Managing Director, Niger Delta Power Holding Company (NDPHC) Limited, Mr. Chiedu Ugbo has advocated for a re-think in the current practice pricing domestic produced natural gas in foreign currency.
Ugbo who spoke at the 2023 Nigeria Energy Summit, which was held recently in Lagos said the cost of gas is prohibitive in Nigeria.
“I understand that producers have their own arguments but unfortunately, this is Nigeria and if Nigeria has over 200tcf in proven gas reserves, why is it so difficult to get gas?.
“Maybe there has to be an investment in technology that can bring out this gas cheaper. A big question is, why is gas denominated in US$. Before the unification of exchange rates, we were buying gas at an official rate of around N440/$ but now that is floated, are you going to pass the pass-through cost to consumers?
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“Are you going to push over 100% increase to consumers? That will be difficult, and it emphasises the availability question.”
According to him, renewables may be the future of energy but as of now, Nigeria needs natural gas to power heavy industries.
In his view, some industries like those in the steel sector and some others cannot transition immediately to solar energy. They still need natural gas.
As such, “We still have a lot of opportunities, especially in power generation to ensure the consumption of gas as we transit to renewables. There are also opportunities in homes for the use of natural gas in cooking and such.
However, “For gas to play an effective role as a transition fuel, certain challenges have to be dealt with.
“In the power sector, we have serious problems with the availability of gas. For example, NDPHC has over 2,000MW available generation capacity on the Western axis of the Niger all the way from Delta State to Ogun State and we need at least 600 million standard cubic feet of gas (scf) to power them. Incidentally, I just managed to get between 100 million and 120 million SCF of gas. It is that bad. So, availability is a major challenge”.
Ugbo then advised that regulators in the electricity and oil and gas sector should intervene to provide succour and ensure the generation of enough electricity for Nigerians.
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