The acute power shortage being experienced across the country may persist as it emerged on Sunday that power sector operators, mainly the Power Holding Company of Nigeria, cannot afford to pay commercial prices for gas.
The PHCN had blamed acute shortages in power supply on the vagaries of gas supply from the Nigerian Gas Company, which in turn claimed that its gas supplies were being disrupted by persistent vandalisation of its pipelines.
But the Gas Master Plan, the blueprint prepared by the Federal Government to guide the development of gas projects in the country, indicated that the power sector, which required about 70 per cent of the gas produced in the country to run their plants, could not afford to pay for their primary input.
The Group Managing Director, Nigerian National Petroleum Corporation, Alhaji Abubakar Yar�Adua, at the recent Gas Stakeholders Forum held in Abuja, explained that the power sector could only get the gas needed for its operations through a special pricing intervention by government.
But international oil companies and other stakeholders in the country have insisted on a market-driven gas pricing policy as the incentive needed to commit resources to gas gathering and production as demanded by government.
Three weeks ago, shortage in gas supply resulted in a cut of gas supply to the nation�s main thermal power stations at Egbin, Omotosho, Geregu, Delta and Afam.
Even at full supply, the quantity of gas currently available in the country fell abysmally short of what was needed by the power sector.
The document obtained by our correspondent in Abuja on Friday noted, �The diversity of the downstream gas portfolio creates opportunities and challenges alike. Perhaps, the most critical challenge is the varying capacities of the various sectors to afford gas.
�In particular, the power sector, which is the singular largest buyer, is least able to pay. A sector-based gas pricing intervention is, therefore, inevitable � particularly in the short/medium term.�
The master plan added that the marginal cost of gas supply in the Niger Delta was established as basis for developing a cost-reflective pricing mechanism.
According to it, there is a limited volume of gas reserves that can be developed profitably at a relatively low dry gas price.
Yar�Adua expressed optimism that there was significant potential to earn far more than $0.1/million British thermal units, on an aggregate basis, from the domestic sector in view of the rich mix of sectors involved.
�The domestic sector comprises a rich mix of project opportunities with significantly higher gas pricing thresholds. Though power and domestic fertilizer constitute 70 per cent of the value potential, the remaining 30 per cent was over seven to 10 times the $0.1/mmbtu.
Dec242007