Nigeria, unarguably one of the top leading countries rich in hydrocarbon resources of oil and gas, is lagging behind its peers, no thanks to corruption and lack of strategic investments that have stunted the growth of the sector for decades.
While Nigeria wrecks its oil and gas sector, other countries like Qatar, Saudi Arabia, Iran, Algeria have recorded significant progress by using their natural resources to build world-class infrastructure, created millions of jobs and moved their citizens from austerity to prosperity.
Regrettably, Nigeria, despite being blessed with hydrocarbon resources, only boasts of massive unemployment, rising poverty level, environmental degradation caused by gas flare, among other blights.
Despite the country’s abundant gas resources and a proven reserve of over 206 trillion cubic feet, the country does not have much to show for it as energy access, either for cooking or gas-to-power. Power is grossly insufficient, fuelling a higher energy poverty level.
Nigeria remains the major producer of hydrocarbon products in Africa, with the highest natural gas reserve and the sixth largest global exporter of liquefied natural gas (LNG), which contributes enormously to its GDP but homes are still in darkness, petrol scarcity has become the rule rather than the exception and the transportation is still in shambles, worsening the plight of the citizens.
The percentage of people with access to electricity in North Africa, East Africa, West Africa, Southern Africa and Central Africa stands at 98 per cent, 47 per cent, 23 per cent, 43 per cent and 25 per cent respectively. In a related manner, the constellation of the population without access to clean energy in West Africa is predominantly in Nigeria, with about 100 million people living without electricity.
Research on multidimensional energy poverty in Nigeria shows that the energy poverty index in the country is 0.38, which means that more than half of the households in the country are energy poor.
The major drivers of energy poverty in Nigeria are the surge in energy demand, insufficient energy supply and low income.
Reversing the trend
The demolish the barriers to funding in the gas value chain, the Minister of State for Petroleum Resources(Gas), Mr. Ekperikpe Ekpo, in March, inaugurated the multi-billion dollar Midstream and Downstream Gas Infrastructure Fund (MDGIF) to boost investments in the gas sector.
Ekpo, who doubles as the chairman of the MDGIF, said the Fund’s mandate is to support the midstream and downstream gas infrastructure development to align seamlessly with the aspirations of the President Bola Tinubu-led administration. In line with the Petroleum Industry Act (PIA) 2021, which provided for the establishment of the MDGIF, the immediate-past government of President Muhammadu Buhari had in August 2022 floated its pioneer governing council, which signalled the commencement of the fund.
The initiative is expected to help bridge the huge infrastructure deficit which has been a major hindrance towards gas distribution and utilisation in the country, especially in the wake of the ‘Decade of Gas’ and energy transition policies of the nation.
The MDGIF is to be generated from a pool of a certain 0.5 per cent, paid by each of the oil marketing companies on every litre of petroleum products imported into the country either through private finance initiative (PFI) or through the Nigerian National Petroleum Company Limited (NNPC). The fund is also raised through fines paid by oil and gas producing companies as penalties for flaring gas.
The fund is currently domiciled as a directorate at the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) where an executive director of the Authority is serving as the chief executive officer of the MDGIF, effectively making the Authority the custodian and manager of the fund.
Members of the MDGIF Governing Council include: Mr. Oluwole Adama, Executive Director; Mr. Joseph Tolorunshe, Secretary; NMDPRA Chief Executive — Mr. Farouk Ahmed; Representative of the Central Bank of Nigeria (CBN); Representative of the Federal Ministry of Finance; Independent members — Ms. Amina Maina (North-East); Mr. Edet David Ubong (South-South); and Mr. Tajudeen Bolaji Musa (South-West).
Also, in a bid to tackle gas-to-power gas shortages, Ekpo set up an Inter-Ministerial committee from the Ministry of Power and Gas to suggest sustainable ways to ensure a steady and sufficient gas supply to electricity generation companies.
The committee was formed following a meeting between the two Ministries at the Office of the Minister of State Petroleum Resources Gas in Abuja.
During the meeting, Ekpo outlined the challenges contributing to the inadequate supply of gas to the Thermal Power Plants.
