Legislature
NDPHC lacks competence, capacity for gas supply contracts for Nigeria, say senators
There may be no end in sight for the lingering hiccups in the power sector as the Niger Delta Power Holding Company (NDPHC), one of the major players in the sector has been written off by the Senate Committee on Power for lacking capacity and competence to enter into gas supply contracts on behalf of the country.
Recently the Senate Committee on Power launched investigation into the make up gas (MUG) titled “Need to investigate the controversial Make Up Gas (MUG) processing deal involving the Federal Ministry of Finance, Niger Delta Power Holding Company (NDPHC), Calabar Generation Company Limited and ACUGAS Limited”.
At the investigation, the Senate committee members expressed displeasure at the way and manner the Niger Delta Power Holding Company (NDPHC) handled gas supply contracts that left huge liabilities for the nation.
During the proceeding, the Managing Director, Niger Delta Power Holding Company (NDPHC), Chiedu Ugbo said NDPHC has been taking gas from ACU Gas, which they used to generate power from the Calabar Power Plant to the national grid
According to him, in terms of payment payment, there are two issues: payment for what was consumed and payment for Make Up Gas (MUG), which he called “undisputed and disputed”.
He said they were not able to pay for the gas that was consumed because EMBET receipt from the market doesn’t cover what they have generated and NDPHC passed their invoices to the guarantor, which is the Federal Ministry of Finance (FMF).
He said it was clear “we generated this amount of energy using this amount of gas; however, Nigerian Bulk Electricity Trading (NBET) Plc has not been able to pay. So, you are the guarantor, pay and whenever NBET pays we will pay you back”. That is payment for what was actually consumed.
Taking this year, for example, he said “in January, we got 9.43% of our invoice paid. That invoice has about 65% gas cost. In that situation, we passed it to the FMF as a guarantor to pay because we have utilized the gas to generate the energy and sold to EMBET, but due to liquidity issues NBET is unable to pay, same with February and March”.
On MUG, Mr. Ugbo said because of the dispute on it between NDPHC and ACUGAS, FMF came up with the initiative that all the electricity generation companies’ MUG be taken and “repurposed”.
At this point, having listened to him, the Senate couldn’t hide its disenchantment with NDPHC and the vice chairman of the committee, Senator Lola Ashiru (Kwara South) said one thing they have discovered was that they were not sure if NDPHC has the capacity to purchase gas for your Generation Companies (GenCos).
“If the Federal Ministry of Finance is not there in the background, there is no way you could perform. There are so many things you are not sure of. You are not sure how you are going to off load the energy you are generating. You are not even sure the TCN will transmit neither are you sure there will be payment for whatever you are selling out.
“Looking at all these things, there is issue of capacity to enter into contract. When there is no capacity to enter into contract, what it means is that the existence of your business is in doubt.
The only way we can get out of this is a total renegotiation and when you are doing total renegotiation, you must be sure of your own capacity to do business. If you are not sure of it, we will just be going round and going deeper into debt. I advised that you should do a clear study of your own position.
“The world is going private. We were with Dangote at the weekend. It is a private enterprise and we were so amazed. He has thrown in almost $22bn into his business and he is very sure that he will succeed.
Now we are talking of our own GenCos and every day of our lives we are going deeper and deeper into debts. I don’t know what we should do at this stage, but I think it is important for you to carefully to carefully restructure your business, to carefully restructure yourself and repackage all these indices into a new contract renegotiation.
Speaking further, another senator said “the matter has become “a naughty issue”, adding that he was getting confused.
Chairman of the investigative committee, Senator Enyinayya Abaribe asked the MD, NDPHC if the have the right to go into contract negotiation that involves the Federal Ministry of Finance and therefore the country without the involvement of the Federal Ministry of Justice. He said the committee has a letter from the Attorney General of the Federation that the Federal Ministry of Justice was not involved in any MUG agreement.
“It is very surprising for us that you commit the country to this amount of money without the involvement of the Ministry of Justice”, Abaribe said.
However, the MD, NDPHC said this agreement was signed with take or pay provision in 2011, adding that at that time nobody anticipated the liquidity problem in the sector. The Attorney General, when it went to them for the gas supply agreement, reviewed it, took it over. Before we signed the PRG, the Attorney General’s office cleared it for everybody, for Federal Ministry of Finance, for us, i.e for gas supply agreement as at 2016, 2017; the renegotiated one.
Mr. Ugbo said the MUG was purely a Federal Ministry of Finance affair and NDPHC was only informed about it.
Dahiru Moyi, Special Assistant to the Minister of Finance and Coordinating Minister of the Economy, while answering a question from the senators on the outstanding volume of the MUG said “there are many lapses as I said. If we start to go deep into this things we will never end. So, the Ministry of Finance, to say at least, let’s put aside all things and find solution.
He said the outstanding MUG as at December 2022 is about 26 billion cubic of gas (bcf). That will bring $300 million to the Ministry of Finance, if it is Liquefied and sold as LNG. That was the idea and it’s growing by the day.
“We believe in 13 years, the Ministry of Finance will stop this hemorrhage, at least be able to get something to pay and support other projects. We cannot use money appropriated for a project to do this. It will cause a lot of disruption in the whole fiscal environment.
According to Mr. Moyi the MUG today may be 30 or 40 bcf, only ACU Gas may give us exact figure, adding that “the problem is that NDPHC contests and disputes everything unilaterally as you heard ‘force majeure’ without getting Ministry of Justice involved.
But Mr. Ugbo said they have done a lot of things. “We said we could use the gas in Alaoji and Calabar. As we speak, NDPHC have finished the pipeline from ACU Gas to Alaoji.
