The year 2011 is gradually coming to an end and the energy sector is still entangled in one controversy or the other. Despite its ambitious economic development programmes aimed at placing the country in the league of twenty most developed economies in the world by 2020 , the government is yet to come to terms with the urgent need to fix the sector and formulate policies that would enhance it, even in the new year .
Despite the fact that oil was first discovered in the 1950s , the year 2011 could not reverse the seeming jinx that tend to rubbish the fact that the country with proven oil reserves exceeding 9 billion tons cannot boast of functional refineries or utilise the natural gas reserves of over 5.2 trillion cubic metres which has? made it the world’s seventh biggest resource.
As usual , the country throughout the year under review relied heavily on its petroleum industry for economic growth? as the sector accounts for about 80 per cent of government revenues and provides 95 per cent of foreign exchange.
For? better part of the year, the sector apart from giant strides made by the private sector in the in gas distribution networking, it was the same old song? of promises , debates , accusations and counter accusations of fraudulent practices.
Oil exploration
Oil exploration in the country which slumped to the lowest in a decade after producers like Royal Dutch Shell Plc and Total SA, backed away from investment until the country’s petroleum sector improved in the year 2011 with the success recorded with the? amnesty programme of the federal government .
Attacks in the South-South by militants and armed groups including the Movement for the Emancipation of the Niger Delta(MEND), cut more than 28 per cent of the country’s oil output between 2006 and 2009, just as it deterred new investments.
The attacks which decreased after thousands of fighters accepted a government amnesty in 2009, brought some good tales to the nation’s oil exploration sector.
Shell sold some of its Nigerian onshore licenses to allow local producers and new investors to develop the deposits. The company’s decision to sell four out of a total of 34 blocks it holds in the country was recorded during the year.
According to its? Chief Financial Officer, Simon Henry , “The blocks sold and for sale represent less than 10 per cent of our production in Nigeria . So we’re really reducing the footprint and increasing indigenous participation.”
Power supply
Despite its pre-eminent role in global oil production, the country’s domestic power supply is under-developed, and shortages of power have hampered industrial growth.
As the country draws curtain on the year, the reality on ground seems not to reflect the efforts of the present minister, Professor Barth Nnaji, who adopted fresh strategies to boost power supply.
Nnaji , had at different? fora said the various power plants in the country would be repositioned to produce over 5000 Mega Watts of power before December this year.
? The minister of who undertook the tour of? power facilities with the Minister of Information, Mr. Labaran Maku, said the federal government was determined to ensure? that the problem of power failure was a thing of the past.
Amid palpable challenge of shortage of gas supply to the power generation plants , funding, inadequate power generation, radial and fragile grid , obsolete equipment and transmission line redundancy, the minister was very optimistic as the year rolled –by that the country would have power sufficiency within the shortest possible time.
He consistently maintained that the present administration was? aware that Nigerians desired stable power , pointing out that it has become a strategic national objective to which the nation was committed to change its economic fortunes.
More than ever before, there was a sincerity of purpose on the part of government to achieve the quest? for a? stable? power? supply through the Independent Power Producers (IPPs), even as the federal government’s plants were constantly been overhauled to recover lost capacity.
Nnaji at Egbin Power Plc located in Lagos said the federal government would? immediately disburse N1.5 billion required to complete repairs of the ailing ST-O6 for it to function at its full capacity.
? One of the novel ideas in the sector that was also vigorously pursued during the year under review was the issue of privatisation.
He said: “ Privatisation is about money.We want all the units of the 1320 mega watts of power be provided for Nigerians. Let us even consider expansion of the plants .There is nobody in the country that will take up the power plants and operate it the way it is . It would be operated above its original capacity.”
During the year, some of the impediments to effective power generation was also uncovered by the minister when he visited the Olorunsogo Power Station located in Ogun State.
There it was discovered that the Chinese operating the plants were frustrating power generation efforts by refusing to transfer the technology and manual of its operation written in Chinese language , just as they were accused by the management to have developed the penchant of ridiculing Nigerians and deserting the plants at will.
These efforts soon waned into despair with the shutting down of the nation’s biggest electricity generating plant which is the Egbin Power Station located?? in Lagos with its attendant loss of 1,080 megawatts.
The Chief Executive Officer, Egbin Power Plc, Mr. Mike Uzoigwe, confirmed the development and said the shutdown was caused by equipment failure, saying? before the setback,the station was contributing about 1,080MW to the national grid.
When it finally commenced operations less than 48 hours after it was shut down due to the said equipment failure it could only recover about 400 megawatts out of the 1,080 it lost .
The Chief Executive Officer, Egbin Power Plc, Mr. Mike Uzoigwe, simply told disillusioned Nigerians that “Unit 2 and Unit 5 are back. Unit 1 is now okay, but not connected to the grid yet. The two working units are altogether doing less than 400MW
Fuel subsidy bogey??
Debate on the contentious issue of fuel subsidy removal by the federal government? took the centre stage in the oil sector dividing members of the Organised Private Sector (OPS)? and every other segments of the society, with stakeholders taking different position on the issue.
While the government maintained that fuel subsidy removal would help to revamp the nation’s economy , many other stakeholders including the religious leaders and former President Olusegun Obasanjo to mention but a few said its removal would inflict more hardship on Nigerians.
Gas project
To this end, energy experts who appraised the sector during the year noted that the ongoing debate over the federal government’s decision to remove subsidies from petroleum products underscored the need to focus on alternative sources of energy needed for both domestic and industrial uses.
The private sector operators in the energy sector rose to the occasion with investments in alternative and cost effective energy fuels.
One of such projects in the year 2011 is the 128km Akwa Ibom-Cross River natural gas pipeline constructed by a subsidiary of Oando Plc, the Eastern Horizon Gas Company, for the Nigerian Gas Company.
The project, was conceived by the Nigerian Gas Company, mid-wifed by Oando Gas and Power, an indigenous company, financed by a consortium of Nigerian banks comprising First Bank, Kakawa discount House, FSDH Group, First City Monument Bank Plc, Access Bank Plc, Fidelity Bank Plc, Ecobank Nigeria Plc and Sterling Bank Plc and executed by a Nigerian contractor, Oilserv.
The project, which was commissioned within the year, not only guarantees the supply of affordable energy sources but also opens up the south-south to industrial growth.
Petroleum product scarcity
The sector witnessed soaring price of Kerosene and cooking gas in the country , compelling? many people to resort to alternative sources, like firewood, charcoal and saw dust.
This is despite the fact that Nigeria is the world’s sixth largest exporter of crude oil. Kerosene, an essential product in most households, did not suddenly become expensive and scarce at major filling stations in the country, the price of cooking gas also went through the roof by over 7 per cent in most parts of the country .
While Kerosene sold for N170 per litre at filling stations in Lagos and neighbouring states in the year, to fill the 12.5-kilogramme cylinder costs consumers at N3,200 at most LPG plants and N3,400 and N3700 at retailers’ out-lets.
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