The Nation Newspaper

Category: Energy

  • Jonathan: local content has hit 32% in oil, gas industry

    The value addition and percentage spending retained in Nigeria’s upstream and downstream operations have increased from less than five per cent to 32 per cent, former President Goodluck Jonathan has said.

    He said at a conference in Houston, United States that despite some limitations, the gains from the implementation of the local content Act were visible in capacity building for upstream and downstream operations.

    In his presentation entitled, “Local content as a driver for technological development,”Jonathan said before the passage of the local content law, the industry projected a value addition profile, or percentage spending retained in Nigeria’s oil and gas industry at less than five per cent.”

    He said the revenue, which came in form of taxes, royalties and rents,  has now been ramped up to about 32 per cent through engineering design, fabrication, manufacturing and procurement, royalties and rents.

    Jonathan said there is also an appreciable progress in skills acquisition in the industry in line with the manpower development objectives of the Act, pointing out that the pre-local content Act picture of limited skill sets, which brought about the influx and dominance of expatriates into the industry, has been positively altered.

    He said: “Through training and strict adherence to streamlined regulation, there are more qualified Nigerians working in the industry now than ever before. Thousands of Nigerians have been trained in technical areas, such as geosciences, oil spill management, underwater welding, pipe mill operation, engineering design and fabrication.

    “Another positive development in this area is that Nigerians have developed the capacity to carry out most onshore upstream activities, just as many Nigerian companies involved in drilling activities, are competing favourably with industry leaders. More than 38 per cent of registered marine vessels currently belong to Nigerians, up from a time when indigenous operators could only boast of less than 10 per cent ownership of the operating vessels.

    “There has also been a boost in the promotion of indigenous participation and the fostering of technological transfer as reflected in appreciable local growth in such technical areas as line-pipe mills, pipe coating, painting and cables manufacturing, as well as improved fabrication capacity. Only recently, one of Nigeria’s indigenous oil servicing firms established a $100 million fabrication plant in the Niger Delta region.

    “With this plant the local company intends to serve the fabrication and industrial needs of Nigeria and Africa, especially in the petroleum and power sectors,” Jonathan.

    The former President said despite the roles research and development (R&D) played in industrial development, little or no attention was hitherto paid to this critical area in the oil and gas industry. The story changed after the R& D guideline and strategy involving the participation of industry players, academia and government was developed in the wake of the Act. Local operators are now benefitting from the prevailing order where over 90 per cent of contracts are awarded to Nigerian companies or foreign companies that are in partnerships with Nigerian firms. Before the local content law came on stream, less than 20 per cent of contracts in the industry were conceded to indigenous companies.

    “Also, some international oil companies have been reviewing their interests in oil blocks and marginal fields by selling off some of their assets to Nigerian firms. It is instructive to note that the Act has ensured that no obvious gap was left in the industry because benefitting Nigerian firms have not only lived up to the task, but have greatly improved output. The outcome is that there are now more technically competent indigenous oil and gas companies with Nigerians constituting the majority of their workforce,” he stated.

    According to him, although the implementation of the local content policy recorded some successes as listed above, there are still some limitations in the area of steel manufacturing for fabrication, as well as the local capacity in manufacturing for upstream and downstream operations.

    “Therefore, the industry can still do with further strengthening of the capacities of Nigerian operators as well as the inclusion of more indigenes of producing communities in the economic activities of the sector,” he said.

    “The Local Content Act has galvanised and transformed the entire oil and gas industry in Nigeria into a very vibrant sector with enhanced capacities in technological development, interventions and innovations. I believe that the local skills, capacities and creativity developed for the oil industry can easily be adapted in other sectors of the economy such as ICT, agriculture, transportation, power, health and overall manufacturing,” Jonathan added.

  • ‘Integrity, prudence foundation of our success’

    Morpol Engineering Services Limited Executive Director, Engineering, Felix Ayejunikanwa, in this interview with EMEKA UGWUANYI at the yearly sub-Saharan Africa oil and gas conference in Houston, Texas, United States explains how his firm is managing security challenges in its host communities in Niger Delta, among other issues.

    Could you give an insight into the operations of Morpol?

    Morpol is an engineering, procurement and construction (EPC) contractor or firm and we are into pipeline construction work, equipment erection and we build process plants. We have been in the market for sometime. Morpol will be 50 years old by June this year. But we went into engineering about 26 years ago. Morpol started as a stockist, doing buying and selling until the owners, based on advice, had a rethink on why buying and selling only, because they were making supplies to the Nigerian National Petroleum Corporation (NNPC).

    They heeded the advice and went into engineering, that was when they started bringing in some engineers. It is on record that since we started, we have not been awarded a job and it’s abandoned in the last 26 years. We have made a record in the industry in such a way that NNPC we started with, is promoting us everywhere, telling people about Morpol.The interesting thing to me also is the Shell project, we bidded for the job, Daewoo and Saipem bidded for the job too, among others. When the bids were opened and evaluated, they realised that our offer for the job was less than 50 per cent of the average price quoted by the foreign companies.

