By Michael Eboh
Managing Director of Total Exploration and Production Nigeria Limited, Mr. Nicolas Terraz, has bemoaned the fact that over 58 per cent of electricity produced in Nigeria is monetised.
Terraz, who was represented by the Executive Director, Asset Management and New Energies, Total Nigeria, Mr. Patrick Olinma, at a panel session at the just concluded Nigerian Gas Association (NGA), International Conference and Exhibition in Abuja, argued that the solution to the problems in the gas and electricity sectors go beyond infrastructure development.
He said: “You cannot talk about domestic gas in Nigeria without talking about the power sector. If you look at the Aggregate Technical, Commercial and Collection losses, it is over 58 per cent. It means, in effect, that the power that is produced, which is less than 5,000 megawatts, not up to 50 per cent of it is monetised.
“If you do not monetise the power that is produced, how are going to pay, let alone the issue of cost-reflective tariff? Even at today’s tariff, you are not monetising up to 50 per cent of the power that is produced, how do you want to pay for gas and pay for all the supporting infrastructure. I think beyond developing additional infrastructure, we need to look at even the operations of the power plants. I was looking at the NERC report, most of the plants are running at 20 per cent of their installed capacity. This has nothing to do with infrastructure.”
He maintained that efforts should be made to truly interrogate take a deeper look at some of these challenges we face, noting that it goes beyond developing new infrastructure.
According to him, no matter how much infrastructure is put into the system, it is not a silver bullet; it would not move things forward.
He said: “Security of off-take payments, having a bankable Gas Supply Agreement, GSA, in the Nigerian context, with all the guarantees, does not really mean much. We built a multi-million dollars pipeline, to deliver gas to Alaoji, up to 300 million standard cubic feet, SCF. Today, we are not even supplying up to 10 per cent of the 300 million SCF in that pipeline and yet we have a bankable GSA, with the Alaoji power plant.”
“I don’t know how many gas suppliers have been able to enforce ‘take or pay’ that you have in these gas contracts, and indeed around the world I don’t know how many suppliers have been successful to enforce ‘take or pay.'”
He pinpointed security of gas pipelines as one of the crucial areas that requires attention if the Nigerian energy, oil and gas sector must achieve its full potential.
Terraz also suggested placing emphasis on solving the myriad issues affecting the development of the gas sector over fixating on building new infrastructure.
He added that that domestic gas supply challenges had contributed to problems in the power sector, while he noted that the industry should be focused on hindrances which if not dealt with, could impede the development of the sector.
He said: “For instance, we and several other independent companies use the Trans-Niger Pipeline (TNP), which is a very crucial pipeline, to evacuate gas.
“When we make our plans we consider 25 per cent non-operational outage. This has nothing to do with maintenance or operational issues, but with security, vandalism and all sorts of things going on in the Niger Delta. I am talking about an existing pipeline not a new infrastructure.”