NDPHC boss advocates sale of gas in naira
By John Ofikhenua, Abuja
The Managing Director of Niger Delta Power Holding Company (NDPHC) Limited, Chiedu Ugbo has advocated for a re-think of the current practice pricing domestically produced natural gas in foreign currency.
“Gas should not be denominated in US dollar and then exposed to vagaries in the forex market,” he said.
Ugbo, who spoke at the 2023 Nigeria Energy Summit in Lagos, said the cost of gas is prohibitive in Nigeria.
A statement from the company in Abuja, quoted him as saying: “I understand that producers have their own arguments but unfortunately, this is Nigeria and if Nigeria has over 200tcf in proven gas reserve, why is it so difficult to get gas? “
“May be there has to be investment in technology that can bring out this gas cheaper. A big question is why is gas denominated in US$?
“Before unification of exchange rates, we were buying gas at official rate of around N440/$ but now that is floated, are you going to pass the pass-through cost to consumers?
“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 transit immediately to solar energy because they still need natural gas.
According to him: “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.
“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 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 manage to get between 100 million and 120 million scf of gas. It is that bad. So, availability is a major challenge”.
Ugbo advised that regulators in the electricity and oil and gas sector should intervene to provide succour and ensure generation of enough electricity for Nigerians.
“If we can find a means to reduce cost of gas at least for domestic consumption, that would help a lot. Gas should not be denominated in US dollar and then exposed to vagaries in the forex market.
“As electricity producers, we need gas to fire our power plants. We should find a reasonable means to supply gas for domestic consumption.
“IOCs have gas but they are unwilling to reserve gas for the domestic market. I understand their position about illiquidity of the domestic market but there needs to be a good handshake between the gas regulator and electricity regulator for us to harmonise interests.”