    You know Daewoo and Saipem are international companies, so they felt that we would not be able to do the job, saying we have come there to commit suicide and there is no way we would be able to do the job. But we moved in as a management team and started the planning and preparation, at the end of the day we delivered the job and got commendation from Shell that we delivered the job a year ahead of schedule.

    Secondly, Shell Vice President, Nigeria/Gabon, gave us meritorious performance award on the job. Thirdly, two of about 16 different host communities where we worked gave us commendation letters that they have not seen a company like this that is transparent, has integrity and is fair, and equally, we always see the communities as part of us. We sat with them and sincerely tell them what we have and that we would not be able to give them what we don’t have.  We told them we are Nigerian companies just like you but, we want to prove to foreign companies that Nigerian companies can do it, give us the cooperation.

    The government also supported us. Our professionalism, fairness, integrity and sincerity, among others, saw to our success. It was in the news that the Minister of State for Petroleum Resources said the government was able to save about $2billion by awarding contracts to Nigerian companies as against their foreign counterparts. We are part of that story. Imagine saving $2 billion, it’s not a joke. So, we continue to demonstrate our capacity that we can do what these foreign companies can do if not better. Any time EPC contracts are being discussed, we are there. Apart from Shell, we have other companies that we work for.

    You have proven to have the capacity but how do you cope with the challenges of accessing finance, which is a major problem to Nigerian firms?

    Everything has to do with planning. We don’t get to the farm before rolling our sleeves. We are proactive. We believe you have to plan well ahead. We are very conservative, in the sense that, we are quiet, moderate and we don’t waste money and don’t go for expensive lifestyle. Our office is moderate and we are not people that connect to buying private jets, among others.

    So, we have been working over the years and have been saving money. Apart from the money we have saved as a result of our conservative lifestyle, we have been banking with United Bank for Africa (UBA) for about 50 years. They have seen our reliability and integrity, so when we knock on their door, they open it for us in terms of funding. Currently, whatever we need comes from UBA, particularly. UBA has demonstrated the willingness to support us as a Nigerian company that has not defaulted for once, so this is another way of managin’g funds. Just last month, Shell called us for a forum where they brought in a number of Nigerian bankers and said they have a project of about $2 billion to be executed and would want to see how their contractors will not suffer funding difficulty. The idea is for all payments to be made through these participating banks whereby the banks could rely on this to provide funds to the contractors as very attractive interest rates. This is another way to help Nigerian companies that are interested. That is one way of funding. Also you know the type of job we do is based on milestones whereby you are paid by stages you do, so the cash flow is always flexible and we are comfortable with that.

    What are the challenges your firm and those in the same operational category face in the course of duty?

    The first is security. To work in Nigeria, and particularly in the Niger Delta, is a tough one security wise. But again, we believe that this approach of involving people (the host community), giving them sense of belonging is helping us, so call those people that could be a threat and sit with them on a roundtable and tell them we have come to work here and can only deliver with your permission. I can tell you we moved into Gbarain-Ubie for the project in May 2014 and and we didn’t lose a life and nobody was kidnapped. It was peaceful for us. So, security was a major issue but again we were able to manage it.

    Second one is the communities -agitation of the youths, among others, but we had community engagements – from the king or head of the community to the youths, we normally bring everybody to the table with patience, and that involvement also gave an edge over other companies in terms of having good community relations. I told you we got letters of commendation from two communities and they even wrote to the government that this is the company they would want to work in their area. So, that area of challenge, we have been able to manage it. In terms of manpower, we have a data bank of qualified Nigerians, who can do the job, so we don’t have challenge in that area.

    Of all the jobs Morpol has executed, which one stood out ?

    There are two projects I want to reference. One, of course, is the Gbarain-Ubie project because for us to get commendation letters and meritorious performance award from the Vice President of Shell, is not a joke, it doesn’t come easy. That is outstanding as far as our record is concerned. Secondly, we did the solid state polymerisation (SSP) project for Indorama Petrochemical Company in Port Harcourt. It is about 45 metres high installation. It is a PET plant, we did the erection of the plant for them completely. The ingenuity we deployed there is amazing.

    There, another project given to us by the Lagos State government’s Water Corporation, replacement of 48-inch pipeline on Carter Bridge. The pipe carries water from the mainland to the island. That project was initially built by Julius Berger when they were constructing the bridge, so the pipe was laid under the bridge hanged but it fell into the water. A number of companies were called to replace it. They called Julius Berger, but it rejected the offer because it didn’t have the time and eventually we took interest and they gave us the job. What we did with that job was in the news. We didn’t use barge, which sometimes is used to carry your cranes amongst other installation equipment. The technology we deployed in that job is amazing to everybody and the Group Managing Director of Lagos Water Corporation, Holloway, made a comment on that feat, which is a commendation again on what we have done.

    When will work start on Gbarain-ubie’s phase three project?

    We expect to sign the contract hopefully in July this year and construction will kick off after Engineering and Procurement phase of the the project. It will be a three-year project. Remember the previous one we did was delivered a year ahead of schedule.

