- Nigeria’s Ministers of Gas and Power partner to resolve gas supply issues along the electricity sector value chain through naira-based payments.
- Nigeria has a persistent gas supply challenge faced by generation companies (GENCOS)
On February 8, 2024, Nigeria’s Minister of Power, Adebayo Adelabu, engaged in a productive meeting with Hon. Ekprerikpe Ekpo, the Minister of State for Petroleum Resources (Gas), to proactively address the persistent challenge of insufficient gas supply faced by power generation companies (GENCOs) in the country.
Despite Nigeria’s substantial gas reserves, the efficient delivery of gas to meet domestic demand has proven to be an ongoing issue, prompting the establishment of a collaborative joint ministerial committee.
Recognizing the paramount importance of finding innovative solutions for a stable gas supply to the power sector, Minister Adelabu advocates for a pivotal measure – proposing domestic gas payments in naira. This strategic move not only aligns with the nation’s economic needs but also contributes to promoting sustainable energy production.
The Power Minister, drawing upon his extensive experience and network within the financial sector, actively collaborates with stakeholders to champion legislative measures that mandate naira-denominated payments for domestic gas supply, mitigating risks associated with payment shortfalls within the electricity sector.
Addressing another critical concern, Minister Adelabu emphasizes the urgency of combatting the vandalization of gas pipelines in the Niger Delta. Citing a 2021 NEITI report, which highlighted a staggering 7,143 cases of pipeline breakages and deliberate vandalism between 2017 – 2021, he underscores the significant impact on the efficiency of the electricity supply industry (NESI).
The minister also underscores the necessity of establishing clear contractual arrangements between GENCOs and gas suppliers to ensure a consistent supply and maximize the nation’s power generation capabilities. Moreover, he anticipates that the upcoming commissioning of the OB3 line will play a pivotal role in enhancing gas supply to the northern region, thereby fostering industrial growth.
In conclusion, the establishment of a joint ministerial committee to address the challenge of inadequate gas supply to GENCOs represents a decisive step toward resolving energy sector challenges in Nigeria.
Minister Adelabu expresses dedication to assembling a team of experts for this committee. Upon its formation, the ministry pledges to publicly announce the timelines for the initiatives aimed at ensuring a sustainable and robust gas supply to power generation companies.