Outage as Gas-to-power Pact Stalls

THE recent gas-to-power purchasing agreement launched with fanfare last year by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, is under threat as power companies have allegedly refused to pay for gas supplied to them.

The Guardian gathered in Abuja yesterday that efforts by the Minister of Power, Prof Barth Nnaji, to resolve the impasse had failed thus far.

An industry operator told The Guardian: “The gas–to-power agreement which was signed between gas suppliers and power companies has not yielded the desired result. Now, power companies have refused to pay for the gas that was supplied to them and the gas companies have refused to supply again. In fact, power companies are demanding that the gas is supplied to them free of charge.

“The Minister of Power, Prof Barth Nnaji is aware of the development. This logjam may worsen the already unstable power supply in the country. Indeed, the epileptic power supply in recent weeks is as a result of unstable gas supply to the power stations.”

Meanwhile, Alison-Madueke has declared a “12-month Gas Supply Emergency Plan” designed to correct the misalignment in the nation’s gas-to-power aspirations.

She stated that the delivery of gas to engender sufficient, uninterrupted supply to existing and new thermal generating plants has been “a special focus area of the Ministry of Petroleum Resources.”

She also disclosed that President Goodluck Ebele Jonathan has approved the appointment of Mr. Kunle Allen as Chief Executive Officer, Gas Aggregation Company of Nigeria (GACN).

The minister added: “Up till recent times, gas supply to power plants outstripped demand to the extent that significant volumes of available gas remained unutilised on a daily basis. However, a close analysis of the supply chain has revealed that over the last 10 years or so, there has been significant misalignment between power projects and gas supply sources.”

Alison-Madueke stated in Abuja yesterday that even with the National Integrated Power Projects (NIPP) coming on stream, “there are indications of increasing pressure to meet up with the quantity of gas required as fuel to power the plants and at the correct locations.”

She added: “To quickly and holistically address the misalignment, I am immediately deploying a 12-month ‘Domestic Gas Supply Emergency Plan.’ During this period, the Ministry of Petroleum Resources, together with the NNPC and the gas producing companies, will deploy extraordinary measures to accelerate opportunities for quick wins in order to ameliorate the potential gap between gas demand and supply.

“In my capacity as the Minister of Petroleum Resources, and with the approval of Mr. President and on the strength of the extraordinary situations the country faces, a decision has been taken to strengthen the capacity, as well as the roles of the Gas Aggregation Company of Nigeria Limited (GACN), which is a DPR-regulated company of the Ministry of Petroleum Resources with responsibility for gas sourcing and allocation, as well as Operator of the commercial framework of the Gas Master Plan.”

Alison- Madueke stressed that in addition to its traditional gas demand management role, which included processing requests from gas buyers, managing gas supply/demand allocation, as well as facilitating Gas Supply Aggregation Agreement (GSAA) negotiations, the GACN would henceforth be accountable for the following:

•Identifying gas sources/ suppliers and designing incentives for accelerated domestic gas delivery;

•Driving the implementation of the findings of the recently constituted Emergency Gas Committee with emphasis on short and medium-term gas supply, and on a sustained basis;

•Ensuring integration as well as alignment between gas demand and supply to ensure robustness of longer term gas supply to power and provide implicit data to enable the DPR to be more proactive in compelling suppliers to meet Domestic gas Supply Obligations.
Outage as Gas-to-power Pact Stalls