  • Axxela records 4m LTI-free man-hour

    Axxela Limited, a fast-growing gas & power portfolio firm, has recorded a safety milestone, achieving four million man-hours of job without Lost Time Injury (LTI) in its operations, which it reached on April 20.

    LTI is a measure of injury sustained on the job, that is capable of preventing workers from performing, or continuing with a task or resulting in downtime in the operation. It is an oil and gas industry benchmark, which evaluates adherence to safety and environmental requirements in the course of operations, and is a critical Key Performance Indicator (KPI) for Axxela’s conformity with industry best practices.

    Speaking on the safety landmark,  Axxela’s Chief Executive Officer, Bolaji Osunsanya, said: “This significant and laudable feat underscores our dedication to always inculcate an enduring safety culture amongst our employees, and our exemplary adherence to best practices in our day-to-day business operations. I must also commend our managerial and operational teams, along with our partners and sub-contractors for an unrelenting commitment to implementing company-wide world class safety standards in our activities, alongside policies and procedures covering product quality, operational safety, the environment, health, security and emergency readiness.”

    Achieved over six years, the four million LTI-free man-hours comprised operation time in the 12.15MW Akute Power Plant Project (divested in 2016); the 12″ x 128km Eastern Horizon Gas Company (EHGC) pipeline traversing Akwa-Ibom and Cross River states (divested in 2014); the Gas Network Services Limited Compressed Natural Gas (CNG)mother station (a 5.3mmscfd CNG Plant); the 10.6megawatts (Mw) Alausa Power Plant Project (divested in 2017); the 12″ x 8.5km GLIV gas pipeline project taking gas from Ijora to the Marina in Lagos State; the 12″ x 8.5km Central Horizon Gas Company pipeline expansion project from Trans-Amadi through the greater Port Harcourt area; and the installation of eight CNG daughter stations across Southwest Nigeria.

    Axxela’s Environment, Health, Safety, Security and Quality (EHSSQ) Manager, Uche Okpala also said: “We are extremely delighted to realise this historical milestone. Since 2012, we’ve operated diligently without any disruptions due to personnel injury, proving our dedication to stringent safety processes in our day-to-day business practices, while ensuring that all operations consistently meet international safety requirements.”

    Axxela holds an annual EHSSQ week to deepen awareness and strengthen incident-free work culture. It is also the first organisation in the Nigerian Oil and Gas space to achieve the integration of three management systems (ISO 9001:2015 – Quality Management System, ISO 14001:2015 – Environmental Management Systems, and OHSAS 18001:2007 – Occupational Health and Safety Assessment Series).

  • ‘How we checked fuel scarcity, by marketers

    Marketers under the aegis of the Major Oil Marketers Association of Nigeria (MOMAN) have given insights into how they helped to reduce fuel scarcity in the country.

    The marketers include Oando, Forte Oil, Mobil, and MRS.

    In separate interviews, the marketers said they collaborated with the Navy, the Petroleum Tanker Drivers (PTD),  the National Association of Road Truck Owners (NARTO) and others to reduce the traffic that was preventing tanker drivers from supplying fuel in time.

    They said there were many tank farms, loading bays and jetties in Apapa, adding that tanker drivers spent days on queue to load fuel.

    MOMAN Chief Security Officer Colonel Adesanya (retd) said the marketers set up a committee, adding that the committee and the Navy collaborated to reduce gridlocks in Apapa and its environs.

    He said decongesting the road was the first assignment undertaken by the Navy and the committee.

    According to him, the Navy introduced a call card system, through which truck drivers were given cards that would enable them to load fuel and leave the loading bay immediately for others.

    He said: “Since the Navy took over the clearing of tankers and other vehicles that are causing traffic in Apapa, vehicles, especially fuel tankers, have been moving freely. The call card was signed by the Navy, to enable it authenticate the tankers that have either loaded or are due for loading. Through this, the Navy and the marketers were able to reduce the traffic on the roads and the number of hours spent by tanker drivers before they supplied fuel.

    ‘’Fuel tanker drivers spend a lot of time at the jetties in Apapa, before they load. The development has resulted in fuel scarcity, as tanker drivers do not supply fuel to the end users in time. However, the collaboration between the Navy, the marketers and other agencies have helped in reducing the scarcity.’’

    He said reducing the turnaround time for loading of fuel and supplying it had helped to checkmate  scarcity.

    Adesanya, also the Head of Security of MRS, said the drivers would not have been able to speed up the process of supplying fuel, if they were not given cards by the Navy, with a view to reduce the time they are wasting in Apapa, where they are loading petroleum products.

    Also, MOMAN’s Head, Safety and Health Committee, Dr Oyet Gogorima, said the call up card issued to taker drivers made their work schedule samplers.

    He said the idea  has reduced vehicular congestion at the loading bay and the jetties, stressing that the issue has fasten the process of loading and distribution of fuel.

    He said the usual traffic in Apapa has reduced, because drivers comply with the directives of the Navt and other agencies in the area.

    He lauded the  Commander, NNS Beecroft Commodore Okon Eyo for his helping to clear the gridlock in Apapa, stressing that traffic has eased up in the area greatly.

