Manufacturers and other users dependent on gas supplies from the Escravos to Lagos Pipeline (ELP), a natural gas pipeline which supplies gas from Escravos region of the Niger Delta area to Lagos, are counting their costs after a fire Tuesday night led to the closure of the pipeline.
ELP, one of the most critical oil and gas infrastructure feeds seven plants, seven gas plants, connects the 250,000 barrels per day Transforcados terminal and serves numerous industrial users, making it one of the most important oil and gas infrastructure in the country.
In a statement issued on Tuesday night, the ministry of Power, Works and Housing said that gas supply to Egbin power plant with electricity generation capacity of 1,320 megawatts (MW), 676MW Olorunsogo National Integrated Power Projects (NIPP) plant, 338MW Olorunsogo plant, 450MW Omotosho NIPP plant, 338MW Omotosho plant, and 60MW Paras power station were affected and thus they were shut down.
Also affected was the Forcados Oil Pipeline System, the second largest network in the Niger Delta and transports oil water and associated gas from fields in the western delta to the Forcados oil terminal. The terminal has an oil export capacity of 400 000 b/d. A 31 kilometre pipeline delivers crude to offshore loading berths for export. The Trans Forcados Pipeline (TFP) is the major trunk line within the system into which feed multiple branches from onshore fields.
Due to shortage of the pipeline network onshore feeds such as Utorogu, Sapele,Oben, Odidi, Escravos, Ovade and Oredo have also been affected affecting gas supplies to industries in Lagos
“There is intense scrambling to fix the problem because the ELP is too critical to be shut down for long. It controls the major artery of Nigeria’s gas supply, feeds the most critical power plants, this is why everyone is working hard to rectify the problem,” said Chuks Nwani, an energy lawyer based in Lagos with knowledge on the matter.
Many manufacturers who use gas as their source of power supply foresee a bleak 2018 if nothing is quickly done to fix the problem.
Manufacturers say they will have to find alternatives to gas such as Low Pour Fuel Oil (LPFO) but admitted that it is expensive to embark upon.
Ibrahim Usman, chairman of Manufacturers Association of Nigeria Power Development Company, told BusinessDay that it would hit most of the heavy industries such iron and steel hard. Usman said that many firms are devising ways of dealing with the situation.
“It is going to be a disaster, really. I hope this does not portend a bleak 2018. The immediate impact of this will be seen in the cost of production,” Usman said.
One manufacturer, who is a member of MAN Gas Users Group, said that this might take the manufacturing sector back to 2016 when gas was scarce and expensive.
“It is not easy to immediately resort to LPFO if your power plant is gas calibrated. So, it is a situation that will ultimately raise production cost and prices of goods. For a country like ours where it is hard to pass on costs to consumers due to competition from China, this will further affect our competitiveness,” the manufacturer, who preferred to speak anonymously, said.
Frank Jacobs, president of MAN, told this newspaper that some manufacturers might be forced to shut down eventually.
“Gas is the source of power for most manufacturers. So, with this kind of situation, factories will shut down, and many will begin to look for alternatives. The impact is well known,” Jacobs said.
Nigerian manufacturers spent N129.95 billion on alternative energy sources in 2016 against N58.82 billion recorded in 2015.
The 2016 figure represents 121 percent jump from that of 2015.
About 30 to 40 percent of manufacturers’ expenditure is spent on alternative energy sources such as fuel, diesel, gas, low-pour fuel oil, coal and inverters as they grapple with incessant power disruptions, which cripple production activities.
Many parts of southern Nigeria were thrown into darkness on January 2, 2017 when a damage caused by fire was reported on the pipeline. The incineration of the ELP, which was built in 1989, was suspected to have been caused by a bush fire at Abakila, in Ondo State.
“Since the Incident, the Transmission Company of Nigeria speedily deplored to the site and within an hour we were able to restore the national grid and get it back up,” said Usman Mohammed, the managing director of TCN in an interview on Channels Television on Wednesday night.
Meanwhile, checks show many parts of Nigeria are still thrown in darkness. Electricity consumers in many parts of Lagos and other south west states continued to experience blackouts as the bulk of power to the grid is now from hydro sources.
BusinessDay checks on the Nigerian Electricity System Operator indicate that generation as at 06:00Hrs on 04/01/2018 stood at 3,081.70MW. This is 2,140.6MW less than the record peak generation of 5222.3MW that went into the grid on December 8, 2017.
NNPC in a statement yesterday said firemen had been drafted to the scene and were able to contain the fire from the leak point of the pipeline incident. However, the fire could not be extinguished due to the high pressure of the line.
“To put off the fire, the line would require being isolated and depressurized, which might lead to a complete shutdown of the pipeline segment for repair works to be carried out.
“The exercise will affect gas supply to customers in Ondo, Ogun and Lagos State with subsequent shutdown of the following power plants with a combined generating capacity of 1,143MW: Egbin, Lagos, Olorunshogo, PEL Olorunshogo, Ogun, Paras Power Plant, Ogun and Omotosho plant, Ondo State,” said the NNPC.
ODINAKA ANUDU & ISAAC ANYAOGU
