Two years after its declaration, Nigeria’s ‘Decade of Gas’ policy has recorded underperformance at a paltry 5 per cent to date, lagging by as high as 80 per cent against the federal government’s 85 per cent annual growth benchmark.
The government blamed the poor record on a number of challenges that are impeding gas production and utilisation such as the introduction of the Value-Added Tax (VAT), high exchange rate, increase in the international price of goods, high cost of transportation as well as domestic producers benchmarking gas prices on international prices.
President Muhammadu Buhari had in March 2021 declared January 1, 2021 to December 31, 2030 as Nigeria’s Decade of Gas, a period the government aspires to accelerate gas production and use same to tackle energy poverty, industrialise the country, create jobs, lift 100 million Nigerians out of poverty and ultimately set the economy on the path of prosperity.
Providing the policy’s performance updates during a session at the just concluded Sub-Saharan African International Petroleum Exhibition and Conference (SAIPEC) 2023 in Lagos, the Southwest Zonal Coordinator of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Mr. Ayo Cardoso, however, said some improvements had been recorded.
“So, if we look at some of the projections that government gave us, just like I had mentioned before – about 85 per cent of base increase yearly. What we have is just about 5 per cent, “Cardoso said.
Tracing the growth of gas facilities between 2017 and 2022, he explained that Liquefied Natural Gas (LNG) facilities were five in 2017 and 42 in 2022 while Compressed Natural Gas (CNG) facilities stood at 97 in 2017 and 112 as at 2022.
According to him, Liquefied Petroleum Gas (LPG) plants in 2017, “were 675, and in 2022, we had 13,038. LPG add-ons in the filling stations has not grown much since 2017. It’s still battling between 500 and 585. So, from our own calculation, we have not really gone far as government really expected us to go in terms of Decade of Gas.”
He said the Decade of Gas was to basically ensure availability and domestic utilisation of gas and gas production, adding that with the proven reserve in the country, Nigeria has a good potential from gas business.
He noted that the domestication of gas products such as CNG and LPG has significant improvement in the country’s economy.
“Now, where are we on that Decade of Gas? The initial benchmark by government was that we have an increase of about 85 per cent per year in Decade of Gas. But are we there yet? I will say we are still far from that place.
“I will show some examples of how far we have gone. But we have seen that we have significant improvement in the domestic infrastructure such as pipeline, storage plants and processing plants as well, “he explained.
Cardoso maintained that Nigeria has potential 900 billion standard cubic feet (scf) of gas in the National Gas Flare Commercialisation Programme (NGFCP).
As of date, he stated that Nigeria’s LNG industry has grown significantly and that government was also more interested in gas-to-power just like other critical sectors, adding that about 70 per cent of the gas was to be dedicated to gas-to-power.
On the way forward, Cardoso stressed the need to encourage more local production and offtake of gas in the domestic market in order to insulate the gas price from international price and imported gas.
He also advocated the monitoring of gas producers to ensure realistic and relative gas price.
However, in the course of implementing the Decade of Gas policy, the NMDPRA zonal Coordinator said the organisation had learnt some lessons, saying that based on the fact that gas business is a long term business, there was need for a stable environment to enable more people play in that space.
He further said: “And the passage of the Petroleum Industry Act (PIA) has provided that enabling environment for the industry. There are quite a number of regulations that would be passed soon to pave the gas market. We also learnt that the sector has created more jobs for people, new skills. So, we need to invest more on our people, to train more of our people to get into that business.
“We’ve also learnt that there is need to have a lot of collaboration between government and private sector for us to forge ahead in this gas business.”
Also, fielding questions on the Midstream Infrastructure Fund (MIF) being managed by the authority and how industry operators can access those funds, Cardoso said there was need for companies to collaborate with government and reach some commercial agreements for execution of projects.