    He said the issue has resulted in seamless operation of tanker drivers, as well as making commuting in the area  hazles free.

  • Fed Govt seeks more energy distributors

    The Federal Government is seeking more investments in  distribution  to improve   electricity, Minister of Power, Works and Housing, Mr Babatunde Fashola, has said.

    The government, he said, was working towards actualising its dream of making electricity generated in the rural areas, a commercial product.

    He said the government was committed to making generation, distribution and transmission of electricity  a business activity.

    The government, according to him, can only maximise the potentials in the sector, when it is able to sell what it produces.

    He said: ’’ We must be able to sell what we produce, because there is no gain in generating what you cannot distribute or supply to the people.

    Fashola, who spoke at the side line of the inauguration of 2xby 60 MVA 132/133 KVA in Odogunyan power sub-station in Ikorodu, Lagos, said energy distribution is vital to the growth of the industry, stressing that the government is targeting  more investments from it.

    According to him, the country requires more players in the distribution value chain, in order to be able to compliment the services of the eleven companies, approved by the Federal Government, to distribute power to the consumers in the country.

    He said the country was able to distribute 5,000 megawatts of electricity out of 7,000 megawatts of electricity that was generated in recent times, adding that the shortfall of 2,000Mw of electricity would have been avoided, if there is enough power destruction capacity on ground.

    Fashola said: ‘’At the moment, the country generates 7,000 Mw of electricity, while it is distrusting only 5,000 Mw of electricity. In the meantime, the country needs more capacity and capital in the distribution segment of the sector. That is where the country needs to focus its attention now, if Nigeria is to handle the industry as a business venture. We must be able to sell what we produce, because there is no gain in generating what you cannot distribute.’’

    He said the country would generate more electricity, adding that the power generation must be matched with distribution to achieve growth in the sector.

    The Minister said the country is expecting 240 Mw of electricity from Afam Power Plant, adding that the development will help in improving power generation in the country.

    Still on power, he said the government has created and executed 90 projects in Yola, and other parts of the country, adding that the idea would help improve supply of electricity.

    Similarly, LAGA CE Power Limited Managing Director,  Mrs Rhoda Afolabi, said her firm had in the past nine years built the power sub-stations in Ipaja, Odogunyan and two others, adding that Odogunyan sub-station will help improve electricity supply to the industrial areas.

    She said steel, manufacturing and other companies in Ikorodu will be able to access electricity through feeders on the sub-station.    She said the project ensures that 90 Mw of electricity would be release to the industries and other users in the area.

    She said his ministry inherited over 800 containers at the ports, on assumption of office in 2015, adding that the containers were not cleared due to poor finance.

    The inability of past government, Afolabi  said, to clear the containers, made it difficult for contractors in the power sector to get materials to work with.

    He said the ministry has been able to clear 500 containers, while at the same time, moved the equipment in those containers to sites where electricity is being transmitted and distributed in the country.

    He said the government would have by the end of 2018, expand the distribution capacity in the country, to boost supply iof electricity in Nigeria.

  • Sahara group, others chart future energy roadmap

    The need to promote the adoption of sustainable energy practices in sub-Sahara Africa dominated talks by top government officials, ministers and energy experts, including, Kola Adesina group managing director of Sahara Power Group, at the Horasis Global Meeting in Cascais, Portugal.

    Adesina addressed delegates as one of the eight panelists that spoke on “Creating sustainable energy policies.”

    He highlighted the need for innovation, institutional support, good corporate governance, sustained public-private sector collaboration within the region, and the participation of global partners, including developed economies and multilateral institutions.

    He said: “Innovation is a long and painstaking process. Not only does it require great intellectual capital it needs due diligence and a strong institutional support system to flourish. Institutional support means that government policy and private sector corporate governance work in concert by creating and facilitating the right policies needed to expand sustainable energy across multiple sectors and borders.

    “Any ambitions we have for lighting up sub-Saharan Africa either via exploring alternative sources of energy or addressing the current infrastructural deficits that blight us can only succeed if there is a solid underpinning of policy creation and execution.”

    According to the International Energy Agency, in 2016, global investments in energy, including networks, renewables and thermals exceeded investments in traditional oil and gas development for the first time. There is an undeniable paradigm shift from the dying, dirty business of fossil fuels towards a more sustainable, climate complaint source of energy.

  • Salvic boosts production by 75,000 bpd

    To improve Federal Government’s crude oil output and earnings, Salvic Petroleum Resources Limited has increased production in its Oil Mining Lease (OML) 30 from zero-level to 75,000 barrels per day (bpd).

    Located at about 35 kilometre East of Warri in Delta State, OML 30 is reputed to be the second largest onshore oil and gas asset in the country. With capacity to produce an estimated one billion barrels of oil, OML 30 comprises eleven oil fields three flow stations, the Ugbelli tank farm (UPF),  the Trans Forcados Pipeline (TFP) and an estimated one billion barrels of oil.

    Operated by Salvic under the nameplate of Heritage Energy Operational Service Limited (HEOPS), the daily production of 75,000 barrels remains the biggest output of OML till date.

