Legal issues, global energy transition, others may impede on energy

Tue Oct 29th, 2019 - Abuja (FCT)

By Ediri Ejoh and Kehinde Adeyanju

As Nigerians continues to mourn over the country’s epileptic sector as it affects businesses as well as economy, more troublesome crisis ranging from legacy debts crisis, global shift in the energy mix and other challenges may compound the woes for the industry.

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Industry experts have raised the alarm on full deregulation, clear policy, transparency and adequate checks and balances on the operations in the power sector to ensure efficiency which will drive development to the sector and Nigeria’s economy.

Stakeholders who spoke recently at the just concluded Energy Sustainability Conference organized by the Energy Institute, Nigeria, EI, called on the federal government to as a matter of urgency rescue the sector to avoid dearth in the nearest future.

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At a panel session on financing the energy sector, Head, Commercial and Business Development, Asharami Energy, upstream arm of Sahara Group, Mariah Lucciano-Gabriel, lamented huge legacy issues besetting the sector.

She said: “One of the things that beset Nigeria’s power is that the country has had legacy issues on power which is close to N1.7 trillion in deficit, how do you realise money across the entire value chain? This ranges from the Generating Companies, GENCOs, to gas suppliers and through offtake.”

She explained that major issue bedevilling the energy sector is institutional knowledge, adding that “For several decades, the Nigerian financial space is structured primarily to support upstream, midstream and downstream oil and gas including the power space.

“But since there is a major risk opportunity for global energy transition, is there any institutional knowledge to effectively mobilize capital into newer funds for energy? For example, not many people are aware that solar energy is cheap compared to conventional energy sources.

“Even though many projects may capex heavy in the alternative energy space over a period of time they have low operating expenditure.”

Lucciano-Gabriel enlightened operators that one of the ways of overcoming challenges is to grow financial and technical capacity in house.

Also speaking, Chief Financial Officer, CFO, AMNI International Petroleum Development Company Limited, Mr. Uzoma Nwankwo, believed that funding energy either conventional or non-conventional renewable requires money, as starting point for renewable is quite expensive including maintenance cost.

He explained that investors borrowed money from banks to purchase Distribution Companies in Nigeria, DISCOs, and they are indebted while some are insolvent.

“This has made banks to be scared, the experience they had with the energy sector is not making them to fund other sectors hence they withdrew from funding alternative power.

“Indeed, it is a challenge for energy sector, the only way out is persistency, diligence with hard work.”

He noted that if the country can provide energy using gas it will be the most accessible way to power.

“Gas has not been exploited to the point where it could deliver power to the country up to 180,000 Megawatts (MW) given the Nigerian population but 25,000 MW is what the federal government is projecting. This means there is a lot of gaps and whether renewables are enough to fill this gap or overtake it, it is not yet known.

He stated that speculations about renewables as alternative to fossil fuels, with local and international grants given out, “it is still a fact that fossil fuel is here to stay at least for the next 50 years or more.”

On power sectors’ privatization, he explained that the power privatization has not succeeded due to issues bothering it.

“A power plant cannot be built without taking into consideration how they will be powered through gas. Many Independent Power Plants (IPPs) that were built, none of them has gas. The country does the right thing in the wrong way.”

However, other experts are of the opinion that, to resolve some of these lingering issues in the energy sector, the government should get it acts together to do the right thing while people should hold them accountable in order to move the country forward.

FG determined to revive power sector

In another development, the Senior Special Assistant to President Muhammadu Buhari on Public Affairs, Ajuri Ngelale, has urged Nigerians to expect better performance from the current administration as efforts are in place to revive the power sector.

Ngelale, who is also a member of the Presidential Power Initiative, said the President had engaged processes to ensure that the transformation in Nigeria’s power sector is visible to all by 2021.

“Nigerians have got the right to be sceptical, they were told that we would be generating 40,000 megawatts by 2020 and all of that, and that has not happened. So we understand that if the government says something about the power sector Nigerians are very sceptical, but we are asking our people to pay attention to what is happening right now.

“Earlier this year around July, the Federal Government signed an MoU with Siemens a global engineering giant based in Germany.

“As a result of the meeting with Angela Merkel and President Muhammadu Buhari in the statehouse, they agreed that the German Government would step in and assist us with the development of our power sector.

“So what we are telling Nigerians and we are saying it openly for them to hold us to account, is that by Dec. 2021 we would have increased our distribution capacity from 3000 megawatts to about 7000 megawatts.”

“Which means Nigerians will see more than double the capacity they have been seeing over the last several decades within the next two years”.

Challenges in the sector

Ngelale said due to some challenges in the sector, the Nigerian government is currently focused on distribution. “Mr President has said we need to deal with distribution before we touch anything else let Nigerians be seeing the power that we are already generating.

“While that is going on as we get towards 2021, we are also building the Ajaokuta to Kaduna to Kano Gas Pipeline but along that pipeline, there is going to be three power plants. One in Abuja, Kaduna and Kano; each power plant is going to generate 1,350 megawatts; if you put all that together that is of course more than 4000 megawatts of new power.

“And that is separate from the Mambilla Hydro Power Project that’s about 3500 megawatts that we are currently at the end of negotiations with Chinese Government”. Ngelale while expressing Governments excitement at the project reiterated that by 2023, power distribution would have risen to 11,000 megawatts.

“So, 7000 megawatts distribution by 2021 and 11,000 generations, transmission and distribution by 2023 under this Siemens Deal is something we are very excited about,” he added.




source: Vanguard