A bizarre strike action by staff of the government-owned Nigerian Petroleum Development Company (NPDC) and possibly aided by the management of the company is responsible for the near total darkness inflicted on the nation since the last four weeks, a BusinessDay investigation has revealed.
It began as a mere tussle for supremacy over who would manage the oil mining license OML 42 which holds significant gas reserves and straddles the vital gas pipeline linking the nation’s power plants but as it degenerated, the strike action has led to a near halt in the supply of gas to most of the nation’s 23 thermal power stations.
The strike action has put at risk the entire gas-to-power strategy of the government and the legacy of President Goodluck Jonathan’s administration.
The NPDC is a fully-owned subsidiary of the Nigerian National Petroleum Corporation (NNPC) engaged in Oil and Gas exploration and production activities in the hydrocarbon-rich regions of coastal Nigeria, both onshore and offshore; and more recently, around Equatorial Guinea.
The current problem began when oil sector leader, Shell opted to sell its assets held in OML 42 to NECONDE in 2011 but curiously the right to operate the field was vested in NPDC with disastrous consequences for production over the years.
A report by the globally acclaimed energy-consulting firm Wood Mackenzie, spoke of significant underperformance in NPDC management of divested assets when compared to performance of private companies like Seplat which in similar circumstances took over OML 40 at 14,000 barrels a day but quickly moved production to a staggering 75,000 barrels daily.
However, OML 42, which in its best days under Shell produced about 70,000 barrels a day, is today far below 20,000 barrels daily, under the management of NPDC.
Things changed last year when the Petroleum Minister opted to do a favour to one Nigerian firm acquiring a Shell asset by also granting it operatorship, and this then paved the way for others like Necode to benefit.
On the back of the minister’s surprise movement on the issue, the Department of Petroleum Resources, the industry regulator, changed tactics by putting up a recommendation which tactically granted rights to operate the field to Neconde but this policy shift is now being contested by workers of NPDC.
The striking workers did not only shut operations at OML 42, they also shut operations of the vital Trans Forcados Pipeline (TFP) through which passes the critically needed associated gas for processing and distribution to the nation’s plethora of thermal power plants.
The length and scope of the workers strike at NPDC is leading many in the industry to suspect that management which benefits from contract award as operators of OML may have either acquiesced or even supported the workers.
As at Monday, only five of the nation’s 23 thermal power stations were operating, supplying about 900MW leaving the nation in utter darkness.
The situation was worsened by the collapse of the hydro power stations.
In the past four weeks, Nigeria suffered seven total electric power system collapses, according to industry data.
Industry data also suggests that since NPDC took over management of the Trans Forcados pipeline, gas supply to the nation’s thermal power plants has been constrained.
Apart from the gas supply, Nigeria oil export from Forcads has also been wiped out by the strike action embarked on by NPDC staff.
The purchase of OML 42 by Neconde was completed for a purchase price, subject to closing adjustments, of $585 million. Of this amount, $435 million was paid by consortium partners as equity contributions to Neconde with KI paying for the potential share of KOV, pursuant to the bridge financing arrangement.
NPDC says on its website that it aims to be Nigeria’s leading E & P Company, profitably operating a global business but it has consistently failed to achieve any of these key objectives.
If as the workers claim, the strike has been called off, it could take another two weeks before power generating can reach the pre-strike level of 3,500MW.
By Our Reporter
