Manufacturers in Nigeria have devised alternative means of providing electricity to industrial clusters as local prices of natural gas hit rooftops.
The Guardian Nigeria reports that at $1.80, the price of natural gas at the international market remained cheaper than $7.99 per standard cubic meter (SCM) charged locally.
To address their electricity challenges, local manufacturers had unveiled a special purpose vehicle called, MAN Power Development Company, to provide electricity to industrial clusters.
Despite opportunities that Liquefied Natural Gas (LNG) offer to Nigeria in terms of reserves, pricing, and utilization for gas-to-power, access to the commodity has remained a challenge.
LNG and Compressed Natural Gas (CNG) form sources of alternative power to local producers due to the failure of the national grid to meet their demands. But the switch to LNG and CNG has remained a mirage due to high cost, infrastructure, and policy framework.
While the 614-kilometer Ajaokuta-Kaduna-Kano (AKK) gas pipeline project, flagged off recently by President Muhammadu Buhari, was expected to address the challenges of ailing industries, local manufacturers are eager to see that gas-to-power becomes a reality.
Self-generated electricity hits N119b in 2019
The operators stated that while electricity outages spanned about 10 hours per day, electricity expenses constituted about 40 percent of the total cost of production, and the average cost of self-generated electricity hit an average of N119 billion in 2019.
Years after, the Vehicle has continued to experience challenges from distribution companies that have continued to block adoption, citing clauses in the eligible customer scheme, while some have successfully migrated to the scheme.
In 2019, MAN generated no less than 13,000MW of electricity under its Independent Power Projects (IPPs) and microgrid platforms to meet their operational needs as generated power from the national grid remained insufficient to meet their demands.
“The idea is to be able to put manufacturers in clusters and arrange for power, which can be supplied through hydro, solar, gas and will remove the cost of manufacturers getting involved in producing their own power, “ said Reginald Odia, chairman of Economic Policy Committee of MAN and director of the MAN Power Development Company.
Nigeria has the largest gas reserves in Africa and the ninth-largest in the world but only about 25 percent of the reserves are being produced.
The country’s total gas reserves stood at 203.16 trillion cubic feet as of January 1, 2020, up from 202Tcf in 2019, said the Department of Petroleum Resources.