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Root Cause Analysis Of Nigerian Electricity Woes II: Solutions

By: Churchill Okonkwo Published July 3rd, 2010  Continued from here....

All over the world, renewable generation of electricity has not made a convincing economic case in the market, although politically it has the upper hand. Coal and nuclear continue to take a political battering at the hands of the renewables advocates while the politics of energy is being upended by new implications for natural gas. To this end, the Presidential Advisory Committee on Power should focus on policy decisions that hinges around what we have in abundance – natural gas and hydro.

The blacksmith who does know how to forge a metal gong should look at the tail of a kite. When Mr. President was in South Africa to watch the opening ceremony of the 2010 World Cup, he and is hundreds of aids should have taken some time of to find out why and how the government owned power company – Eskom – is forward looking, efficiently managed and free from corruption. That should be the starting point for answers to the questions in Nigerian electricity woes. For Eskom, coal was the answer; it is thus reasonable to believe that the future path of fuel-based power generation in Nigeria should be gas.

Natural Gas as Fuel of Choice

When it comes to generating power, natural gas is more appealing than its main competitor, coal. Gas burns cleaner, without spewing lung-damaging particulates and contributing to acid rain and climate change. Gas plants are much cheaper and faster to construct than coal- burning plants— important considerations for private investors— and can be used for base load or peak power. And, of crucial importance to the topic at hand, a modern gas combined- cycle turbine power plant emits only about half as much CO2 per kilowatt- hour as a coal plant.

There is an enormous opportunity cost in failing to convert this gas to reliable electricity in Nigeria. The gas lost through flaring could more than half-fill Nigeria's electricity needs. Very often mitigation actions against flaring are seen as strategies to reduce emissions of green house gases alone. However, in Nigeria several of the actions needed to reduce these harmful gases are the same that would be needed to generate more electricity, create more jobs and reduce local environmental problems. The benefits of greenhouse gas emissions reductions becomes an added bonus.

Nigeria’s best opportunity to reduce these gases is from ending gas flaring. Latest available statistics show that gas flaring accounts for 31.4 percent of a total 54.9 percent of emissions from Nigeria’s energy sector. Making this currently flared gas available for electricity production will be the needed tonic for solving our current power crisis. The inability of the government to firmly enforce a ban remains a puzzle. Also, investments in abundant sources of renewable energy, stipulated in the Renewable Energy Master Plan would assist in addressing energy security.

End to restiveness in Niger delta

The signing of the Gas Supply and Purchase Agreement, GSPA, between the Nigerian National Petroleum Corporation, NNPC, its Joint Ventures, for the supply of 65 million cubic feet, mmcf/d, of gas from Pan Ocean’s Ogharafe Gas Plant to the Egbin Power plant is another welcome development. But what happens when militants’ starts attacking oil facilities due to non implementation of the agreement in the ‘amnesty’ deal?

To guarantee uninterrupted gas to these plants, the federal government must comprehensively resolve the Niger delta crisis.  And who other than President Jonathan could understand better the plight and agitations of the people of the oil rich delta. As it stands, President Jonathan has not taken any concrete step to seal the fragile truce brokered by Yaradua. That’s what he should be doing. Failure to do so will be like building on quick sand.

Hydro

The committee tagged Inter-Ministerial Committee on Small and Medium Scale Hydroelectric Power Development in Nigeria should take a look at the Three Gorges Dam Project (TGP) in China. It is the world's largest hydropower complex project located in one of the three gorges of the Yangtze River, Xilingxia gorge in Hubei province. It is expected to generate 150,000GWh excess power than the initially planned 224,400GWh for a total of 370,000GWh. Nigeria can generate more that 6000 Megawatts from hydro alone only if we can change our way of planning and executing projects

The point here is that until renewable energy alternatives are readily available and accessible both in terms of cost and capacity, any power project that has less short and long term impact on the environment in Nigeria should be encouraged. 

Cost, subsidy and privatization

Nigeria is an energy exporter; the ample earnings from crude oil have perhaps contributed to the liberal largeness from the government. However, subsidies work against efficiency of resource burden on the government. But at the same time, subsidies are a political issue and it is hard to eliminate them. A thorough cost benefit analysis of subsidies can go a long way in reducing the political resistance to reducing subsidies. The reported increase in the price of gas supplied to power generating industry should be seen as a welcome development but more is needed.

The goal of power generation is to deliver a reliable electricity supply at a reasonable cost. Any increase in reliability however involves a cost that has to be balanced against the benefits associated with the resulting reduction in the frequency of power outages. The good news is that consumer’s willingness to pay for reliability enhancement in power generation in Nigeria is very high and will make any power project economically viable. The results from some published research indicated that most businesses and households are willing to pay more to improve quality of supply. They are willing to pay to reduce the frequency of outages. All we need is governments’ willingness to sell the decentralized power sector to right firms to manage.

The Bottom Line: What You See Is What You Get

Electric utilities around the world are increasingly showing an ‘overwhelming’ preference for building natural gas–fueled plants, a trend that is expected to drive gas past coal as the dominant North American fuel for on-peak power production by 2011. Given that gas is less polluting than coal (by any measure), produces half as much carbon dioxide (CO2) per unit of energy output, and requires plants that are quick to build and not capital-intensive, new gas reserves appear to position the fuel as a winner in generating markets.

There exists an urgent need for action that would address the enormous challenges faced by most metropolitan cities and rural dwellers in Nigeria. Action that will lead to cheaper power sources while minimizing environmental hazards is the only way forward. This we can only do by falling in line with the rest of developed countries in exploring low carbon energy resources and greening our economies.

Nigerians need abundant, affordable, modern energy, and this points to private property and free markets–and adaptation in the face of uncertainties–and not government ownership and control of energy resources as is currently being pursued. The role of government should start and end with regulation.

 

Churchill Okonkwo writes from Washington DC

Churchill.okonkwo@gmail.com

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