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Our pipelines grossly inadequate to move gas around – Nestoil boss

Chukwuemeka Umeh

Lagos, July 7, 2019

Mr Chukwuemeka Umeh, the Executive Director of Nestoil Group, has said that the country’s gas pipelines are grossly inadequate to move gas around and urged government to invest in gas economy value chain.

Umeh made this known in an interview with the News Agency of Nigeria (NAN) on the sidelines of the just- concluded Nigerian Oil and Gas Conference in Abuja.

Umeh, who was reacting to the country’s gas pipeline infrastructure, said Nigeria should be a gas economy, rather than an oil economy.

According to him, Nigeria is at the point where we need to decide where we need to go as an economy.

“Our primary income is from oil and gas with large scale tilted toward oil but the energy focus of the world is changing.

“We must also change, so that we can survive as a country. Today, we use only about 10 per cent of our gas domestically, while a large chunk of it is being exported.

“I think this is what causes the economic challenges. We should be a gas economy, rather than an oil economy.

“As you know, it’s the other way round. For us to be a gas economy, we must make the entire gas value chain work,’’  Umeh said.

According to him, what that means is that the gas producers should be able to make enough investments required of them to produce.

He advised that the owners of the pipelines (gas transporters) should also have robust infrastructure to move the gas around the country and “that is not what we have today.

“Our gas pipelines are grossly inadequate to move gas around. So, we should ideally have pipelines running to every part of the country.

“Every state in this country should have a gas pipeline. Beyond that, the actual use of gas in the country is of optimum importance.

“What I mean at this point, is that we need to have power plants (power stations) running gas in most parts of the country,’’ Umeh said.

The Nestoil boss also decried government’s inability to find meaningful solutions to Nigeria’s power crises.

He described as “unfortunate’’ South Africa’s intimidating capacity to generate over 40,000 megawatts of power, which easily dwarfed Nigeria’s meagre 4,000 megawatts.

Umeh noted that Nigeria struggled to meet its electricity needs, in spite of having the reputation as owner of the ninth-largest proven gas reserves in the world.

He pointed out that South Africa was able to solve its power problem; even though it was in no way close to Nigeria as far as potential for power generation was concerned.

Umeh noted that South Africa had been able to produce 40,000 megawatts for the benefit of her 57 million population; whereas Nigeria had been grossly inadequate in this obligation to citizens.

The Nestoil boss advised the Federal Government to take proactive measures that would allow the forces of demand and supply dictate costs.

Umeh said: “We hit 5,000 megawatts a year ago and people were clapping.

“It is a travesty that Nigeria is producing 4,000 megawatts every year to serve over 180 million people, while Norway has three million people but producing 36,000 megawatts.

“So, the power industry must work; and the petrochemical industry must work. We have the capacity to produce two million tonnes of fertiliser in this country on yearly basis but we still import petrochemicals.

“We should be producing, using it domestically and also exporting. We have the capacity; so, those part of the value chain must work.’’

Umeh explained that the Discos wanted to make investments and recoup their money.

“If they can’t make their money back, that means they can’t invest. So, Discos must be able to sell power at a tariff that allows them to make investments and make returns.

“The government must work with the private sector as true partners,’’ he said.

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