Nigeria needs $20bn annually to achieve gas expansion plan – NEITI

Nigeria needs an estimated $20 billion annually to bridge the country’s gas infrastructure, the Nigeria Extractive Industries Transparency Initiative (NEITI) has said.

NEITI Executive Secretary, Ogbonnaya Orji, disclosed this at the policy dialogue on Nigeria’s Decade of Gas plan organised by the African Initiative for Transparency, Accountability and Responsible Leadership (Afrital) in Abuja on Monday.

The Nigerian government had in December 2020 rolled out the National Gas Expansion Programme (NGEP) to help deepen the use of natural gas and make it a preferred form of cleaner, cheaper energy for both personal and industrial use.

Mr Orji said Nigeria has the largest gas reserves in Africa and the ninth-largest globally. NEITI reports put the country’s gas reserves at over 200 trillion cubic feet (tcf).

He explained that NEITI’s position is consistent with the provisions of the Petroleum Industry Act passed in 2021.

“The PIA provided the most significant progress for the gas sector in strengthening governance and providing fiscal frameworks for the sector’s growth.

“We call on the government to urgently put a national gas utilisation policy in place. Such policy needs to be clear on the specific roles of the industry, government and investors in implementing the plan,” Mr Orji said.

Similarly, he said the gas utilisation plan should show the market-driven opportunities that would successfully translate the gas plans into sustainable economic development.

For the gas utilisation policy to work, Mr Orji said there is a compelling need for deliberate ambitious investment in its infrastructure.

“This includes specific connectivity across upstream facilities to processing, power plants and other end uses.

“The network code provides a framework through third-party access to resolve some of the connectivity issues, but to a large extent, achieving the desired gas expansion will require an estimated $20 billion annually to bridge Nigeria’s gas infrastructure,” Mr Orji said.

He said given the shrinking fossil fuel investment landscape, clarity is required of the infrastructure to be prioritised.

He explained that a new concept analysis would be required to demonstrate the new approaches the government intends to embrace to deliver on the gas infrastructure.

Besides, he said the projects must be prioritised given limited international funding and competing energy transition and development objectives.

Against this background, he said NEITI recommended that the federal government develop and publish a detailed, realistic and comprehensive gas policy with clear roles for the state and non-state actors and timelines to track periodic progress.

He also called on the government to provide an updated infrastructure blueprint outlining infrastructure commitments and priorities to address the vast shortage of gas industry infrastructure across the value chain; and direct independent assessment of the risks involved with gas expansion to create a strategy to minimise the impacts, maximise the benefits, phase out oil and gas assets and plan for a post-oil and gas future.

Government must also develop an industry-specific linkage between the integrated gas policy with Nigeria’s energy transition policies with a supporting action plan built on a robust monitoring and evaluation framework to track implementation, he said, adding that it must also marshal out a detailed plan to end gas flaring through a private sector-led commercialisation program and pursue an open, competitive and transparent gas flare commercialisation programme (NGFCP).

Paradigm Shift

In his address, the Executive Director of the African Initiative for Transparency, Accountability and Responsible Leadership (Afrital), Louis Ogbeifun, said many countries are abandoning fossil fuels as a significant energy source.

For Nigeria to make good on its promise to join the train, he said the country would have to increase its crude oil production in the short run beyond the current level to have money to diversify and invest in other alternative sources.

He said even in the medium and long-term periods, natural gas, which Nigeria has in abundance, which has been described as cleaner than coal or petroleum, is also within the fossil fuel family.

This, he said, means that walking off fossil fuel for Nigeria is not immediately foreseeable.

“The question is, how does Nigeria maximise its hydrocarbon benefits with so much of its assets lost to vandalism, crude theft, and the massive depreciation of its currency?

“Nigeria’s focus on using gas as a sustainable energy alternative is capital-intensive. It has been speculated that Nigeria would need over $1 trillion to achieve the 2060 zero-emission targets,” Mr Ogbeifun said.

He said with the dwindling international funding support and the expulsion of foreign interests from some parts of the continent, which is spreading to other countries in the sub-region, the citizens must be worried about how to fund and birth the gas projects in a manner that would be cost-efficient, cost-effective, and less hazardous to our women, youths and the rest of the citizens.

“With the myriad of challenges facing the federal government, especially with funding regimes and the bullish behaviour of the USD against the Naira, what alternative right-sizing plans do the government have to ensure that the decade of the gas action plan is not in jeopardy?

“We should also be worried and begin to ask how the government shall deal with the burning of our gas, also popularly known as “gas flair,” that the target dates for ending gas fairing have been shifted several times, forex issues, lack or limited access to funding by acreage holders and local investors,” he added.

Over the years, he explained that Nigeria has behaved like the prodigal son by exporting mineral resources to earn dollars for consumption without savings, reinvestment in revenue, and employment generation ventures.

“It is also delighted to exchange its raw materials for finished products. Yet, we expect different results regarding foreign reserves, development, and economic boom.

“This model has buried many industries in the economic graveyards, created employment overseas, and worsened unemployment and poverty in Nigeria.

“These analogies reflect the contradiction of being a rich but poor nation. Rich because Nigeria is vastly rich and blessed with abundant minerals and energy resources but so poor that most citizens do not have access to affordable electricity and other essential social and welfare benefits,” he said.