Resolving Nigeria’s energy challenge through Bayelsa power hub initiative

                                 

ALTHOUGH Nigeria’s Niger Delta region was once notorious as a hot bed for kidnapping, militancy and youth restiveness, new things are beginning to emerge in the ho­rizon, as governments of the vari­ous states in the zone are making strident efforts to contribute more to national development based on their competitive advantages.
For Bayelsa State, there appears to be a deliberate strategy by the government to erase resentment and all negative tags on the oil rich state and home to Nigeria’s im­mediate past President Goodluck Jonathan using its natural endow­ments and economic potentials as a selling point.
What perhaps seems to still wor­ry discerning observers of Africa’s largest economy was why succes­sive governments had continued to play politics with the state’s devel­opment aspirations until Governor Seriake Henry Dickson last year picked up the gauntlet to kickstart its industrialisation master plan with the 1st Bayelsa State Eco­nomic and Investment Forum.

Spurred by the success of the maiden edition titled, “Unlock­ing Bayelsa State’s Economic Potentials, Opportunities and Challenges,” the government last month moved to consolidate on its 2014 achievement, which had already seen the signing of about five memoranda of understanding with investors in pharmaceuticals, power generation, telecoms, agri­cultural and SME financing.
The imperative for the state’s industrial development agenda, however, resonated about a fort­night ago when development and economic experts from the length and breadth of the country con­verged on Yenagoa, the Bayelsa State capital for the 2nd Economic and Investment Summit with the theme, “Unlocking Bayelsa State’s Industrial Future.” The objective apparently was to explore how best to use its abundant natural re­sources to catalyse industrial devel­opment process and create jobs for her citizens.
And in demonstration of its readiness to partner the Nigerian and global business community in the task of the state’s economic transformation, the Governor Se­riake Dickson administration nar­rowed the 2015 summit down to four achievable targets, focusing on its areas of competitive advan­tage including agriculture, oil and gas industrial activities, power gen­eration and manufacturing.
According to the governor, the overall objective of the 2nd BSEIF is to diversify the state’s economy, create jobs, grow its internally generated revenue and boost its in­dustrialisation by moving attention away from crude oil sales.
It was indeed on the basis of these key issues that he unveiled various initiatives and projects to fast-track the process to assure the private sector that Bayelsa is ready for business.
The governor said, “We are pleased that Brass has been granted a free trade zone status. The grant of free trade zone status will sig­nificantly impact over two multi-billion dollar projects in Brass Is­land, namely Brass Fertilizer and Brass LNG. The presentation by the Oil and Gas Free Trade Zone Authority will reveal investment opportunities for project develop­ers and financiers at the Brass Oil and Gas City.”
Dickson also used the oppor­tunity to unveil the master plan for 50-hectare Eco Industrial Park to be built at Gbarantoru and the 220-hectare power generation hub in Gbarain as well as the Agge Deep Seaport.
The Bayelsa helmsman, how­ever informed the business com­munity particularly the nation’s pri­vate sector that his administration remained committed to providing critical infrastructure and enabling environment to drive their invest­ment in any of the projects.
While presenting an overview of the 2nd BSIEF, the state’s Commis­sioner for Trade, Industry and In­vestment, Kemela Okara, admitted that the theme of the 2014 summit, which was “Unlocking Bayelsa State’s Economic Potential: Op­portunities and Challenges,” had already begun to yield dividends considering that over five Memo­randa of Understanding (MoU) have been signed between the state and various investors on power generation, pharmaceuticals, tele­coms and financing for agriculture and SMEs.
He stated: “Leveraging on the positive outcome of the 2014, the theme for BSIEF 2015 is Unfold­ing Bayelsa State Industrial Future. Our objective is industrialisation, focusing on key sectors of power generation, agriculture and in ad­dition to unveiling the investment opportunities in the Brass Oil and Gas Free Trade Zone Area.”
Okara said the state was deter­mined to achieve the objectives set out by the governor to create jobs and industrialise the state through private sector partnerships.
Matters Arising
Although the 2015 Bayelsa State Investment and Economic Forum has come and gone, there were quite a few lessons that all stakeholders that attended the conference as well as those that monitored proceedings in the media space took home with them.
