Gas Supply to GenCos: FG sets up Inter-Ministerial Committee to Address Challenges
The Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo and the Minister of Power, Adebayo Adelabu, have set up an Inter-ministerial Committee to address the challenges of low gas supply to power Generating Companies (GenCos).The Committee was set up at the end of the meeting between the two Ministries in Abuja.
According to a statement by the Ministry of Petroleum Resources, the Inter-ministerial Committee will strategize on how the country can achieve a steady and sustainable gas supply to GenCos to meet both the domestic and industrial needs of the Nigerian people.
Speaking at the meeting, Ekpo listed Decade of Gas legacy debts; vandalization of gas resources infrastructures in the Niger Delta region; domestic pricing of gas in dollars as challenges causing low supply of gas to GenCos.
“This has affected production from the Nigeria Liquified Natural Gas (NLNG) company which is producing below capacity. He however assured that the OB3 line which supplies gas to the northern part of the country would soon be commissioned to enable supply to the northern part of the country.
“Knowing the importance of gas supply to generating companies and the industries, we held a stakeholders’ meeting on Tuesday with gas suppliers in order to know why there has not been adequate supply of gas to generating companies, we need to work together to resolve this,” a separate statement by the Ministry of Power quoted Ekpo as saying.
On payment for domestic gas supply in naira, the minister said: “However, this should be legislated on. We can both meet Mr President on this, once we agree on modalities as he is the only one that can give the directives”.
On his part, Adelabu also suggested that payment for domestic gas supply should be denominated in naira as against dollars.
He said: “If we are serious about the economic development of the country, we need to solve the problem of gas supply today. We should look at the possibility of mandating the gas suppliers to price in naira. The domestic supply is just a fraction of what the gas suppliers supply to the international market, so paying in naira should not be a problem”.
The Minister stated that the GenCos need to enter a contractual arrangement with the gas suppliers.
“With such contractual arrangement with gas suppliers, the minimum requirement that should be supplied to the generating companies would be clearly stated, thus eliminating the present situation where the generat- ing companies are only operating at about 20 percent of their installed capacity”.
Emphasizing the importance of liquidity in the power sector value chain, Adelabu maintained that “We cannot over emphasized the importance of liquidity in the sector, the generating company have to cover their overheads, maintain and service their machineries, most importantly , pay for gas which is the raw materials needed for production. The only way to sustain production is payment”.
Members of the committee were drawn from both ministries, regula- tory agencies, operators and critical stakeholders in the gas and power sectors.
Early February, the national grid collapsed for the first time in 2024, resulting in a total blackout nationwide.
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The Transmission Company of Nigeria (TCN) had attributed the collapse to lingering gas constraint. “This, combined with the current low power generation due to gas constraints, caused the imbalance leading to the partial system disturbance.
“Gas constraints continue to impact grid flexibility and stability. Ensuring sufficient gas supply to power generating stations is crucial for grid stability as sufficient generation allows for better grid management in the event of sudden generation losses like this,” TCN spokesperson, Ndidi Mbah said in a statement
