBLIC NOTICE
This is to inform our esteemed customers of the Upward Review of the Electricity Tariff which takes effect from July 1, 2020. #ekoelectricity#empoweringqualityoflives#tariff pic.twitter.com/l8NztEd8oU
— Eko Electricity Distribution Company (@EKEDP) June 26, 2020

Meanwhile, Nairametrics had reported in last January that the new electricity tariffs would be introduced by the Nigerian Electricity Regulatory Commission (NERC) effective from April 1, 2020.

Why NERC wants to increase tariff: The increase in price is a follow-up to the charges set in 2015. The tariff increase would cater for revenue shortfalls in the sector. The order was issued to the 11 DisCos on December 31, 2019.
The Minister of Power, Saleh Mamman, had said in a Nairametrics report that the hike was inevitable due to the rising cost of electricity generation in Nigeria. According to him, improvement in electricity supply necessitated the need to increase the electricity tariffs.
Mamma said electricity supply was being affected by cost-ineffective tariff and that it was a drawback on the operation of the energy distributors. So, if electricity supply was to improve, there’s a need for procurement of needed equipment that would reflect on the electricity tariff.

Energy

Chunk of monthly loss of over N30 billion incurred from the large number of customers engaged in energy theft.

Published 1 day agoon June 26, 2020

The Electricity Distribution Companies (DisCos) have decried a monthly loss of over N30 billion revenue to electricity theft, and called for appropriate legislation to check the act.
According to a statement issued by Mr Sunday Oduntan,  Executive Secretary, Research and Advocacy,  Association of Nigerian Electricity Distributors (ANED), the losses results from the large number of customers, engaged in energy theft, meter bypass, vandalism and unpaid electricity bills.

Oduntan explained that over 40% of electricity consumers do not pay their electricity bills, as they indulge in illegal connection of electricity.
READ ALSO: DisCos respond to NERC’s threat to revoke operators’ licenses
According to NAN, DisCo operators attributed the challenges  to form the major part of the DisCos’ Aggregate Technical, Commercial and Collection (ATC&C) losses, and called for effective legislation against them.

“There is need for effective legislation by the National Assembly to checkmate energy theft in the country as the practice is costing the power sector billions of naira monthly.
“The power sector is currently grappling with a liquidity shortfall of over N1.5 trillion occasioned by a combination of adverse conditions among which is the high rate of energy theft,” he said.

Oduntan said that in the presentation by the Discos during, they showed an instance where out of N27.7 billion that was billed for energy consumed in 2019 by unmetered customers, only N5.2 billion was recovered.

(READ MORE:DisCos earn N473 billion in 2019, reveal reason for metering gap)
With each Disco losing an approximate of N3 billion monthly, the total loss from 11 Discos puts the loss at over N33 billion, he explained.
“The sector cannot continue like this. There is no sector in the world where criminal acts affecting critical sectors are not given special treatment. Until people know that there are penalties for the specific crime of energy theft, this is not going to stop, “Oduntan said.

To reduce these incidences and ensure greater transparency, the companies are working hard to ensure availability of meters. However, this move has to be complemented by specific legislation because of incidences of meter bypass.
“There is a mindset that stealing electricity is okay and that needs to be corrected through the enactment of appropriate legislation,” Oduntan said.
The DisCos were collaborating with security agencies and the judiciary toward enforcing actions that could deter energy theft.

 

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