OFF-GRID SOLUTIONS FOR INDUSTRIAL AND COMMERCIAL CLUSTERS

SUMEET SINGHDIRECTOR - SALES & STRATEGY

1. Power Sector Overview• Power Sector in Numbers• Value Chain• Challenges • Solutions

2. Off-Grid Solutions

3. Natural Gas for Off-Grid Solutions• Benefits of Natural Gas• Options• Benefits

4. Industry Clusters & Gas Coverage

5. Powergas Solution• Distribution Network• Company Overview• Strategic Alliances• Sourcing Partners & Key Customers

OUTLINE

1. Nigeria – Power Sector Overview

• Nigeria gas reserves currently stands at 202tcf• Natural-Gas Based Thermal Power Plants for this Presentation as it

represents more than 70% of existing Generation Capacity of Nigeria

POWER SECTOR IN NUMBERS

NIGERIA - POWER SECTOR

• Energy plays an important role in Developing Economies, and more so in Sub-Saharan Africa.

• As GDP is a measure of a Country’s Economy, similarly is the “Energy Consumption” a measure of the Country’s GDP & its growth pattern.

• Nigeria’s underperformance in Energy is highlighted by the low per capita kWh consumption, not only amongst the developing economies of the world, but also amongst Sub-Saharan Africa with total electrification of less than 50%.

NIGERIA - POWER SECTOR

POWER SECTOR – VALUE CHAIN

• Total Installed Generation Capacity (on-grid) ~ 7,000 MW• Actual Electricity Demand - 20,000 – 30,000 MW• Recent MAN Study – “Industries Self-Generate 13,000 MW

Power” – Off-Grid Power

• Total Installed Generation Capacity (on-grid) ~ 7,000 MW• Actual Electricity Demand - 20,000 – 30,000 MW• Recent MAN Study – “Industries Self-Generate 13,000 MW

Power” – Off-Grid Power

NIGERIA – POWER SECTOR

CHALLENGES IN SECTOR

• Default on Gas Payments and Contract Compliance• Inadequate Gas-Supply Infrastructure • US$ denominated Gas Price (in a Naira denominated Sales, Naira per

kWh)• Long Project Execution Timelines (white elephant)– Project Economics

change over such periods• Inadequate Power Evacuation Infrastructure • Old Transmission Networks and Sub-Stations – High Losses (100

generated, only 50-70 delivered) • Old Distribution Infrastructure • Metering Gap• Bad Service Quality • Revenue Collection Losses• Cost-Reflective Tariff

NIGERIA – POWER SECTORCAN THE GOVERNMENT SOLVE ALL POWER PROBLEMS ?

• Limited Sources of Revenue (especially after the Crude Price Crash of 2014-2015)

• Low Tax Collection Rate - Very bad Tax Compliance Rates• Other equally important key Issues to address (Roads, Healthcare,

Education, etc)• Countless other issues

GOVERNMENT INDIRECT CONTRIBUTION

• Cheapest Petrol in West Africa (7th cheapest in the World, at $ 0.40/Lit)• Cheap Diesel (despite not having efficiently operating Refineries –

$0.63/Lit)• Relatively Lower VAT Rates (current 5%, Finance Bill proposing 7.5%)

2. Off-Grid Solutions

NIGERIA – POWER SECTORWHAT IS THE SOLUTION?

• There’s No “One Answer” to all problems in the Power Sector

• An alternative and an immediate medium-term Solution :

“Off-grid Solutions For Industrial And Commercial Clusters”

• Definition of “Off-grid” (as per Merriam-Webster Dictionary)

“not connected to or served by publicly or privately managed utilities (such as electricity, gas, or water

• Nigerian Industries have been thriving on off-grid Solutions since more than 20 years

NIGERIA – POWER SECTOROFF-GRID SOLUTIONS

• Earlier off-grid solutions were expensive LPFO/Diesel-based self-owned Power Generation

• Slow migration (last 10-12 years) to Cheaper Gas-based off-grid solutions where Gas Pipeline/infrastructure is available

• Challenges for Users with above solutions:

• CAPEX/Finance restrictions for new Equipment • Less know-how of technology • Inadequate Gas Pipeline Infrastructure• “Resistance to Change”

Nigerian Industries have been thriving on off-grid Solutions since more than 20 years - What has changed now ?

