The Managing Director, Cowry Asset Management Limited, Mr. Johnson Chukwu has identified inadequate gas supply to the various power plants in the country as the major limiting factor to the power supply in the country.
Chukwu who disclosed this in Lagos however said that the out gone government has gone far in rectifying this problem as the second Escravous-Lagos Pipelines (ELPS)was billed for completion in July thereby bringing another one million litres of gas to Lagos adding that that would boost gas supply to all the power plants in the Southwest part of the country.
He hoped that with this feat, gas supply from the east to the west would have been achieved even as he disclosed that there was another plant by one of the oil majors to bring the third pipeline to Lagos reaffirming that gas transmission infrastructure was the major constraining factor which was being addressed.
According to him,” The other end is to strengthen the distribution network of these companies. Today, the companies because they have very low supply, they are not able to cover their costs and therefore, they are not in position to borrow”.
“So, once we address the level of gas supply from the transmission companies and from the distribution companies, the distribution companies would be in a better position and they will be able to source money from the capital market to strengthen their network and improve power supply to the homes and offices as well as to the industrial outlets”.
“And then the government has done one or two things in gas supply which I said gas has been the biggest constraining factor in power supply, government reviewed the gas price to achieve export tariff. I think the government may actually need to do more than that since gas is the major constraining factor, producers of it may need to be incentivized to act as a motivation to build gas treatment infrastructure to dry the gas and supply dry gas, that is to remove the liquid so that they can supply dry gas to the power plants”.
“But that will be influenced by the price for which they are selling the commodity because at low prices, they are not ready to make additional investments in the gas treatment plants”, he said.
Chukwu therefore called on the new administration to make direct investments into transmission grid or better still go into Public Private Partnership arrangement to get it done explaining that because of the nature of the transmission grid which he said was monopolistic in nature, there was the need to have some level of government influence in the area.
