Master plan to channel 60% of gas consumption to power generation — Usman, NNPC COO Gas & Power
The Chief Operating Officer, Gas and Power, Nigerian National Petroleum Corporation (NNPC), Engineer Yusuf Usman, in this interview with the Publisher, Nigerian NewsDirect, Dr. Samuel Ibiyemi, speaks on the efforts directed by the Corporation towards making gas reliably available for power generation in the Country. He disclosed that a proposed 10-year Decade Gas Master Plan will upon kick-starting ensure about 60 per cent of gas consumption would be channeled to power generation in the Country. According to him, the Corporation is working assiduously to ensure recovery from cut in the production of crude oil according to OPEC’s recent policies on global oil prices. Among other issues of concern, he spoke on the need for consumers to pay for energy consumption, subsidy matters, and pressing investments on Gas production value chain. Excerpts:
Saying you are rationing gas sounds like an aberration and warning bell, how big is this challenge and how do we solve it?
It is like a puzzle and when you’re trying to solve a puzzle, you are in a situation where you just have to do some balancing. Our predicament today is coming from the fact that; first of all, we are producing 2.2 million barrels of oil a day before the pandemic. Immediately after the pandemic, prices plunged and the Organisation of Petroleum Exporting Countries (OPEC) had to take a decision to recover the price. Hence, they imposed a cut. This meant that Nigeria had to respect the cut. Our own OPEC cut, dropped us from 2.2 million bpd to about 1.6 million bpd. Remember, we are talking about gas — this is oil cut. Someone may wonder, how does it affect gas? The gas we have here in Nigeria is associated gas that comes from the crude oil and natural gas. So, it means when you have a cut in the production, it also affects the molecules that will come with these oil. NNPC through the leadership of our leader, Mallam Bello Kyari, was very strategic with the cut. They tried to cut those spins that will not affect gas production after a limit. Because obviously, no matter what we do, certain reduction in volume will come in. That’s what we are experiencing. This gas reduction is experienced in two sides. On the export side, between January and today, we have lost about 15 cargoes of production because of the outages of this oil. We have two types of markets. We have the market that will pay almost immediately and market struggling in terms of payment. So, each time there is a cut, If you’re an investor, you have to balance from where your revenue will come and where your revenue will not come. That is why I talked about rationalising. Even within the domestic market, the volume I have today, I have to curtail certain off-takers and make sure that we have power into homes because of the strategic demand and we also have the critical sectors working. For instance, if I cut gas for cement factories, the cement prices will go up; (but) If I give cement and un-cut power, your power generation will go down. So, it’s a delicate balance that we have to do until we are able to recover and we are doing a lot of work to be able to recover our volumes so that things will be normalize.
What do we have to do to make sure that there is a parallel line in reliance on gas so that cut or no cut, we will have enough gas for power generation?
Once you have rationing, it means you have deficiency of supply and that is why this decade of gas is timely. This is so because we are now having a conversation that will lead into a master plan that will cure all these issues that we have. And I must commend the Honourable Minister of Petroleum Resources for responding even before our recommendations to set up the committee that will develop these master plan. Between now and 10 years, the consumption of gas, 60 percent of it will go to power. You cannot talk of development without power and no country that desires to develop will be without stable power supply. Power is a necessity that we have to solve. This is for two reasons; first, it will bring about development and investment. Secondly, we have the right to power. This means we have to pay attention to power. We have to thank our government for trying assiduously to make sure that the power challenges are sorted out. We have to encourage them. And all of us have to be together to make sure that power succeed.
One potential thing around power is that you have to pay back for the services given to you. That’s one challenge we need to check. Whatever energy we discharge, we have to get the return of that money we discharged. This is because we need this money to reinvest. And also our infrastructure needs a lot of investment to cure. But we are not waiting for that. The industry is also thinking. We are looking at mini-grid, for instance, that will bring about efficiency 24/7 power supply to the customers. This means that the customers that can pay will be targeted with provision for power efficiency and making generation steady enough. That way investment will come and then we fix even those ones that are not steady. That model is one scheme that we are working to do. For those areas that are challenged, Maiduguri for instance, we are trying to take thermal power solution there. Though so many have continued to ask why not solar? The experience we have today about solar in the North is not good. This is because all the state governments have made attempts to put solar solution in their street lights. As at today, there is nobody using Solar. They have all switched to diesel generator. This means there are liabilities of solar alone and it’s not good enough. So, we have to combine it with a stable system. If you rely solely on solar solution to a whole city like Maiduguri, which is the largest city besides Kano in the North, It will be very difficult for the city to survive only on solar. Therefore, the thermal solution is the best solution in the current circumstances. You can see we are creating solutions that can sustain before the grid is expanded
What kind of investment is required in terms of figures?
The figures will come out after the decade of gas master plan is done. As someone who is experienced in the system, if you want to generate 1000megawatt of power, you need an investment of N1billion. So, if the decade of gas master plan will give us 10,000 additional megawatts of power, we will be looking at N10billion. For the gas, we have seen in the industry you need an investment from about $300 million dollars. This means for 1 bcf gas, $1 billion or there about will be needed.
So, if you need to grow the gas to about 7bcf that we have seen on the low case and high case of about 10bcf as from the current 1.8bcf we are doing, you’re looking at investment of about $15 billion dollars, to add to this one you will have about $25 billion. If you need to grow the infrastructure after the AKK pipeline project, we are talking of doing infrastructure from the East to pick up and dovetail as the primary supply to the AKK, then we will also take it up to Maiduguri — you will be looking for about $1.5 billion. Roughly, we are looking at investment that is close to $40billion. How do we attract investment of $40billion, we have to create the enabling environment for the investment to come. This is because we will be looking in the direction of foreign direct investment with combination of equity. All these things need to be defined in the Decade of Gas Master Plan this time around so that everything is taking care of. We have got to get it right this time around.
Is Nigeria ready for this?
Yes, Nigeria is ready! We have the human resources. We have the right leadership today. The leadership by Mr. President for declaring Decade of Gas. The leadership provided by the Honourable Minister of State Petroleum resources in driving the gas initiative. The focused leadership provided by the GMD of the NNPC, Mallam Mele Kolo Kyari, is the instrument you need, actually, to propel what we want to do. By the way, everything lies on human capacity. We have countries that do not have resources, they have human beings and there is nothing they don’t have today. So, today we are enjoying a focused leadership. So, the mix is there for us to move in the direction of development.
