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Nigeria needs $25bn investment in gas for sustainable power reform

by Editor

March 19, 2013 | 5:07 pm
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  For the country to make substantial progress in the power sector, an investment of about $25 billion will be required between now and 2020. The investment, oil and gas experts say, should be channelled to infrastructure development across the gas and power value chain.

Of this figure, they say about $10billion would be required to develop gas fields, procession, and transportation networks. Another $12 billion would be required for power generation and $3 billion for transmission and distribution.

However, an estimated $60 billion investment would be required, if the country is to attain 40 gigawatts (40,000megawatts) of electricity in the nearest future.The country’s current power production level is 4,300 megawatts.

The development of gas fields and the sale of the commodity at affordable prices to investors are essential ingredients to achieving a viable and vibrant power and gas sector, operators in the industry say.

Current domestic gas prices do not cover the cost of development, and investors want the tariff reviewed upward, to encourage more investment, such as would support the power sector.

The price of gas is hindering investment in every segment of the power value chain, operators say.

According to the operators, the investment of $25 billion would guaranty a stable gas-power value chain, which would deliver the required electricity generation to support the country’s development aspirations.

They say that since gas cannot be stored, the much needed infrastructure chain must be put in place, while consumers of the commodity, such as power plants, must be able to utilise it immediately they get it. They lament that gas to power infrastructure development is still in its infancy.

Also, they expressed concerns about the low tariff in the power sector, which they say make projects economically unviable and has made it difficult for investors to raise the required funds to build the infrastructure chain.

There is the potential for tariffs in the power sector to rise, because the market price for alternative fuels, such as diesel, is more expensive, experts say . Consumers spend five times more on diesel generators than on gas fired generators.

 The operators want government to evolve a system which provides incentives for investment in gas fields and transportation infrastructure, so as to give impetus to the expected boom in the power sector to drive the nation’s economic growth.

Eddy Wikina, the managing director of Treasure Energy Resources, said it is important that government makes the necessary investment in the power sector for the economy to progress. “Steady power would enable Nigeria to engage in more economic activities.”

Meanwhile, James Olotu, managing director of the Niger Delta Power Holding Company Limited, (N DPHC), owners of the National Integrated Power Project (NIPP) has assured Nigerians that all pending projects will be completed by December 2013.

 

OLUSOLA BELLO


by Editor

March 19, 2013 | 5:07 pm
  |     |     |   Start Conversation

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