​Nigeria electricity regulator seeks control over gas supply to power stations

The Nigerian Electricity Regulatory Commission ​has urged the federal government to empower it as a regulator of gas supply to power stations to check poor electricity supply.

The commission said the regulatory structure of gas meant for power generation, and other forms of gas supply in the country, should be separated.

The body said the nation will continue to face poor power supply if the electricity regulator lacks control over the quantity of gas, or its availability, to power plants.

Currently, the Nigerian National Petroleum Corporation, NNPC, handles gas distribution in the country, irrespective of what use the product is meant for.

The Chairman of ​NERC, Sam Amadi, noted the absence of a coordination between gas transport regulatory regime and electricity supply.

He said​ the​ government must overhaul the current arrangement where the N​NPC regulates both gas supply and its delivery to power plants.

Citing examples of United Kingdom and the United States, after which the country’s electricity industry was modelled, Mr. Amadi said effective coordination and efficiency in the various pricing points in those countries were possible with the electricity sector regulator also as the regulator for gas transportation and supply to power plants.

The Chairman also identified commercialisation of gas market; pipeline vandalism; enforcement of domestic gas supply obligations and control of gas production and supply by NNPC as some of the major constraints to adequate power supply in the country.

Until recently, he said gas suppliers had minimal incentives for dedicating gas supplies to power plants, or building gas infrastructure to cope with growing electricity demand.

The power sector, Mr. Amadi said, was not competitive, as gas supply was not based on enforceable contracts.

With the take-off of the Transitional Electricity Market, he said electricity supply would henceforth be based on bankable contracts, while gas suppliers would now have contracts that would attract liabilities for failure to meet their supply obligations to power plants.

He blamed the country’s inability to generate 6,000 megawatts of electricity over the years to inadequate gas supply to the power plants, pointing out that abundance of gas was hardly a guarantee for adequate supply to power plants.

“Because gas supply to power is outside the direct control of the regulator of electricity, we can’t predict accurately how much gas will be available for power generation,” he said.

Under the multi-year tariff order, Mr. Amadi said the country’s forecast in 1998 to generate about 9,000MW failed as a result of NNPC’s inability deliver the gas required by the power generation companies, apart from the challenge of non-completion of the National Integrated Power Projects.

On commercial incentive for gas supply, he said government had responded to the challenge by fixing cost of gas at $2.50 per 1,000 cubic meters , and transport at $0.80 to encourage more supplies to power plants, while ensuring bankability through enforceable gas supply and transport contracts.

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