The
Managing Director of Chevron Nigeria,Mr. Clay Neff, has said that the power
sector in Nigeria gas invoice arrears increased to N100bn from N40bn as of September
2014
He stressed the need to
immediately implement the gas supply aggregation agreements and put a stop to
the build-up of arrears under the legacy Nigeria Gas Company contracts regime.
Neff spoke at the Nigerian
Gas Association’s Business Forum 2016 in Lagos through the Managing Director,
Shell Petroleum Development Company and Country Chair, Shell Companies in
Nigeria, Mr. Osagie Okunbor.
He said, “We certainly have
the largest proven gas resources in Africa, and ninth in the world. However,
only about 25 per cent of these reserves are being produced or under
development today.
“There is virtually no
active exploration in search of any gas reserves. The total power potential of
these discovered but undeveloped gas reserves present some 68 years of 40,000
megawatts compared to today’s power generation of about 4,000MW.”
Neff noted that Nigeria had
taken important steps towards accelerating gas development, adding that the
government’s gas master plan provided a road map for developing the gas
industry.
He said, “Nigeria’s total
gas production has increased significantly, growing from 415 million cubic feet
in 2000 to 1780 million cubic feet, while flared volumes have reduced by 60 per
cent through investments in gas flare out projects. But there is still a need
for improvement.
“Even though Nigeria’s total
gas has grown substantially, domestic gas supply is essentially unchanged since
2000. Nigeria has one of the lowest power generation levels per person in the
world.”
The OPTS chairman described
gas development as critical to the realisation of the government’s aspiration
of increasing power generation to 40,000MW, saying a seven-fold increase in
domestic gas supply would be required for power generation alone.
“This represents a huge
development opportunity for Nigeria’s gas industry. Nigeria has been held back
by several challenges that need to be addressed.”
He said repaying outstanding
gas invoice arrears would help to build confidence in the sector.
Other necessary steps,
according to Neff, are to develop adequate infrastructure; ensure sufficient
funding for gas development; provide enabling commercial and fiscal terms, and
providing a secure operating environment.
He said the CBN had taken a
commendable step of providing a mechanism for partial repayment of gas invoice
arrears.
“However, since this
mechanism was announced in August 2014, power sector gas invoice arrears has
actually grown from the reconciled N40bn figure of undisputed arrears in
September 2014 to about N100bn, according to the NNPC estimates of May 2016.
“The current system,
laudable as it is, is simply not working. It is important to settle the
outstanding debts and establish bankable credit support facilities for future
gas sales. Without these assurances, I think it will be unreasonable to expect
investors to commit additional investments to grow long-lasting power.”
According to the OPTS
chairman, Nigeria’s inadequate gas infrastructure has contributed to the
inability to meet domestic gas demands.
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