    Investigation conducted by The Nation, revealed that the firm achieved the feat, following its resolve to restore Trans Forcados Pipeline and further maintain  a 24-hour surveillance on the project. The firm engaged the host community with a view to minimise security threats on Oil Mining Lease 30 and further boost its production.

    The source listed other achievements to include the decision by the firm to provide a forum for dialogue, where people in oil producing communities  meet to discuss issues that border on their co-existence. Through this, the firm was able to assemble leaders such as the President-Generals, traditional rulers, and youths among others, who can influence and shape people in 110 communities in the area.

    The source added: ‘’Salvic made timely Freedom To Operate (FTO) payments to ensure unhindered access to locations, where the firm produces crude oil among others.  The communities relied on the 2017 Global Memorandum of Understanding (GMoU)  fund to carry out community development projects and the fund was paid in full.

    Beyond the GMoU, Salvic developed a robust Community Service Relations programme for 2018, which was approved by the Joint Venture (JV) partners like the Nigerian Production Development Company (NPDC) and the Shoreline Energy Limited. In addition, the firm has awarded 55 Quick Win projects and 93 MoUs by the first quarter of 2018.

    Others, the source said, are the resolve by Salvic to provide  Health, Safety, Security and Environmental (HSSE) programmes. Through this, the firm made the safety of its personnel and equipment paramount, in order to record growth.

    According to the sources, the firm has been able to reduce issues such as community/oil firms confrontations to the minimum barest level in order to boost crude production, which has been hampered by incessant destruction of oil installations by militants in the region.

     

     

     

    ‘’ As the issue of militancy resolved in the Niger Delta region and further encourage production of crude in OML 30, oil fields and others in the region are sure of boosting crude production and the earnings recorded by the government. If this trend continues,  Nigeria will certain meets  its fiscal responsibility , which has been made difficult by the crash in the global price of crude oil, fall in the value of naira to dollar, coupled with a depressed economy in the country,’’ the source added.

     

  • US high interest rates to affect Nigeria’s, others’ oil production

    Nigeria and other countries in sub-Saharan Africa may continue to suffer high production cost and reduced output as global oil and gas stakeholders strive to  reduce cost of production per barrel of crude oil. These countries, aside Nigeria, include Senegal, Angola and Ghana, among others,

    According to Sebastian Spio-Garbrah, Chief Africa Frontier Markets Analyst, DaMina Advisors LLP, Ontario, Canada,  the high cost of production is due to the high cost of fund as the United States(US) interest rates continue to increase.

    Spio-Garbrah stated that US used to have the lowest interest rates, but the interest rates have continued to soar and because cost of fund is a major component in oil operations, countries that do not have access to funds with low interest rates such as Nigeria, may have to contend with high production cost.

    In his presentation titled: “Beyond Oil – A New Africa: Risks & Opportunities”, delivered at the 11th Annual sub-Saharan Africa Oil and Gas Conference at Marriot Westchase, Houston, Texas, Spio-Garbrah said Nigeria and some other African countries are currently battling with major production decline over rising US benchmark interest rates, adding that the production challenge include other factors.

    According to Spio-Garbrah, the rising US interest rates will hit the Net Present Value (NPV) of high risk African oil producers, adding that rising interest rates almost always leads to financial crisis/recession

    He also listed some other factors affecting Nigeria and other African countries production target to include the Paris climate change accords & effects, which according to him, were signed by 195 countries, Saudi-Russia détente on oil production, rise in US and non-US Shale oil exports.

    Others are domestic demands for indigenisation/stronger local content laws and rising regulatory risks in mining sector.

    On the Paris climate change agreement, he said diesel got the first hit and followed by gasoline, adding that, China, India, California, Paris, Madrid, Mexico City and Athens are to ban diesel vehicles from 2025.

    “Copenhagen wants to ban new diesel cars from entering the city from 2019. France and Britain will ban new gasoline and diesel cars by 2040. Switch by road freight truckers from diesel to natural gas/gasoline is a major structural change, which will lead to surging demand for gasoline, but ultimately lower prices.

    “Move away by EU/US car/truck manufacturers from diesel will force growing emerging economies to use more gasoline and natural gas.”

    On what African oil exporters can do to get more value from its oil, Spio-Garbrah advised that they should build more local refineries to develop domestic petrochemical capacities, citing the 650,000 barrels per day (bpd) Dangote refinery as a step in the right direction.

    He noted that oil exporters should stabilise their macro-economic environment to make investment climate more attractive by reducing domestic interest rate to spur local borrowing.

     

     

     

    He said they (oil exporters) should enter into long term technology and training partnerships with major international oil companies (IOCs) and National Oil Companies (NOCs) to professionalize local technical capacities, hedge future sales to reduce export income volatility and rapidly de-fossilize major economic exports. Reduce overall costs of doing business  in order to bring down the average cost of production while buying  into US shale oil companies to access technology and critical intelligence,’’ he advised.

  • Work begins on Bayelsa Oil & Gas Park project

    •NNPC, NCDMB partner on contracting cycle reduction

    Work has begun on the Nigerian Oil and Gas Park (NOGAP) at Emeyal-1, Ogbia Local Government Area of Bayelsa State.

