‘Global disruptions offer Nigeria leeway for gas-to-power maximisation’
With the disruptions in the global oil industry, causing energy imbalance and low demand for oil, one of the operators in the power value-chain, has urged the government to implement regulations that would aid gas utilisation for power and home use in order to aid economic growth.
In a chat with The Guardian on, “The future of oil and Nigeria’s energy dynamics,” the Chief Executive Officer, Century Power Generation Ltd., Dr. Chukwueloka Umeh, said there is no better time than now for the Federal Government to take definitive and courageous steps towards diversifying the economy.
Umeh said: “In the face of the cyclic oil prices, we must now see a Nigeria without oil and immediately start diversifying to agriculture and manufacturing. In order to do this successfully, the gas and power industries need to be unshackled and supported to encourage substantial private investments and growth’’.
According to him, despite Nigeria’s largest gas deposit, it still grapples with power generation and distribution issues notwithstanding the millions of dollars spent to revive the sector.
“Nigeria should essentially be a gas-producing country that happens to produce some oil. It is time to do things differently. We should stop the endless committee meetings, conferences and engagements.
“Pick a set of regulations, such as the ones that birthed the only project-financed power plant in Nigeria to date, Azura power, respect contracts and the rule of law to give local and foreign investors comfort, and just get it done.
“We have all the expertise we need to make the industry work, so let’s stop searching for the perfect solution elsewhere. Take whatever we have, and just make it work.”
He said investors are not ploughing the much-needed resources into gas and power projects for several reasons, including constantly changing regulations, difficulty in enforcing agreements, ease of doing business, and unrealistic tariffs.
He also urged the Government to relax its regulation enough to allow a real gas and power sector to come into existence, and actually grow in a measurable form, in partnership with the private sector.
Market forces and competition should be allowed to drive gas and power tariffs rather than allowing prices to be set by a regulator, adding that government’s role should be limited to providing appropriate regulation that will catalyse private entities to drive the much-needed diversification in Nigeria.
He cited the example of several private estates in Lagos, where steady and uninterrupted power is being supplied as a result of the cost-reflective tariffs that the residents pay, which is far less than what they would have paid to operate fuel or diesel generators with the attendant health and safety hazards.
This, according to him can be replicated on a larger scale across the country, if companies within the entire gas and power value chain are allowed to work under relaxed regulation as well as charge cost-reflective tariffs.
Commending the Federal Government’s efforts to deregulate the power sector, Umeh urged them to do more urgently to make it an investment destination, and help stem the alarming growth in the unemployment rate in Nigeria.
“We must, however, understand that the privatisation of power does not guarantee immediate availability of power because it takes at least three years to build a power plant from groundbreaking to actual generation. Private companies should be encouraged and incentivised to build power plants as well as strengthen transmission and distribution networks knowing that their investments will eventually be recovered through cost-reflective tariffs.”
One of such projects is the Century Power Okija IPP, which is projected to generate about 1500 megawatts of power when its three phases are completed.
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