Senate Proposes Stiffer Sanctions for Gas Flaring from 2021

  • Says Nigeria loses N217bn annually

Deji Elumoye in Abuja

The Senate thursday put the country’s annual revenue loss to uncontrolled gas flaring at N217 billion.

To stem the tide, the upper chamber is considering the passage of a bill which provides strict penalties for gas flaring offenders from 2021.

Leading the debate on the Gas Flaring (Prohibition and Punishment) Bill, 2020, which passed the second reading during plenary, the sponsor, Senator Albert Akpan (Akwa-Ibom North East), stated that available data from the Nigerian National Petroleum Corporation (NNPC) showed that in 2018 alone, Nigeria lost over N217 billion in revenue.

He added that oil and gas companies flared a total of 244.84 billion standard cubic feet (scf) of natural gas within the same period.

According to him, with the average price of natural gas put at $2.90 per 1,000 scf as of February 16, 2017, the 244.84 billion scf flared translated to a loss of $710million or N217 billion-using the official exchange rate of N305.25 per dollar.

Akpan recalled that although the bill was passed by the eighth Senate in 2018, it failed to receive concurrence by the House of Representatives due to time constraints as it was closed to the end of the legislative session.

According to him, the bill introduced by the ninth Assembly, which promises guaranteed rapid infrastructural development of the oil and gas sector, will enhance revenue accruable to the government and ensure clean environmental improvement for the people of the Niger Delta.

“The flaring of natural gas produce in association with crude oil is one of the most dangerous environmental and energy waste practices in the Nigerian petroleum industry.

“Gas flaring affects the environment and human health; results in economic loss, deprives the government of associated tax revenues and trade opportunities, and deprives consumers of a clean and cheaper energy source and environment.

“The volume of flared gas, according to analysis, is sufficient enough to feed three LNG trains or generate 3.5GW of electricity,” he said.

The senator explained that the bill, when passed into law, would address the inadequacies and shortcomings of the 1979 Act; bring gas flare penalty in line with current economic realities, and ensure the achievement of the national flares-out target of January 1, 2030.

Akpan said: “The current gas flare penalty of N10 per 1,000 scf is too low, and not in line with current economic realities, and it encourages continuous gas flaring by operators with its attendant negative effect on our environment instead of encouraging investment in infrastructure by the operators to make gas available for our domestic use.”

The Gas Flaring Prohibition and Punishment Bill 2020, according to the lawmaker, “seeks to increase the gas flaring penalty to an appropriate and commensurate level sufficient to de-incentivise the practice of gas flaring, while introducing other market measures to encourage efficient gas utilisation.

“The bill equally makes it mandatory for operators to submit gas utilisation plan within 90 days of the commencement of the Act for effective monitoring as well as makes provision for a two-year periodic review of the minister’s powers granted under the Act.”

Clause 11(a) of the bill provides that: “Any person who flares gas after December 31, 2020, contrary to section 4 of this Act, commits an offence under this Act, and shall be liable on conviction to pay a fine which shall not be less than the cost of gas at the international market.”

Senate President, Dr. Ahmad Lawan, thereafter, referred the bill to the Senate Committee on Gas headed by Senator James Manager for further legislative work and is to report to plenary within four weeks.