He noted that these issues include a Decade of Gas legacy debts, the vandalization of gas resource infrastructures in the Niger Delta Region, and the domestic pricing of gas in dollars.
Ekpo affirmed his readiness to collaborate harmoniously with individuals, organizations, and agencies to address these challenges.
To deepen LPG penetration, Ekpo, yesterday met with major stakeholders in the gas sector, to among others, find ways to make Liquefied Petroleum Gas (LPG), more affordable and accessible to Nigerians.
During the engagement which took place in Abuja, the minister promised that the federal government will intensify efforts to increase upstream gas production and bridge the significant gas supply gaps which continue to hamper the country’s strategic economic sectors.
Ekpo noted that it was imperative to work together to unlock more resources to provide gas for power, for export, domestic use, fostering economic growth and ensuring energy security and eradicating poverty.
“We will prioritise the domestication and penetration of LPG and implement measures to significantly reduce the price of cooking gas for our people, ensuring it becomes more accessible, available, and affordable for our citizens,” the minister stated.
Deepening gas investment
After eight years of project delay, Ekpo recently assured that the $700 million Obiafu/Obrikom/Oben gas pipeline, popularly called OB3, would be completed in March 2024, a project that commenced in 2016.
Ekpo, described the OB3 gas pipeline as one of the biggest gas transmission systems in both Nigeria and Africa.
“Another milestone in our journey towards a gas-focused economy is the Ajaokuta-Kaduna-Kano pipeline. I am pleased to report that significant progress has been made in the construction of this critical infrastructure project, and we are on track to ensure its completion and commissioning as scheduled.
“The Obiafu/Obrikom/Oben (OB3) is a vital piece of gas infrastructure for the supply of feedstock to the AKK pipeline. This pipeline is among the biggest gas transmission systems in both Nigeria and Africa,’’.
To further crash the cost of cooking gas, Ekpo supervised the commissioning of Temile Development Company Limited’s 23,000 cubic meters ultramodern Liquefied Petroleum Gas (LPG) Carrier – ‘Alfred Temile 10 at the Hyundai Mipo Dockyard in Ulsan, South Korea.
He lauded the courage, vision and hardwork exhibited by Nigerian firms in breaking new frontiers in the gas business value chain in line with the local content law.
He worried that poor infrastructure, especially inadequate vessel remained a major factor responsible for the rising cost of cooking gas in the country. On the Trans border gas pipeline, the recently assured of uninterrupted supply to the Nigeria-Morocco gas pipeline project when he led a delegation from Nigeria to Rabat in Morocco to meet with the country’s Minister of Energy Transition and Sustainable Development, Ms Leila Benali and other officials involved in the project.
The Nigeria-Morocco gas pipeline was proposed in December 2016 in an agreement between the NNPCL and the Moroccan Office National des Hydrocarbures et des MThe Federal Executive Council in June 2022 authorised the NNPCL to enter into an agreement with ECOWAS for the construction of the pipeline.
“President Bola Tinubu is passionate about this initiative and will do everything possible to ensure that we get to the end of it. It is a long-term project but it will succeed. My assurance to you and the people of Morocco is that gas will not be a problem as far as Nigeria is concerned.”
NGA,expert set agenda
On their part, the Nigerian Gas Association (NGA) called on the Federal Government to ensure an immediate and critical review of the Petroleum Industry Act (PIA) after wide stakeholder engagement and consultation to address impediments hindering investment and ease of doing business.
NGA President, Akachukwu Nwokedi, acknowledged PIA’s enactment in 2021 as a welcome development that provides regulatory clarity for the petroleum sector and specific provisions for the gas industry.
He also commended the fiscal aspects of the law for its potential to transform the gas sector. However, Nwokedi emphasised the need for a swift review of the PIA to address gaps currently hindering the gas sector’s growth.
On his part, Energy policy analyst and partner, Bloomfield Law Practice, Mr. Ayodele Oni, urged the Minister to address issues around backbone gas infrastructure which he described as critical. ‘‘It’s the government’s duty to see to that aspect. Also pricing needs to be commercially driven for investment attractiveness. Further, there is a serious need to consider Naira pricing for gas and need for the government to settle historical debts to gas producers for the power sector.