NDPHC Seeks Reversal Of Dollar Gas Pricing

Managing director, Niger Delta Power Holding Company (NDPHC) Limited, Chiedu Ugbo has advocated a re-think in the current practice pricing domestic produced natural gas in foreign currency. “Gas should not be denominated in US dollars and then exposed to vagaries in the forex market,” he said.

Ugbo who spoke at the 2023 Nigeria Energy Summit, which was held recently in Lagos said the cost of gas is prohibitive in Nigeria.

A statement from the company that was released to The Nation 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 reserves, why is it so difficult to get gas? “

“Maybe there has to be investment in technology that can bring out this gas cheaper. A big question is why is gas denominated in US$? Before unification of exchange rates, we were buying gas at an official rate of around N440/$ but now that it 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 transition immediately to solar energy. They still need natural gas.

As such, “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.

However, “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 managed to get between 100 million and 120 million scf of gas. It is that bad. So, availability is a major challenge”.

Ugbo then 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 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 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 the 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.”

He then nonetheless assured his audience that NDPHC will continue to strive to ensure that Nigerians get electricity supply despite the challenges.