Source- Vanguard
As the nation enters a new calendar year, industry players and stakeholders in the energy sector have offered varied opinions on the issues that affected the energy sector in 2016 and their expectations of the government in 2017.
Their submissions are coming on the heels of the downturn in the economy of the country which is still reeling on the crest of recession. While some of the stakeholders believe there should be drastic change in the policies of government, some others called for caution in the implementation of some policies.
Barry Esimone, an engineer and Chief Executive Officer, Crusteam Group, an energy and infrastructure group of companies believes that the reality of discussing the challenges in the Niger Delta must be faced. “The solution must be found, an enduring solution, especially by government because this is a political problem, it is not technical, it is not business, as far as I am concerned. It depends on how government wants to sort it out.
Oil
“I think government should be able to sort it out, otherwise, every other thing they are trying to do to hope that they will increase production, will amount to chasing shadow. Even the expatriates you will need, with their expertise will not like to work in a hostile environment,” he said. Esimone explained that finding solution to the Niger Delta problem in 2017 will save Nigeria a lot of scarce resources which could be channelled to other demands. According to him, “If you tell expatriates you have a battalion of army, guarding one well, they should come and look at the well, they don’t want to die from a stray bullet, even from the army. The place has to be made habitable by engaging stakeholders, so as to find an enduring, once and for all solution to this. That is the only thing that will change the landscape. If we do that and have a conducive environment, we will not be spending scarce money to explore the inland basins. Even if we have to, we would have made enough money from the one we have and then plough the benefits to the inland basins development.”
JV Cash Call will still hold – Eroton CFO
Also Frank Ihekwoaba, Chief Financial Officer, Eroton Exploration and Production Company Limited, believes it is incorrect for the government to say there will be no cash call in 2017. “It is incorrect to say there will be no cash call beginning from January, 2017. There has simply been a change in the model of operation with the introduction of a base budget for which there will be cash calls and the introduction of incremental production which will be funded by the operator and paid by the government with oil.
“The reason government has cash call is because it is envisaged that NNPC will get the base production oil, sell it, pay cash and deposit the residual into the treasury. From the incremental production, NNPC will pay royalty and other statutory obligations, fund its operation and the residual into the treasury,” he said.
Ihekwoaba however believes that government has taken a positive step with a new funding model. “Regarding the growth of the industry in 2017, government has taken a positive step with the new industry funding model. What is required now is for government to review the drastic cut to operators’ expenditure to realistic levels as has been done in 2017 budget,” he added.
Poor funding still hinders electricity – ANED
In the electricity sub-sector, the Association of Nigerian Electricity Distributors, ANED enumerated some of the challenges of the distribution companies to include little or no improvement in gas supply, pipeline vandalism, resulting in about 50 percent reduction in generation, for the period of May, June and July. According to Sunday Oduntan, Executive Director of ANED, the electricity distribution companies, DISCOs, have been operating at a loss for the past two and half years. As a result, no bank has been willing to lend to the DISCOs or GENCOs money for the critically needed capital investment.
“A review of other power sector reform efforts strengthens our need to remain on course. Indeed, there is empirical evidence that electricity reform efforts, largely, result in reduced tariffs for consumers, increases investment that results in improved power supply and improves the customer electricity supply experience. However, we cannot correct the deficiencies associated with a power sector that has over 63 years of failed performance overnight. Patience, time, collaboration and adequate resources are required,” he said.
Renewable energy seeks clear policy direction
Speaking on renewable energy, the Chief Executive Officer, Community Energy Social Enterprise Limited, Patrick Tolani explained that though the various memorandum of understanding signed by stakeholders portend bright future for the sub-sector, there is need for government to create enabling environment for investors. “It is heart-warming to know that some power purchase agreements, PPAs, were signed for on-grid generation and there is optimism that this can translate into real delivery from those sites to improve the national electricity generation target.
“The only fear is that the government is not helpful with policy direction that could give comfort to investors. Investors are worried about the foreign exchange scarcity and the lack of direction from the government on what to do to tackle the problem.
“Government seems not to have deployed enough ingenuity to convince the populace that it can provide what it takes to steer the country to achieve the renewable energy target contained in the Renewable Energy Master Plan (REMP),” he said.
Tolani believes the solar energy sub-sector has witnessed some growth particularly in roof-top deployments. For him, with the coming into being of the Renewable Energy Association of Nigeria (REAN) it is believed that there is hope the interest of the sector in the coming years, particularly in 2017 will be advanced expectedly.
Tolani also expects that the government should play better leadership role in 2017. “On the positive note, I believe that there would be more investment into isolated mini-grid installations if the new regulation being finalized by the Nigerian Electricity Regulatory Commission (NERC) can be properly thought out to pull investment into the country and not push investment away from the country.
“The tariff has also been an issue in the current year. I am optimistic that we can find the right tariff that will not only support investment but, deliver affordable and efficient electricity supply to the consumers.
“Everyone should have reasons to be optimistic in 2017 and hope that things will work in the best interest of the country and its people. There is no need to mince words on this matter: without sustainable electricity supply, we will continue to struggle economically and domestically,” he added.
Gas supply still a big problem – TCN
For Abubakar Atiku, Managing Director, Transmission Company of Nigeria, TCN, lack of fund has been hindering the progress of over 130 projects in the power sector which had been ongoing since 2012.
According to him, funding of TCN projects had consistently been missing from yearly budgets for some time now.
He explained that the stability of the transmission network cannot be guaranteed whenever power generation drops below 3,000 megawatts (MW). “Frequent system collapses on inadequate gas supply to the generating plants compounded the woes of the sector.
“The system is likely to collapse whenever generation is below 3,000MW, adding that the current 20-30MW spinning reserves is not enough to save the system from collapse whenever up to 300MW is suddenly lost by the grid
“Generation is about 3,000 to 3,200MW because of the issue of gas. Late last month, only one unit was generating 170MW at Egbin Power Station. Once we are generating below 3,000MW, nobody can guarantee system stability,” he said. Atiku urged the government to turn the challenges to opportunities, so as to spur growth in the sector by 2017.