This Day (Lagos)

17 June 2012

Nigeria: PHCN's N23 Billion Debt Stalls Gas to Power, Says Ige

Abuja — The backlog of unpaid debt for gas supplied to the Power Holding Company of Nigeria for its thermal power plants across the country by the Nigeria Gas Company currently put at N23 billion is now stalling the operations of NGC, the gas transportation arm of the Nigerian National Petroleum Corporation.

Group Executive Director, Gas and Power of NNPC, Dr. David Ige, who disclosed this in an exclusive interview with THISDAY in Abuja, stated that the PHCN had in the past two years failed to constantly remit payments for gas supplied to its thermal power station.

This is running against the provisions and terms of the gas commercial framework initiated by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, as a means of shoring-up investment in Nigeria's gas sector.

He explained that the commercial framework and pricing regime could not be described as a problem or challenge to PHCN in its payments defaults but rather, the lack of financial discipline by the utility which has seen it fail in its revenue collection.

Ige said: "About a year ago the minister of petroleum announced a wave of commercial regime for gas as part of efforts to develop the gas master plan. "What we have done really in gas to power is that we have proposed a graduation in price from what used be about 10 cents to bring the price to a commercial price over a three year period.

"And we staggered it this way to allow the power sector to adjust and rather than just slam from N24 to $2 and so we agreed this in consonance with the Nigerian Electricity Regulatory Commission and stakeholders in the power sector two years ago.

"But the problem today is not so much that the price projection is not right, the problem is that PHCN is not paying, NIPP is paying the right price but PHCN as we speak has got N23 billion outstanding debt; they are not even collecting enough revenue to meet their operating cost and this is a dilemma for us because a lot of what we did and of course, the entire gas master plan was predicated on this commercial framework because there are many other sectors apart from the power sector that pay almost double the price."

He noted that the ministry of petroleum has evolved several measures to ensure sustainable supply of gas to PHCN thermal plants including the 12-months emergency plan that was recently announced by Alison-Madueke.

Ige added that in view of the need to ensure that adequate gas is supplied to PHCN, most independent gas producers are often asked to supply gas to PHCN without payment and perhaps, not within the right commercial framework.

"The demand for gas by the power sector is a huge problem coming and the growth in demand keeps going up.

Gas that were developed by producers for other means are been channelled to the power sector and the producers do not know whether they will be paid or even the right price but we just have to do that," he said.

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