Nigeria is ready for multi-billion dollars investment in power, gas
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:
CONTINUE FROM WEDNESDAY
Is Nigeria ready for $40 billion investment in gas and 10,000 MW power generation?
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 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 you 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.
What is the situation for people who want to invest in domestic supply?
At the moment, there are prices. The policy allows a yearly review of this price. We have finished our work. There is a little bit of governance that is required for the prices to be announced. And the prices are good enough for the investors because what we have done is to look at the entire value chain, and look at how to ensure appropriate rate of return on investment to the investors which is typically what you see in this sector. Whatever the prices are will be announced. Anything short of this, will mean the investors have to subsidize to go into that scheme. We are trying to grow the domestic market, and we want to do it right so that we won’t have to start with subsidy.
Why are we not tapping into Non-Associated Gas and how are we not capturing some of these excess gas into OB3 pipeline?
I didn’t wait to finish with the OB3 before I commissioned the section. That’s number one. Secondly, you’re also enabling independent stakeholders that don’t have the capacity to do gas gathering pipelines because their production is small in number. You help them to go to the market. Potentially, as soon as we complete the infrastructure, we will see the flare going down. Then the remaining flare will be taken care of by the flare commercialization program. It is better than investing huge amounts of money in gathering. We are doing a mix of both NAG and AG. So we took out the AG and then used the NAG as a security of supply. But today, we are almost balanced in terms of AG and NAG.
You mentioned a $40 billion fund requirement. How are we going to fund it considering the global market and the situation in the international community and Nigeria?
These are preliminary numbers like I said. Once the Nigeria’s decade gas master plan is developed, we will see the real numbers of what we want to achieve in the next 10years. We have been doing a couple of things these days. But what we realised now is that if you inject a little bit of equity, and start your project, you have completely de-risked the investment. By the time you announce the investment, a lot of people will come. For instance, we have the Hausa-North Gas Processing Company which has recently signed up a financing of $260 million. We have structured it that way. What we did first was to put in our own equity. By the time we announce investment to complete the project, we are able to broker this investment and the important thing is the money came from five Nigerian Banks and about two African Banks. So, we have structured this financing in Africa and within Nigeria. It means you can structure a scheme where you make the initial investment and then you go out to look for debts. The PIB is also contented with that. That is why they tried to provide for infrastructures funding where we can use that fund to make for initial investment and then we can come through debts.
There was a report on the export of export of gas outside the country, will that be enough for power?
This means that our reserve is increasing. It means we have the molecules. All we need to do is to bring the molecules into use. We have more than enough gas to do our projects and also export the gas to earn revenue. The decade for gas means gas for the development of Nigeria and for revenue. With this, we will get through exports. We have seen opportunities within Africa to be able to market some of these huge amounts of gas we have. One example is Equitorial Guinea; they have a Liquefied Natural Gas (LNG) plant that is drying up. We have the asset that we can use to refill it. We are also embarking on Gas to Morocco. This gas to Morocco all started from Presidential Fertilizers initiative where both presidents encourage a collaborative MoU that will see about taking prospects from Morocco and using our own Urea to create the fertilizer that we have. And this is why you see positive improvement in Agriculture especially rice production. The long term view of this MoU is to do a pipeline from Nigeria all the way to Morocco. It will be taking the West African pipeline route. This is because it will pick up a lot of African countries. Some of these African countries have gas they will inject into the pipelines while some don’t have, but can take the gas for development. If they cannot pay for the gas, they can get the electricity. It is this kind of vision that is required to lift Africa from the picture that you saw which is currently in the dark into light. It is a wonderful initiative to do. And you can see what gas will do.
How soon is that?
Today, we have finished visibility. We are just launching the Final Investment Decision (FID)for the project.
