Lagos — Gas producers demand 114% hike in price

Indications have emerged that power outages in the country may linger for a long while, as the logjam over the implementation of a gas pricing agreement between the National Electric Power Authority (NEPA) and Nigerian National Petroleum Corporation (NNPC) has further dropped electricity generation.

While THISDAY checks revealed that electricity generation had declined by 43 percent to 1,700 mega watts (mw) in last one week resulting in unprecedented power outages in most parts of the country, NEPA has officially put power output at 2,900 mw.

It was gathered that the face-off between the two government parastatals, had reduced gas supply to NEPA's thermal power plants, particularly to the $700 million Lagos Egbin Thermal Power Stations.

At the heart of the disagreement, according to sources, was the implementation of a gas pricing regime reached last year by the two parties, where NEPA was required to pay N30 per one thousand standard cubic feet of gas effective from July 2004, representing 114 percent jump over the N14 per thousand standard cubic feet the authority presently pays.

The agreement also provided for a further increase to N70 per thousand standard cubic feet of gas, the price to be paid by NEPA effective from January this year.

However, this pact could not be implemented following the inability of NEPA to get the Federal Government approve its request for upward review in electricity tariff, without which it would not agree to pay higher prices for gas.

NEPA engineers at the Egbin power station informed that the generating units in the plant were being run at about half its capacity following an advice from the Nigerian Gas Company (NGC), a subsidiary of the NNPC, that gas supply has been reduced.

"All the six units in the station are in perfect condition, but we cannot run all of them due to the drop in the volume of gas supplied," a source disclosed.

A senior NGC official although confirmed yesterday that the company has been unable to implement the agreed price regime, he, however, added that the drop in gas volume to the power stations was from the producers mainly Shell and ChevronTexaco

NEPA sources further explained that while some of the thermal generating plants were under performing, there has been no back up from the hydro power stations in Kainji, Shiroro and Jebba, due to the low water levels at the dams feeding the plants.

Consequently, electricity supply to Lagos, Nigeria's commercial capital, has hovered between 500 mw and 550 mw since last week as against a requirement of 1,500 mw, which has left the metropolis with over 10 million people in darkness.

The sharp drop in electricity generation when compared to the 3,300 mw achieved at the beginning of this year, was linked to a major collapse of NEPA's network grid last week.

NEPA spokeswoman, Mrs. Effuru Igbo, however, said yesterday that the system collapse was not due to the drop in power supply but because of the tripping of the system at Egbin plant.

Igbo told THISDAY that electricity generation currently stood at 2,900 mw, which according to her was far less than the national demand of 6,000 mw.

"We have explained that the dry season, which reduced the water levels in our hydro power stations, was responsible for the drop in power generation," she said.

She added that NEPA expects an improvement in generation from contributions from the Agip Independent Power Plant in Kwale, Delta State, which will generate 480 mw, another 400 mw plant being built by Siemens in Imo State and the 150 mw plant in Ughelli, Delta State, being built by Marubeni of Japan.

Manufacturers said the cost of goods and services would be increased by 20 percent, with immediate effect following the poor power supply and the high cost of procuring diesel to run private generating sets.

President Olusegun Obasanjo said last week that the Federal Government was looking up to multinational oil and gas production companies to boost power generation in Nigeria.