3. Natural Gas for Off-Grid Solutions

NATURAL GAS FOR OFF-GRID SOLUTIONS

VIRTUAL GAS PIPELINE – OFF-GRID

NIGERIA – POWER SECTOROFF-GRID SOLUTIONS – Case 1 – Central Gas & Power Facility (Mini-Grid)

Central Gas Supply FacilityCentral Gas-Fired Power-Plant

Gas & Power Supply to the Industrial Cluster through Pipeline & Distribution Network

NIGERIA – POWER SECTOROFF-GRID SOLUTIONS – Case 2 – Captive Gas & Power Supply

Off-Grid Captive Gas Supply & Power Solution

Power Supply

Gas Supply

NIGERIA – POWER SECTORBENEFITS OFF-GRID SOLUTIONS vis a vis CURRENT ISSUES

Existing Challenges Off-Grid Solutions – addressing the issues

• Default on Gas Payments and Contract Compliance

Willing-buyer & Willing-Seller arrangement

• Inadequate Gas-Supply Infrastructure Off-grid Virtual Pipeline Gas Supply

• US$ denominated Gas Price (in a Naira denominated Sales, Naira per kWh)

Naira based Contracts (US$ escalations addressed)

• Long Project Execution Timelines (white elephant)– Project Economics change over such periods

Project Execution timelines < 1 Year

• Inadequate Power Evacuation Infrastructure

• Old Transmission Networks and Sub-Stations – High Losses

• Old Distribution Infrastructure • Metering Gap• Bad Service Quality

- No requirement of heavy transmission & distribution infrastructure

- No transmission losses - No challenges on the Metering as the

Solutions are ‘all-inclusive’- Service Level Agreements/ Guarantees

• Revenue Collection Losses• Cost-Reflective Tariff

• Big risks for Clients/Industries to not pay – as they have an ‘in-house Power Solution’

• Not having Power is a bigger loss• Willing-buyer & Willing-Seller arrangement

4. Industry Clusters & Gas Coverage

INDUSTRY CLUSTERS & GAS COVERAGE

GDSL & IKODODU CNG projects catering to the huge current & latent demand of the LAGOS region.

CUMMINS Gas Engines of more than 180 MW in Lagos & West Regions

OGBELE & ABA CNG located in the south-east catering to Port Harcourt / Calabar / Middle belt

Sourcing Gas directly from the Gas Field. Security of Supplies

The intersection region (LAGOS) shall be serviced both by UMUTU or the other two CNG projects.

UMUTU CNG serving the mid-central & Northern Nigeria. Direct Gas Sourcing from Gas Field. It is a perfect example of Gas Flare Reduction & Gas Monetisation Project LNG Project providing reach & storage solutions to Clients as far as Northern Nigeria

Powergas Project with its distribution range

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POWERGAS DISTRIBUTION NETWORK

Summary

Company Powergas Global Investments Nigeria Limited (“Powergas Nigeria”) is headquartered in Lagos, Nigeria

Founding Incorporated in November 2012 as a holding company for gas business in the group, before branching out into the business of processing & distribution of natural gas (CNG & LNG) to industrial customers in Sub-Saharan Africa.

Business Motto Deliver Natural Gas from ‘where its available to where it is needed’

Achievements • Nigeria’s largest compressed natural gas (CNG) producer & distributor

• 8 years of successful track record

• Sub Saharan Africa’s 1st CNG Plant in 2009 (JV in Ota, Ogun State)

• 4 operational plants with 138 MMSCM capacity by October-17 (60 MW Power Generation)

• Strong strategic alliance with leading Up-stream gas suppliers

• Gas delivered on unique “Gas on Wheels” model with 60,000 CNG deliveries so far

• 100% safety record since start of operation

• Best CNG/LNG Company of the year in 2016, 2017, 2018 and 2019

Geographic Mix Present in South-West (Lagos & Ogun State), and South-South (Rivers & Abia State) . New Plant under Construction in Umutu (Delta State) to cater to the “Middle-Belt” market

Major Customers In Nigeria: Anudu Plastics, Geepee Industries, Nigerian Bottling Company (NBC, Coca Cola), Nigerian Breweries (NB Plc, Heineken), P&G, Dufil Prima Foods (Indomie), Hayat Kimya, ROM Oil (FMN Group)

POWERGAS NIGERIA - OVERVIEW

STRATEGIC ALLIANCES

Gas Sourcing PartnersGas Sourcing Partners Equipment & Technology PartnersEquipment & Technology Partners

MAJOR CUSTOMERSMAJOR CUSTOMERS

CUSTOMERS & GAS SOURCING PARTNERS

POWERGAS CNG PLANT – IKORODU

POWERGAS CNG PLANT – IKORODU

CLIENT CNG DOWNLOADING STATION

CLIENT CNG DOWNLOADING STATION

Powergas Global InvestmentsNigeria Limited21, Adeniyi Jones Avenue, Off Oba Akran Avenue Ikeja, Lagos StateFederal Republic of Nigeria

Website: www.powergas.com

Thank You

SOURCES OF INFORMATION/BIBLIOGRAPHY

• Power Sector Value Chain - https://www.energyforgrowth.org/memo/gas-to-power-value-chain/

• Global Gasoline Prices Watch https://www.globalpetrolprices.com/gasoline_prices/

• Global Diesel Prices Watch - https://www.globalpetrolprices.com/diesel_prices/

• Source for Clipart for Industries -- https://clip.cookdiary.net/wallpaper-2362443

• Cummins HSK78 Gas Engine Set Picture -- https://www.cummins.com/generators/hsk78g-gas-generator-series

• DPR 2017 Nigerian Oil and Gas Report