    Minister of State for Petroleum Resources, Dr. Emmanuel IbeKachikwu performed the ground-breaking at the weekend. The Nigerian Oil and Gas Parks are being developed by the Nigerian Content Development and Monitoring Board (NCDMB) and will be built in five oil producing states, with the Emeyal-1 project as the second to take-off.  A similar ground-breaking event was held early in March this year at Odukpani, Cross Rivers State. The other sites are located at Oguta in Imo State, Ikwe-Odio in Akwa Ibom State as well as Delta State.

    The parks, according to the NCDMB, will generate about 2000 jobs at full operation and create a regional low-cost manufacturing hub that will produce equipment components and spare parts to be used in the nation’s oil and gas industry.

    Speaking at Emeyal-1, the Minister said the Federal Government plans to develop similar projects in other parts of the country in order to extend the benefits to more Nigerians. He said: “We will work with the Board and provide everything that is needed for the projects. After the development of the five pilot parks in the Niger Delta states, we will extend this very innovative idea to other parts of Nigeria where oil has either been found or is being explored.”

    Kachikwu said the initiative will send a message to investors that Bayelsa State is ready for oil and gas business, adding that the park will bring about localisation of indigenous companies, where fabrication,  pipe milling, procurement hubs and oil and gas related technologies will flourish.

    The NCDMB Executive Secretary, Simbi Wabote, confirmed that the “park occupies a land mass of about 25 hectares, which will comprise various warehouses, manufacturing shop floors and factories, training centre, hostels, administrative block, mini estate, security posts, fire station, including truck parking and holding areas”.

    The park, he said, will be provided with uninterrupted power supply to address the electricity challenge which often besets most Nigerian manufacturers and businesses.

    He described the ground-breaking as great step towards achieving one of the Board’s key mandates, adding that “this project will positively impact Bayelsa State in general and Emeyal community and its environs in particular. Citizens of the host community and environs will also benefit from on-the-job training opportunities.”

    The NCDM chief appealed to the host community to support and defend the project for it to be completed on schedule, warning that it will be relocated if it faces unreasonable demands and disruptions.

    Bayelsa State Governor, Henry Seriake Dickson, who was represented by the Secretary to the State Government, Mr. Kemela Okara, commended NCDMB for siting one of the oil and gas parks in the state. He acknowledged that NCDMB had been a veritable partner of the state and had contributed to the growth and development of people of Bayelsa. He said the government was determined to industrialise the state and will support every effort designed to complement its efforts. “As a state, we will support the execution of this project and ensure that there is peaceful and conducive environment to aid the speedy completion as planned.”

    The Obanobhan III of Ogbia Kingdom, King Dumaro Charles-Owaba assured the Board that the community is peaceful and the project will not be disrupted. He solicited that more investments should be sited in the community to create employment for youths.

    Also, the NCDMB and the Nigerian National Petroleum Corporation (NNPC) will before the end of 2018 start using a one-stop shop arrangement for reviewing and approving oil industry projects and contracts to shorten the industry’s contracting cycle.

    Kachikwu, who disclosed this at a meeting with top management of the NCDMB in Bayelsa State, explained that the collaborative approval process between NCDMB and NNPC will ensure that the target six-month contract approval cycle time is achieved, while the cost of crude oil production will also reduce.

    He said:“If you look at the cost components we are trying to drive down from $28 per barrel, it is now $23 and we are targeting $15. We can’t achieve that if our bureaucracy is slow.”

    The Minister commended the NCDMB for adopting the use of Service Level Agreements (SLAs) with its key stakeholders, promising to ensure that other agencies within the Ministry of Petroleum Resources adopt the initiative, which will help to drive efficiency within organisations.

    Kachikwu praised the collaboration between NCDMB and the Department of Petroleum Resources (DPR), particularly on the development of modular refineries, which would help to address the perennial shortage of petroleum resources, create jobs and minimise the scourge of illegal refining.

  • How NDPHC is improving, stabilising power supply

    The Niger Delta Power Holding Company Limited (NDPHC) was set up to intervene in critical areas of the power supply value chain to enable government meet electricity requirements for domestic and industrial consumption. In the past 10 years, it has striven to achieve its mandate, writes EMEKA UGWUANYI.

    There is no doubting the huge power supply deficit. With a population of about 198 million, Nigeria needs at least 18,000 megawatts (mw) to enable a chunk of the population access electricity supply and about 50,000mw produced to achieve uninterrupted power supply. But power supply has hovered between 3000mw and 6000mw.

    The Federal Government has, over the years, invested huge amount of money in the power sector without  commensurate results. In the early 2000s the government began a holistic power sector reform, which saw the introduction of policies and initiatives to drive an accelerated sector reform. While some of them failed or fell short of expectation, some initiatives have proven successful. One of such initiatives is the Niger Delta Power Holding Company Limited (NDPHC).

    The NDPHC is a company incorporated and co-owned by three tiers of government – Federal, state and local governments. It was set up to fast-track power sector infrastructure development company in 2005 with a mandate to manage power projects under the National Integrated Power Projects (NIPP). The NIPP is an emergency intervention scheme meant to tackle the huge supply deficit and expand power sector infrastructure in the country.

