By Yemie Adeoye
IN an effort aimed at ensuring uninterrupted supply of gas to the thermal power stations across the country, the federal government has unfolded a two-point agenda for the gas sector to meet the administration’s aspiration of delivering enough gas to the power plants to ensure adequate power supply in the country.

The Minister of Petroleum Resources, Mrs Diezani Alison-Madueke in a side chat with Dr. David Ige, Snr. Technical Assistant to the GMD,NNPC on Gas during the Ministerial Press briefing on Domestic Gas in Abuja recently

The Minister of Petroleum Resources, Mrs Dizani Alison-Madueke, who unfolded the agenda at a press briefing in Abuja recently, said that the focus is to ensure expeditious implementation of the Nigerian Gas Master Plan to attain clear-cut short-term and some medium term objectives as well as position Nigeria as a major player in the global gas market by securing the Final Investment Decision, FID, of the Brass Liquefied Natural Gas by the end of 2010 while refocusing on the Olokola Liquefied Natural Gas project.

She listed the objectives of the two-pronged action to include sustainable supply of gas to the power sector, implementation of a sustainable commercial framework for domestic gas through a re view of gas pricing to encourage investors by enabling them secure bankable agreements and the transformation of Nigeria into a re gional hub for  gas-based industries by signing up world class investors in the petrochemicals, methanol and fertilizers sectors.

The Minister revealed that already a major milestone has been achieved in the area of gas to power pricing review as she has secured the President’s approval for an increase that would boost investment.

Explaining the newly approved gas pricing regime, the Minister said currently the price of gas to power is two cents ($0.2) per Million Metric British Thermal Unit (MMBTU) of gas, and that by the end of the year, the price of gas would increase to $1/mmbtu.

The price would graduate to $1.50/mmbtu by 2011 and $2/mmbtu by the end of 2013, adding that beyond 2014, it would increase based on inflation rate.

“This effort will move the supply to the power sector (and other sectors) from the current loose, best endeavour basis to one anchored on strict commercial agreements. This will move the process of gas supply and purchase in Nigeria to world class levels.

The template agreements have been finalised and I am reliably informed that negotiations of the fine parts of this agreement are ongoing between PHCN and the supplier companies. I expect that within the next four to six weeks, we shall be in a position to execute these landmark agreements between the power sector and the gas suppliers,” Alison-Madueke explained.

The Minister further disclosed that in a bid to concretise the commercial framework for domestic gas, a programme is currently being worked out with the World Bank to provide security for gas revenues sold to the power sector in order to ensure that gas suppliers do not lose money for supplying gas to the power sector.

“With the World Bank Partial Risk Guarantee that was initiated in the Gas Master Plan, the problem of lack of confidence on the part of gas suppliers that when they supply gas they will not get paid is now permanently fixed. The World Bank mission is currently on ground in Nigeria working with our team on the gas agreements and perfecting all other necessary agreements in respect of the Partial Risk Guarantee,” she assured.

Giving an update of the gas to power supply situation in the country, Alison-Madueke said gas supply was at all-time high because all the gas plants in the country are “operating at or very close to full capacity” and repairs on all critical pipelines have been completed.

“Current supply on the western system averages about 700mmcf/d, enough to power virtually all operational power plants on that axis. In fact, there is a situation of slight excess supply capacity. In the East, both Afam VI and Agip’s Okpai IPP are generating about 900MW with a planned addition of about 200MW very shortly.