There's no doubt that Nigeria is on the move. With a population of 175 million it is by far the largest nation in Africa, and this year it overtook South Africa to become the largest economy in Africa too, worth more than $500 billion. No wonder it is ranked as one of the MINT group of emerging economies together with Mexico Indonesia and Turkey - the powerhouse economies of the future.
As well as being the largest oil producer in Africa, Nigeria holds the largest natural gas reserves on the continent. Nigeria had an estimated 182 trillion cubic feet (tcf) of proven natural gas reserves as of January 2013, making it the ninth largest natural gas reserve holder in the world and the largest in Africa. It is not surprising therefore that it has been keen to develop its indigenous gas market as well as exporting it. In fact Nigeria established a Gas Master Plan in 2008 that aimed to reduce gas flaring and monetise gas resources for greater domestic use and to export regionally and internationally.
However the development of a gas network goes back long before this. it was in 1988 that Gaslink was founded, originally created to promote and develop infrastructure for natural gas distribution and utilisation in industries and households in Nigeria. In 1999 Unipetrol PLC (now Oando) assigned its right to develop gas distribution infrastructure for the Greater Lagos Area to Gaslink. The franchise area spans across the seven industrial estates comprising Ikeja, Ojota, Ilupeju, Matori, Isolo, Amuwo-Odofin, Iganmu, Ijora, Apapa and the adjoining areas. Under this agreement, Gaslink became Nigeria’s premier gas utilities company. It is one of the few companies in Nigeria involved in the piping and distribution of natural gas to industrial and commercial as well as consumers. Gaslink operates a 20 year gas sale and purchase agreement (GSPA) with the Nigeria Gas Company.
OG&P is the developer of Nigeria’s foremost natural gas distribution network and captive power solutions. It pioneered the private sector piping and distribution of natural gas to industrial and commercial consumers, successfully reviving private sector participation in the gas distribution business in Nigeria. With an ever-expanding pipeline grid in Lagos State, it is taking bold steps towards building sub-Saharan Africa’s most extensive gas pipeline network. By a long way the biggest local natural gas distribution company in Nigeria, supplying cheap, reliable, efficient, safe and clean fuel to industries in the country, OG&P gas distribution coverage include over 100 kilometres of distribution pipeline system in Lagos; another 128km in Akwa Ibom and Cross River States, as well as a concession award for the Port Harcourt Gas distribution franchise in River State.
Today OG&P is the largest private sector gas distributor and developer of captive power solutions in Nigeria. The company pioneered gas distribution in the greater Lagos area, and is currently expanding into eastern Nigeria and pushing out its network to the fast developing manufacturing clusters around the Lagos area. To date it has completed 230 kilometres of gas pipeline grid reticulation and it has as one of its main objectives the goal of linking western and northern Nigeria as well. OG&P is now well positioned to benefit from its first mover advantage and dramatically increase its customer footprint in the near term. The company's aim is to replicate the success of the Lagos gas distribution network in other parts of Nigeria. OG&P continually looks to expand its horizons by developing unique independent power generation solutions in areas where it has existing gas infrastructure while taking advantage of synergies with the exploration and production assets controlled by its parent, Oando plc.
Gas being an abundant and cheap fuel in Nigeria it clearly has a front line role in powering the country's economic future, however it is not all about gas, which is also being exported in massive quantities - Nigeria is already the fourth largest LNG exporter in the world. Domestically the gas can be diverted to generate electricity for municipal as well as for private sector projects. It was in 2008 that the Akute power plant was incorporated. Akute Power Limited was a project company set up to develop and operate a 12.15MW independent power plant made up of four 3MW gas-fuelled engines, for Lagos Water Corporation in Akute. This development also incorporates the construction of a 13km natural gas pipeline which delivers natural gas to the facility.
The power plant has helped the Lagos Water Corporation to achieve a 300 percent increase in its existing capacity utilisation, through the delivery of 24 hours uninterrupted electricity supply to its two main water treatment plants at Iju and Adiyan in Lagos State. Between them the Iju and Adiyan water treatment plants account for approximately 72 percent of the total capacity of Lagos Water Corporation. Lagos State has reported potential savings of about $3.6 million per annum derived from the services provided by the Akute Power Plant, whilst ensuring that many Lagosians have access to uninterrupted supply of potable water to their homes.
Another OG&P subsidiary Alausa Power Limited (ALPL) arose out of a Power Purchasing Agreement between Oando PLC and the Lagos State Government. This public-private Partnership project was conceived in response to the need for stable and cost effective electric power supply to the Lagos State Government Secretariat in Alausa, Ikeja and its affiliate surrounding agencies, which recognised that the provision of a reliable and consistent power supply was essential to their proper functioning.
Commissioned in 2013, the 10.6MW capacity plant provides power to the Secretariat using two 3.349MW GE Jenbacher J620 Reciprocating gas engines as its primary source with two 2.5MVA MTU diesel generating sets serving as backup. Gas is supplied to the plant via the Ikeja 1B pipeline network belonging to Gaslink Nigeria Limited, once again demonstrating the leveraging ability of Oando plc on its existing infrastructure to deliver quality service to its customers. With plans to expand the plant’s distribution network reaching an advanced stage, and with a BOT model and a 10 year tenure already in place, ALPL is seen as OG&P's progressive captive power solution for a government administration that is building the framework for a better Lagos.
Nigeria alone has an estimated requirement for well over 10,000 kilometres of gas pipeline to reach its main industrial clusters, says OG&P's CEO Mobolaji Osunsanya. So far his company and others have built out less than 2,000, an indication of the huge remaining opportunity in the sector. "There is ample scope, given the right support, for this company and others to get into the game and build this grid," he says.
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