    The company’s key mandate was to develop 10 power plants with a designed ISO capacity of 5,067mw, 102 transmission lines and sub-stations projects and over 291 distribution- injection sub-stations and gas infrastructure with over 22,000 completely Self Protected transformers, among other critical projects.

    So far, the company has completed about 4,015mw of this designed capacity, representing about 80 per cent of the mandate and has also made remarkable inputs in transmission, distribution and gas infrastructure.

    The NDPHC may not have completely solved the electricity needs of consumers, but data on what the firm has achieved, which was obtained by The Nation, showsed that it has recorded some milestones, which when well harnessed, will put the nation on a clear path to uninterrupted power supply. Although the company operates silently, it has continued to fulfill its role as a catalyst in bridging the power infrastructure deficiency that has continued to hinder development in productive sectors of the economy.

    In power generation, eight of the 10 power plants in the NIPP portfolio, along with associated gas transmission metering/receiving infrastructure projects to support commercial operation, have been commissioned and connected to the national grid, contributing over 22,000,000k watt/hour (Whr) of energy daily subject to availability of gas.

    The NDPHC has continued to operate these power plants in the interest of the Nigerian economy despite security challenges and accumulated debt of over N121billion owed it by the electricity market. The firm’s contribution represents about 30 per cent of power requirement in the grid.

    The NDPHC Managing Director/Chief Executive, Mr. Chiedu Ugbo, said although the projects began when NIPP programme took off in 2006, it was disrupted by inadequate funding, particularly in 2008. He was optimistic that reliable progress will be made going by the progress of works at the various sites. Ugbo noted that conflicts resolution in the host communities, which also contributed to the delay with protracted court cases, rekindled hope and fired the NDPHC to speed up work on the projects.

     

    Generation segment

    In the generation segment of the value chain, the NPDHC has over 3,000mw capacity available for deployment to the national grid if it has capacity to wheel it. Inputs from the NDPHC facilities contribute significantly to the current improvement in power supply. The NDPHC has completed the 750mw Olorunsogo II power plant, the 450mw (Ogorode) Sapele power plant, the 434mw Geregu II power plant, the 450mw Omotosho II power plant, the 450mw Ihovbor power plant, the 450mwAlaoji power plant, the 563mw Calabar and 225mw Gbarain power plants.  Ongoing projects in the generation segment include 225mw Omoku, 338mw Egbema and 530mwAlaoji steam machines.

    Many of the NIPP power plants on the national grid also provide ancillary services like spinning reserve to support the system operations, a contribution critical for stabilising the national grid.

     

    Transmission segment

    In transmission, the NDPHC has also completed 2,194km of 330kV transmission lines and 809km of 132kV transmission lines. This represents an increase of 46 per cent and 13 per cent respectively over the pre-NIPP status of grid infrastructure. A total of 10 new 330/132kV substations and seven new 132/33kV substations have also been completed with several other existing substations significantly expanded, thereby, adding 5,590MVA and 3,313MVA capacity to the national grid.

    The NIPPs’ contributions to the transmission grid system have transformed the hitherto radial 330kV/132kV grid into a more robust grid system with significant provision of alternative power flow routes, which now serve as redundancies and which has resulted in a more reliable and stable Nigerian grid.

    These projects were achieved through the commissioning of the over 220km long 330kV Double Circuit (DC) lines providing alternative thermal power into Abuja and the FCT from Geregu, through a new Lokoja substation, a new Gwagwalada substation into the existing Transmission Company of Nigeria’s Katampe and Apo substations with several significant expansion works on existing substation developments along this route.

    Another remarkable transmission project is the 330kV Transmission backbone, which provides several 330kV DC transmission line spurs from Power plant zones in Calabar, Alaoji, Afam and Ikot Abasi into a switching hub at Ikot Ekpene. From this hub, long DC lines emanate to flow power from these southern based power generation centres to Jos and the far North East through Ugwuaji and Makurdi in Enugu and Benue States. With the commissioning of about 95 per cent of this grid backbone in November 2016, the Nigerian transmission grid bade goodbye to the radial grid era and entered a new unattainable level of grid security, reliability and stability that seemed elusive since the commencement of Nigerian grid operations in 1969.

    Completion of the majority of the balance of works on this grid backbone is progressing impressively and planned to be completed soon. The statistics of NIPP contribution to overall transmission system growth and reliability with improvements in transformation capacity, is progressively increasing each day as the balance of NIPP transmission projects are being delivered.

    The company invested in critical transmission and distribution infrastructure needed to evacuate the electricity generated into the national grid and distributed same to end-users. The projects the NDPHC has executed in this area included the expansion of 36 Transmission Company of Nigeria’s 330kV and 132kV substations across the country and the construction of 1,635Km of 330kv Double Circuit lines; 720km of 132kV Double Circuit lines; 10 new 330kV substations; seven new 132Kv substations;         6,150MVA of 330/132kv transformation capacity;  2,800MVA of 132/33kV transformation  capacity; and the provision of over 25,000 complete self-protection (CSP) transformers.

