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6,000MW target in 2010: Matters arising

It is no longer news that the Federal Government failed on its promise
to achieve the target of 6,000mega watts (MW) of electricity generation last December, despite the huge amount invested in the sector, as the current generating capacity falls below 3700MW. Now government has come up with another target of 6,000MW in 2010 with a different approach. In this analysis, Udeme Clement , takes a look at the issues in the sector.

*The Federal Government has failed on its promise to achieve the target of 6,000 Mega Watts (MW) of electricity generation last December

The new approach- This time, government has decided to adopt a new approach in solving the power crisis that has taken its toll on every sector of the economy.

The initiative is to bring in major players and relevant stakeholders in the oil and gas sector, to use 1.4billion standard cubit feet of gas per day (SCFD) to generate 4,750mega watts (MW) of electricity from thermal plants, with a view to realising 6,000MW by December 2010.

In the new setting, Nigerian National Petroleum Corporation (NNPC) and major oil producing firms are to create a synergy in their contributions toward the realisation of this target. This implies that Shell Petroleum Development Company would contribute 780 million SCFD, Chevron Nigeria Limited, 320 million SCFD, Nigeria Agip Oil Company, 110million SCFD, Pan Ocean , 110 million and Total, 60 million, in a bid to realise this objective.

Sunday Vanguard gathered that NNPC is currently deliberating with major stakeholders to set up a special committee, known as, War Room, to facilitate the achievement of the target, with a new management approach that would ensure efficiency at all levels.
The Executive Director, Operations, Power Holder Company of Nigeria (PHCN), Abuja , Mr. John Ayodele, said the initiative by government to readdress the 6,000 mega watts (MW) target was a welcome development and a step in the right direction.

He added, “We are so optimistic that government would achieve more than 6,000MW in 2010. We want everyone to know that realising 6,000 is not a problem anymore, but the major thing is to sensitise the people to start opening small scale industries that would create jobs for the citizens and generate revenue for the economy, to enhance development.
“The present government is totally committed to the issue of power and utilise available resources appropriately to ensure that this target is realised.
Increase/Decrease in capacity – Accordingly, the sector witnessed just a slight increase in the level of outputs from the previous 3,500MW of electricity generation to about 3,700 MW, in December 2009, which has declined below 3,400MW at present.

The 2009 economic year also brought more investments in the sector through the release of N59billion, which President Umar Yar’Adua approved in the last quarter.  The initiative was to enhance execution of major projects in the sector yet the year ended without tangible achievement.

Sunday Vanguard gathered that the N59billion was the balance of the appropriation for power sector budget of 2008, from the total of N115billion previously released. Yar’ Adua, while giving the approval, stated that the money would not solve all the problems associated with power generation in the country as the sector needed more funding, but he assured Nigerians that the money would enhance development in the short run expectation to achieve 6,000MW capacity, that was not realisable at the end of 2009.
Shortage of gas – Accordingly, shortage of gas, supply was identified as the major problem militating against electricity generation, and transmission in the country.  In the last administration, power plants were built in strategic locations in the country, but lack of sufficient gas supply to power those plants made it difficult for electricity generation to be realised.

For instance, gas, which is the major ingredient in power generation, was in short supply.  At the moment, there are power plants everywhere in the country, but no gas to power them.  Also, there was lack of proper co-ordination between gas producing companies and the Power Holding Company of Nigeria (PHCN) to ensure adequate supply of gas, and that also brought about erratic supply of electricity in the country.

Master Plan- The gas master plan, which the Federal Government approved in 2008 to ensure availability of gas supply for generation, transmission and distribution of electricity to meet demands for both domestic and industrial consumption in the country could not bring about the realisation of 6,000MW target. Experts are of the opinion that the gas master plan as well as the gas pricing policy must be properly implemented to boost development in the sector. The initiative should favour domestic users in order to make the domestic gas affordable to the consumers, and to bring economic gains to the industry and the economy at large, still, the target could not be realised.

Prior to the approval of the gas pricing policy, there was no real pricing formula in the gas sub-sector, and that made everything worked without a synergy in the system. The new policy was designed to boost industrial development in the country by ensuring competitive gas prices for all gas consumers, such that Nigeria ’s gas could be supplied at the lowest commercially sustainable prices to the strategic domestic sector, which provides electricity for domestic and industrial consumption.

The effect on the real sector- Aside from domestic consumption, erratic power supply has also affected the real sector of the economy negatively as over 55 per cent of manufacturers closed shop in 2009.

The executive secretary, Manufacturers Association of Nigeria (MAN), Ikeja branch, Mr. Segun Ajayi- Kadir said. number of MAN’s members currently out of business are mostly textile manufacturers who could not cope with epileptic power supply and lack of other infrastructures which brought about reduced production capacity and sudden closure.


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