Wednesday, December 11, 2024 -Nigerians may soon experience a total blackout, as the Nigerian Midstream and Downstream Petroleum Regulatory Authority has directed gas producers to cease supplying gas to indebted generation companies (GenCos).
Leadership reports that the Authority stated that the substantial debts
owed to producers had hindered their ability to sustain operations. It called
on gas off-takers, particularly power generation companies, to ensure timely
payment for the gas supplied.
The federal government and some GenCos currently owe over N2 trillion in
legacy debts to gas producers in Nigeria.
Speaking at a stakeholder sensitisation workshop on wholesale supply
operations in Nigeria, the Authority's Chief Executive Officer, Farouk Ahmed,
announced the decision. Represented by Joseph Tolorunse, the agency’s legal
adviser, Ahmed explained that gas producers had been instructed to halt further
supply to gas receiver companies due to non-payment for delivered gas.
The issue was highlighted by Emmanuel Cofie-Spiff of Oando, who reported
that only 28 per cent of the total gas supplied to off-takers had been
received. He said this had placed considerable financial strain on the company,
while the Authority had not adequately supported producers’ demands for
payment.
Ahmed dismissed this claim, stating that upon receiving complaints, the
Authority directed the affected companies to stop supplying gas until payment
was received.
Additionally, during the event, stakeholders and the regulator failed to
reach a consensus regarding the responsibility for collecting the 0.5 per cent
levy on gas supplied on behalf of the federal government.
Ahmed noted that the purpose of the engagement was to address concerns
raised during the initial phase of the NMDPRA sensitisation programme. The aim
was to reach an agreement that would facilitate the effective implementation of
wholesale supply operations.
He recalled that the Petroleum Industry Act (PIA), enacted in August
2021, introduced licences for wholesale supply operations as stipulated in
Sections 142 and 197 of the Act. These licences are required for entities
engaged in, or intending to engage in, the sale and delivery of natural gas and
petroleum liquids for domestic use or export.
Ahmed highlighted that wholesale gas and petroleum liquids supply
operations represent a significant evolution from the Petroleum Act of 1969,
which focused solely on production and exports. The 2021 PIA prioritises
domestic energy security alongside exports.
He emphasised the benefits of wholesale supply operations, including
fostering investment across the petroleum value chain, enhancing transparency
in hydrocarbon measurement, enforcing domestic obligations, ensuring fair
market practices, and enabling willing buyer-willing seller transactions for
Nigeria’s hydrocarbon resources.
However, unresolved issues persist, and the NMDPRA has faced challenges
arising from disagreements over the implementation of wholesale supply
operations.
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