One of such lessons, as Okara puts it, is that the state is ready to partner the Nigerian and global business community, considering the government has gone the ex­tra mile to strengthen security and improve the business environment particularly in the areas of getting property titles and other fiscal in­centives.
He explained that one of the key benefits of the state government’s partnership with the private sector would be the thousands of jobs that investment in gas and other sectors would generate for youths of the country.
Okara said state government has already signed an MoU with one of the leading power vendors in the country, although the challenge now was developing the transmis­sion capacity to evacuate the power generated. The Commissioner as­sured the state was also developing the landmass to ensure immediate takeoff of the projects while issues of security of lives and property are put on the front burner.
Another key lesson from the de­liberations of some of the discus­sants at the forum is the revelation that the Nigerian government has for long been playing politics with power generation, even when it could developed Bayelsa or other Niger Delta states with sufficient gas reserves as a power generation hub for the entire nation given their huge gas reserves.
Bayelsa State, for instance, ac­cording to experts, is sitting on gas reserves coming from the op­erations of the Royal Dutch Shell platforms.
Available statistics show that the country flares over 1 billion scuf daily, much of which is from the Shell platforms, but not much has been deployed to power generation due to lack of gas infrastructure.
The state, for over 16 years, has sustained its gas supply agreement with Shell to meet much of its pow­er needs but the smallness of its generation and transmission infra­structure has limited the quantum of gas it can take from Shell. State sources further disclosed that the oil and gas rich state has capacity to generate over 4500mw, which is equivalent to Nigeria’s total capac­ity outside the hydro power’s con­tribution. Yet, the Federal Govern­ment is beating its chest for having completed 10 Independent Power Plants that cannot come on stream due to lack of gas supply since most of these facilities are located far from the sources of gas supply.
Little wonder the state govern­ment is extending an olive branch to investors in the oil and gas sec­tor to partner it build bigger power generation and transmission facili­ties for onward evacuation to the national grid.
Geographically, the state is locat­ed at the tip of the Atlantic Ocean and close to the Gulf of Guinea, which makes it suitable to evacu­ate power to the national grid even when all the generation infrastruc­ture are located within its jurisdic­tion.
Meanwhile, power generation experts believe it will be more cost-effective and economical to build transmission high tension lines to evacuate power generated in a loca­tion with adequate gas supply than laying gas pipes to IPPs and ther­mal stations in distant locations, which are usually prone to vandal­ism and brigandage.
There lies the economic sense in the Nigerian private sector explor­ing the Bayelsa power generation hub option, which many believe could end the nation’s electric pow­er challenges in no distant time.
What experts are saying
But speaking on the imperative for developing a national power hub in locations with abundant gas reserves, Executive Chairman of the National Electricity Regulatory Commission (NERC), Dr. Sam Amadi, expressed optimism that with the Federal Government’s decision to continue its privatisation policy, there would be no reason it cannot provide the enabling environment to further incentivise the private sector into participating in the development of gas infrastructure in areas with competitive advantage
Amadi, who was represented by his Special Assistant, Dr. Uche Okoro, explained that Bayelsa State in the Niger Delta region currently boasts of industrial and landed assets that can host over 15 Independent Power Plants, coupled with its other endowments which the country needs to fully resolve its power generation challenges. The missing link perhaps could be the political will to implement the project the way it ought to be done without allowing political exigencies and interferences to dampen the objectives.
From an economic point of view, the NERC boss noted that all the NIPPs ought to be located in the Niger Delta because of its abundant gas resources but for some inexplicable reasons, Nigeria has about 10 IPPs scattered across the country most of them, despite being completed are still struggling to get gas to power their plants.”
He said the agency was already working toward creating more incentives to woo the private sector investors into partnership to develop the gas projects. Such incentives, he said, include tax leverages, robust incentives and adopting an open door policy to prospective investors to see possible ways of assisting them.