Electricity grid collapse to worsen over NNPC’s cut in gas financing

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By Uthman Salami, Ariemu Ogaga and Dennis Matthew

An end may not be within sight for the spree in grid collapse, which had seen many businesses crumble, following the cut in gas financing by the Nigerian National Petroleum Company Limited.

Just last month, Nigeria’s electricity grid collapsed for a seventh record time only in 2022, causing a total blackout, affecting businesses and livelihoods across the nation.

The national grid had collapsed seven times in 2022 — with the last occurring in June. It collapsed twice in March and April 2022.

According to a report, the grid has experienced 206 collapses between 2010 and 2019.

The data from NNPC indicates that it invested N8 billion in national domestic gas development projects within the first six months of the year against a budget of N25 billion.

Meanwhile, gas infrastructure projects gulped N7.4 billion lower than N23 billion budgeted.

Overall, Nigeria’s gas infrastructure projects saw a dip of N32.4 billion in the first half of this year.

NigerianNewsDirect reports that gas production plays a key role in power generation, and lack of sufficient supply of the product may lead to incessant grid collapse.

This is even attested to by the Chairman/CEO, Nigerian Electricity Regulatory Commission, (NERC), Sanusi Garba when he said, “Many factors are responsible for system collapse in Nigeria.

“They include low generation, which can be as a result of low water supply and inadequate gas supply that lead to high fluctuation in the process.”

Speaking with Nigerian NewsDirect yesterday, an oil and gas analyst, Mr Charles Majomi said there is a looming gas supply crisis, which might cripple the supply chain.

According to him, lack of proper competitive fiscal incentives and requisite investment needed to increase production are suffering from chronic negligence.

He believed the spike in attacks and vandalism of gas infrastructure are discouraging investors from making major financial commitments.

According to him, “There is a gas supply crisis looming. As we haven’t increased our crude oil production, there has been a commensurate leveling in associated gas production.

“Equally, there has been little investment in Non Associated Gas assets, due to less than competitive fiscal incentives.

“This might worsen as IOCs exit Nigeria or, at best, are unwilling to make new investments into the sector. Another factor is the energy transition away from fossil fuels to renewable Energy.

“Clarity around availability of funding for fossil fuel projects, the heightening spate of insecurity across the country and the discovery of gas reserves across the continent are also exacerbating investor pull back

“This issue is serious and portends harsh days ahead for the Nigerian Power and Industrial sectors, unless concise and coordinated action is taken now.”

While making known his thoughts on the issue, the lead Strategist of Nigerian Workforce Strategy and Enlightenment Centre (NIWOSEC) Dr David Kayode Ehindero attributed the cause to the spate of insecurity which has limited the resources of the government.

He said the “menace of sabotage by terrorists in North Central and economic sabotage in the power sector collapse, are monsters we are facing.

“The other leg is the transmission company that is grappling with transformer challenge to wheel out the little that comes out of the hydro power plants.

“Thankfully, with the Government to government contract; Germany through Siemens Company, Nigeria is expecting high power transformation in September. Zungeru is coming on stream.

“It’s a critical phase in Nigeria. But there is hope in the horizon. With the  full commercialization, and the Siemens contract, Nigeria will eventually get it right.”

He stressed that it is inconceivable that the President “will be on record as mentioning so much money that he claimed to have sunk into the failed power sector, yet there’s no electricity anywhere in Nigeria.

“So, it is in his self-enlightened interest that he should fire the Minister of Power. This is because we have been experiencing weekly power grid collapse in the last three months since the current minister came on board.”

He urged government to separate undue politics from power market and practice.

“National grid has collapsed. All 19 power plants built by Government are now generating zero power. Fuel and diesel have become gold. The change government preached seven years later, has nothing to offer except more corruption and failure. Everything has collapsed including the economy and governance.

Dr. Ehindero noted that NNPC now commercialized is into serious business and will definitely treat any agency as customer.

Also, an energy analyst, Bala Zakka said the PIA is yet to make any impact in the oil and gas sector.

“Before the passage of the petroleum Industry bill, the impression given to Nigerians was that there was going to be an abundance of refined petroleum products, investment in gas infrastructure. But what we are seeing now is the opposite.

“We are not seeing a boost or increase in electricity. We have not seen our gas being utilized to produce ammonia, we are not seeing enough gas that will be used to generate electricity.

“The whole economy appears to be collapsing. So as of today, it is only the representative of the government in the oil and gas industry by extension, the Nigerian National Petroleum Company Limited, which has been commercialized, and being the only body that can tell us what the problem is.

“Regardless of what we say, they will come out and say this is not what they meant. So, all these things that are happening now. All the energy sectors are not doing well and strategic commercial sectors are collapsing.”

Meanwhile, to find out why the NNPC slashed gas funding, calls and text messages sent by Nigerian NewsDirect reporters to the General Manager, Group Public Affairs Division, Garba Deen have not been attended to as at the time of filing this report.