NNPC averts fresh power crisis as Escravos pipeline goes up in flames again

by Olusola Bello, Isaac Anyaogu and Innocent Odoh, Abuja

January 12, 2018 | 12:45 am
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Another explosion on the Escarvos to Lagos Gas Pipeline was reported again Thursday, barely four days after five power plants resumed operations following an earlier incident which led to them shutting down.
The five power plants affected are Egbin 1,320MW; Olorunsogo NIPP 676MW, Olorunsogo 338MW, Omotosho NIPP 450MW, Omotosho 338 MW and Paras 60MW power stations.
But unlike the previous incident the situation was quickly brought under control as Maikanti Baru Group Managing Director, Nigerian National Petroleum Corporation (NNPC ) directed that repair works should be executed immediately on the ruptured portion of the pipeline .
Following this directive however supplies of gas was restored to the pipeline from Escravos.
The effect of the explosion that happened along Egbokodo-Omadino, in Warri South Local Government Area of Delta State was quickly mitigated by the action
The Escravos-Lagos Gas pipeline serves all the gas thermal plants in the south western part of the country. The infrastructure also supply gas to the West African Gas pipeline which supplies gas to Benin, Togo and Ghana for the purpose of power generation.
Egbin power plants, the largest power plant in the country which is just recovering from the earlier explosion is said not to be affected by this latest explosion as there was no operational disruption experienced by it yesterday.
A source close to the plant said: “As at now, we are still on and generating over 300megawatts. Gas supply pressure is still okay, let s monitor and see if there will be drops in pressure.”
The Nigerian National Petroleum Corporation (NNPC) has issued a tender to buy up to 1.55 million tonnes of petrol from January to April in its continued effort to stave off shortages that continue to plague Africa’s top oil producer.
The tender, issued on Monday afternoon and closed on Tuesday, sought 42 cargoes of gasoline, each 37,000 tonnes, on top of the volumes NNPC is taking through the ongoing crude-for-product swap contracts.
Depending on the density of the petrol, each tonne contains about 1,386 litres and 1,554,000 tonnes of petrol translates to 2.1billion litres. By NNPC’s own admission, it is incurring N26 on each litre of fuel based on a landing cost of N171 while retail prices is pegged at N145 which brings total subsidy on this purchase to N55.9billion.
Against this backdrop, the NNPC is assuring motorists in Nigeria not to engage in any panic buying of petroleum products. The Corporation in a statement signed by Ndu Ughamadu, Group General Manager, Group Public Affairs Division stressed that the NNPC has a robust stock of PMS, otherwise called petrol, which is sufficient to serve the nation for more than 30 days.
This plea comes on the heels of queues noticeable in some fuel stations, especially in Abuja, the statement said.
“Motorists are advised to report any marketer selling above N145 per litre of petrol or hoarding the products to the Department of Petroleum Resources (DPR) which is statutorily empowered to deal with such issues. DPR has offices located in all parts of the country,” the NNPC said in the statement.
Since January 2017 when the price of crude oil shot above $45 per barrel, the NNPC has been recording massive under-recovery in its monthly financial and operations report. Under-recovery is euphemism for when the open market price of PMS is below the approved official retail price at the pump. The expected open price is a combination of the cost of importation and distribution of the commodity, such as marketers’ margins, landing cost and freight cost.
According to the NNPC Monthly Financial and Operations Report for October 2017, the corporation in January 2017, made a provision of N37.264 billion for under-recovery, in the month.
The NNPC report revealed that provision for fuel subsidy in January was the highest in the 10-month period, while in February, March, April and May 2017, the NNPC deducted N6.3 billion, N8.206 billion, N8.206 billion and N7.74 billion respectively, for subsidy payments.
The report further noted that the NNPC recorded ‘under recovery’ of N11.8 billion, N10.25 billion, N7.94 billion, N7.52 billion and N6.85 billion for June, July, August, September and October 2017 respectively bringing it to over N100billion in subsidies for the period.
Nigeria’s decision to regulate the pump price of PMS has created huge gaps in product supply, crises in the downstream sector and disruption of West African petrol market, but a government suffering reputational crises does not appear willing to allow the market dictate pump price of petrol.
The consequences are grave. “Nigeria did not budget for subsidy in the 2017 but they were paid, the same thing in the 2018 budget, this is creating room for corruption because at the end of the day, it has to be paid and by the time it is paid it will not be verifiable because it was never budgeted for,” said Chuks Nwani an energy lawyer.


Olusola Bello, Isaac Anyaogu and Innocent Odoh, Abuja


by Olusola Bello, Isaac Anyaogu and Innocent Odoh, Abuja

January 12, 2018 | 12:45 am
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