However, this seemed not to impress the committee members who felt that the country’s scarce resources were not being properly utilized to solve the problem
The National Assembly has called for a comprehensive reassessment of Nigeria’s Compressed Natural Gas (CNG) initiative following alarming reports of vehicle explosions attributed to uncertified conversions. Lawmakers are urging the Federal Government to prioritize rigorous adaptability tests to ensure the safety and suitability of the technology in Nigeria’s unique environment.
During the 2025 budget defense session of the Joint Committee on Petroleum (Downstream), Petroleum (Upstream), and Gas, Senator Natasha Akpoti (PDP, Kogi Central) questioned the adequacy of research conducted before rolling out the CNG program.
“Nigeria’s bumpy roads and hot climate differ significantly from the smooth and cooler environments where this technology originated. Were these factors considered before introducing CNG?” Akpoti asked.
Her concerns come amid incidents of explosions in CNG-converted vehicles. The Minister of State for Gas, Hon. Ekperikpe Ekpo, attributed these accidents to uncertified conversions carried out by roadside technicians, emphasizing that certified centers adhere to strict safety standards.
Ekpo also assured lawmakers that the technology had been evaluated by a Presidential Committee on CNG and affirmed its long-term viability. “CNG has come to stay,” he stated.
The session also highlighted budgetary concerns, particularly the Ministry of Petroleum’s 2025 capital allocation of N903 million. Lawmakers criticized the sum as inadequate to address Nigeria’s pressing energy challenges.
“For a ministry driving Nigeria’s energy transition, this allocation raises concerns about commitment to infrastructure and innovation,” remarked Hon. Kafilat Ogbara.
As Nigeria seeks to diversify its energy mix, the National Assembly has stressed the need for enhanced safety measures, proper implementation, and increased funding to fully realize the potential of CNG while ensuring public safety and trust.
***Seeks Support for Loans as Budgetary Provisions Fall Short
The Minister of Works, Senator David Umahi, has voiced his deep frustration over the state of Nigeria’s road infrastructure, highlighting inadequate yearly budgetary allocations as a major barrier to progress.
Speaking during the 2025 budget defense session before the Senate Committee on Works in Abuja on Friday, Umahi described the financial constraints as overwhelming. “I’ve succeeded in most of my life’s engagements, but I feel frustrated fixing Nigerian roads with these meagre allocations,” he lamented.
Umahi disclosed that President Bola Tinubu inherited 2,064 road projects valued at N13 trillion, but rising costs have pushed the estimated expenditure to N18 trillion. He noted that the N827 billion allocated for road infrastructure in the 2025 budget is grossly insufficient to address the challenges.
“Roads are critical to economic growth and poverty reduction. They create jobs and drive economic activities. However, fixing these roads cannot be achieved with yearly budget provisions alone,” he explained.
The minister urged Nigerians to support the government’s borrowing initiatives, assuring that the funds would directly impact citizens’ lives by boosting economic activities and reducing hunger.
Senators on the committee, led by Senator Mpigi Barinaga, praised Umahi for his efficient management of scarce resources and supported his call for alternative funding mechanisms. They acknowledged the scale of the work required and admitted that the proposed budget falls far short of what is needed to resolve Nigeria’s road infrastructure crisis.
The session concluded with a shared resolve to explore additional funding options to tackle the nation’s road challenges effectively.
***Minister Lokpobiri Assures of Reforms, Apologizes for Lapses
The 2025 budget defense session for the petroleum sector took a contentious turn on Friday as the Senate and House of Representatives Joint Committee on Petroleum (Upstream, Midstream, Downstream, and Gas) erupted into disorder. Tensions flared over delays in budget documentation, with lawmakers decrying the Ministry of Petroleum Resources’ perceived lack of preparedness and respect for legislative protocols.
The meeting, chaired by Senator Jarigbe Agom Jarigbe, was already fraught with logistical challenges. The cramped committee room, bursting with lawmakers and ministry officials, became the backdrop for a fiery exchange that highlighted the strained relationship between the legislative and executive branches. Calls to relocate the session to a more accommodating venue went unheeded, adding to the frustration.
Before the session could proceed, Hon. Kelechi Nwogu raised a procedural objection, pointing out the absence of vital budget documents. “We cannot engage in a meaningful discussion without the necessary materials. This undermines the integrity of the process,” Nwogu asserted.
The Minister of State for Petroleum Resources, Senator Heineken Lokpobiri, faced sharp criticism for the disorganization. Hon. Ado Doguwa, Co-Chairman of the Joint Committee, accused the Ministry of fostering an adversarial relationship with the legislature. “Minister, we see you only once a year, and even then, the lack of collaboration is glaring. This is unacceptable,” Doguwa said, his frustration evident.
Lokpobiri, in an attempt to salvage the situation, apologized for the lapses. “Distinguished Senators and Honourable Members, I deeply regret this oversight. It was not intentional. The budget documents are being distributed as we speak,” he said. He assured lawmakers that the Ministry remained committed to supporting legislative oversight and improving future engagements.
However, Lokpobiri’s lighthearted remark that the documents were being delivered in “Ghana Must Go” bags—containing no money—elicited mixed reactions. While some lawmakers chuckled, others viewed it as a diversion from the seriousness of the issue.
Doguwa, accepting the apology, stressed the need for strict adherence to legislative guidelines. “While we appreciate the apology, the late submission of documents is a breach of procedure. This cannot continue. We demand accountability and timely cooperation moving forward,” he said.
The session ultimately ended in stalemate, with lawmakers insisting on postponing the meeting until all necessary documents had been reviewed. The debacle underscores the persistent challenges of executive-legislative coordination in Nigeria’s budgetary process, particularly in critical sectors like petroleum.
As the Joint Committee prepares to reconvene, stakeholders will be watching closely to see if the Ministry of Petroleum Resources can rebuild trust and ensure a smoother process in the future.
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