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NDPHC worries over pricing of domestic gas in dollars

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The Niger Delta Power Holding Company (NDPHC) has expressed concern over the current pricing of domestic gas in foreign currency.

This concern stems from the fact that the non-availability of gas is hindering the company from generating power to its optimal capacity.

Mr Chiedu Ugbo, the Managing Director of Niger Delta Power Holding Company (NDPHC) Limited, stated this at the 2023 Nigeria Energy Summit recently held in Lagos.

He highlighted that despite Nigeria having over 200 trillion cubic feet (tcf) in proven gas reserves, the cost of gas remains prohibitively high.

“I understand that producers have their arguments, but unfortunately, this is Nigeria. If Nigeria has over 200 tcf in proven gas reserves, why is it so difficult to access the gas?”

“Maybe there needs to be investment in technology that can extract this gas more cost-effectively. A significant question is: why is gas denominated in US dollars?

Before the unification of exchange rates, we were buying gas at an official rate of around N440/$. Now that it is floated, are we going to pass on the increased cost to consumers?

“Are we going to impose over a 100% increase on consumers? That would be difficult and emphasises the issue of availability.”

Ugbo lamented that the non-availability of gas is a major challenge in the power sector, stating: “For example, NDPHC has over 2,000 MW of 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.

“However, I have managed to secure between 100 million and 120 million scf of gas. It is that dire. So, availability is a significant challenge.”

He noted that while renewables may be the future of energy, Nigeria currently needs natural gas to power heavy industries.

The NDPHC boss opined that some industries, like those in the steel sector and others, cannot immediately transition to solar energy and still need natural gas.

“We still have a lot of opportunities, especially in power generation, to ensure the consumption of gas as we transition to renewables.

There are also opportunities in homes for the use of natural gas in cooking and other purposes,” he said.

To this end, he urged regulators in the electricity and oil and gas sectors to intervene and ensure the generation of enough electricity for Nigerians.

“If we can find a means to reduce the cost of gas, at least for domestic consumption, that would help a lot.

Gas should not be denominated in US dollars and then exposed to the vagaries of the forex market.

“As electricity producers, we need gas to fuel our power plants. We should find a reasonable means to supply gas for domestic consumption.

International Oil Companies (IOCs) have gas, but they are unwilling to reserve it for the domestic market.

I understand their position regarding the illiquidity of the domestic market, but there needs to be a good understanding between the gas regulator and electricity regulator to harmonise interests,” he added.