    In November last year, Minister of Power, Works and Housing, Babatunde Fashola (SAN), innuagurated the 12-circuit Ikot-Ekpene 330KVA Switching Station and the associated transmissions lines with about 285km completed by the NDPHC. These projects are now assisting in evacuating into the national grid, electricity, which had been stranded in the Eastern Delta.

     

    Distribution segment

    In the electricity distribution segment, the NDPHC has constructed and innuagurated over 350 injection substations with a combined capacity of 3,540mw across the country.  It has further constructed 2,600km of 11kV and 1,700km of 33kV distribution lines to improve access to electricity and quality of power supply to consumers. The distribution capacity has also been enhanced by the installation of 25,900 completely self-protected (CSP) transformers across the country, which has significantly reduced technical losses. Under the NIPP programme, the capacity of 33/0.415kV and 11/0.415kV has been increased by 26 per cent. The NIPP is designed to increase the number of 33/0.415kV & 11/0.415kV substations by 163 per cent and that target is nearing attainment.

    The NDPHC also installed 150 MVA transformer at Asaba 330/132 KV transmission sub-station. This transformer was initially installed and energised in February 2015. It failed in circuit in May 2016 and several investigations and tests were carried out to rectify the fault. The transformer was eventually re-energised and put on the grid in March, 2017 after it was technically certified by the technical team of the NDPHC, Engineering & Procurement consultants (EPC) contractors and the Project Consultants (PC).

    This development at the Asaba transmission substation will enhance power supply to Asaba and its environs, including the overloaded Transmission Company of Nigeria’s transformer at Onitsha in Anambra State, which services Asaba and its environs.

     

    Renewables energy

    segment

    The NDPHC is also making an inroad into renewable energy to give power to Nigerians not covered by the grid. In January 2017, the company launched the Solar Home Systems (SHS) project, anchored on the Presidential Initiative on Rural Solar Home Lighting Systems. It aimed at extending power to rural communities across the country without any form of access to electricity from the national grid. The project was tagged: “NDPHC beyond the Grid”. The NDPHC through its long term experience in developing power projects, has identified many rural communities in the six geo-political zones of the country where these solar projects will be implemented. Also, the NDPHC has deployed 200 units of the SHS (Solar Homes Systems) as pilot programme at Wuna. The units were deployed within a period of 12 months.

     

     

     

    In addition to the SHS unit, NDPHC’s solar project is also directed at auditing and reactivating 1,073 solar powered boreholes. Two of these boreholes are in the Wuna community and are the first to be repaired and has provided access to clean water for the community.

     

     

     

    Challenges

    The National Integrated Power Project is the largest single intervention in power infrastructure in Africa and the implementation has not been without challenges, which includes community restiveness, security situation in the Niger Delta region. Such challenges are not unexpected in the process of executing multi-billion dollar projects in emerging economies such as Nigeria. NDPHC’s current management, believesin dialogue and has engaged stakeholders at all levels in resolving some community issues to progress projects delivery and power to Nigerians.

     

     

     

     

     

     

     

    It engaged the Oronta Community in Abia State and the issue was settled out of court. The settlement paved way for contractors to resume work on the transmission line. Similarly, the management engaged the governors of the eastern region especially the Enugu State Governor with a view to solicit his support and that of his colleagues from the region in resolving community issues in the Eastern region where projects delivery is being threatened. In Calabar, the management resolved community issues affecting operation and evacuation of power from Calabarpower station. The resolution of this community crisis made possible the evacuation of power station’s 380mw through the 330kV line into the grid.

    In its quest to ensure steady gas supply to Calabar power station, NDPHC signed a Partial Risk Guarantee (PRG) with the World Bank to ensure regular gas supply to Calabar Power Generation Company.The PRG, which amounts to $112million, is a form of securitization for gas supply under the Gas Sale Agreement (GSA) between NDPHC/Calabar Generation Company Limited and Accugas. This is for a period of nine months during which about 500mw additional electricity will be wheeled to the grid for the benefit of Nigerians. There is need for the payment of the huge debt of N121 billion to enable the firm to do more.

    Way forward

    To ensure accountability in the system, due process as a cardinal tool in the operations of NDPHC was resuscitated and became effective as the current management saw the need to streamline work process at all levels with strict compliance with due process and approval limit. Meetings and interaction with the Bureau of Public Procurement (BPP) were also explored for this purpose in line with the focus and policy thrust of the current administration.

    With completion of the projects in excess of 80 per cent, and the balance being vigorously pursued, the NDPHC has definitely delivered on its mandate of providing robust power infrastructure for the nation.

    Currently generation capacity is about 12,000mw, transmission at about 6000mw and distribution 5000mw. As a result of the huge supply gap Board and management look forward to doing a lot more under NIPP phase II through a more diversified generation-mix underpinned on the utilisation of alternative sources of power generation including renewables. NDPHCplans to close the infrastructure deficit arising from the continued growth of the economy and gaps associated with other critical stakeholders in the power value chain.