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Gas: Unlocking 206trn SCF reserves with CBN’s intervention The

Nigeria has a huge gas resource-base capable of driving economic growth and lifting millions out of poverty. However, the country lags behind in gas development. REGINA OTOKPA examines the opportunities and benefits of the Central Bank of Nigeria’s N250 billion intervention facility to the National Gas Expansion Programme (NGEP)

 

Gas has been the major discourse at different fora in the oil and gas industry; players in government and the private sector have not minced words in stressing the importance of harnessing and stimulating investment in the gas value chain in order to create significant opportunities for a viable manufacturing, infrastructural and industrial sector, address the challenges of poverty and unemployment by providing the right economic needs to help Nigerians meet their basic needs and wellbeing.

 

Leveraging reserves

 

But the big questions have been how to leverage on the vast gas reserves, create a balance between the nation’s gas power and renewable power supplies, ensure gas is viewed globally as a transitional energy source, keep global funding for gas projects, obtain self-sufficiency in LPG and cooking gas in the next few years, and how the transition to gas vehicles as well as a decline in internal combustion engines (ICE) should be positioned.

 

Only a few months ago, the Minister of State for Petroleum Resources, Chief Timipre Sylva, who stressed that government was getting tired of only reeling out figures to support the importance of gas, said actions must be initiated to enable the country utilise her “massive gas resources inline with Federal Government’s Decade of Gas Initiative,” to make life more meaningful for Nigerians.

 

This may not take too long to become a reality, as the Central Bank of Nigeria (CBN), in partnership with the Ministry of Petroleum Resources, has taken the bull by the horns to drive the National Gas Expansion Programme (NGEP) with N250 billion.

 

This giant step has been estimated to unlock 206 trillion standard cubic feet of gas reserves in the country, create over 12 million direct and indirect jobs, approximately two million annually, through industrial activities in critical sectors, and provide leverage for additional private sector investments in the domestic gas market.

 

Apex bank’s objective

 

According to the apex bank, the N250 billion intervention is expected to finance large-scale projects under the Power and Airlines Intervention Fund (PAIF) in line with the existing guidelines regulating it.

 

Also, small-scale operators and retail distributors will be financed by the NIRSAL Microfinance Bank (NMFB) and/or any other Participating Financial Institution (PFI) under the Agribusiness/ Small and Medium and Medium Enterprises Investment Scheme (AgSMEIS).

 

Through this intervention, the bank is targeting improved access to finance for private sector investments in the domestic gas value chain, to stimulate investments in the development of infrastructure to optimise the domestic gas resources for economic development, fast-track the adoption of CNG as the fuel of choice for transportation and power generation, see LPG become the fuel of choice for domestic cooking, transportation and captive power, as well as drive the development of gasbased industries, particularly those into petrochemicals such as fertilizer methanol to support large industries, engaging in agriculture, textile and related products.

 

However, even though the NGEP offers a unique opportunity in unlocking gas molecules as a favourable combination of solution to the many problems bedeviling the country, stakeholders in the sector have advocated more conscious and deliberate efforts to address energy poverty, carbon intensive energy usage damaging the environment and potentially changing the climate in Nigeria, the importation of over 50 per cent of resources despite the huge gas reserves hovering above 206 trillion standard  cubic feet and the over persistence of deforestation as people turn to biomass (firewood) in search of cheaper energy option.

Sadly, projections show that the number of women who die in Nigeria annually due to the use of biomass, may double.

 

Throwback caution

 

The African Refiners and Distribution Association (ARDA) and experts had earlier warned of an imminent danger if Africa fails to quickly adopt modern clean cooking energy as over 600,000 Africans, especially Nigerians, may die yearly due to household air pollution like firewood and charcoal.

 

Despite the warning, the rate of deforestation with 14 per cent of primary forest lost to collection of wood for fuel between 2002 and 2020, is fast pushing Nigeria to the verge of environmental disaster due to desertification, loss of ecosystem, loss of biodiversity, land degradation and soil erosion.

 

But its not getting any better, as a kilogram of cooking gas currently trading for N500 as against the price of N300 earlier this year due to continuous weakness of the naira and the increasing price of natural and refined gas at the international market, is further increasing the demand for fuel wood used for cooking.

 

Besides the naira exchange at N510/$1 on the parallel market after its devaluation in May 2021 from N379/$1 to N410.25/$1, the global price of natural gas has equally witnessed over 60 per cent increase, trading close to $4 per Million British Thermal Unit (MMBtu) in recent times.

 

One key recommendation in addressing these hiccups have been the call for domestication, given its capability to reduce price, spur investment opportunities, reduce burden on  foreign exchange, address the monster of unemployment and strengthen the development of the downstream sector.

 

Experts’ views

 

According to the Executive Director, International Support Network for African Development (ISNAD-Africa), Adedoyin Adeleke, boosting local utilisation of gas at an affordable rate will be a mirage if Nigeria continues to import over 70 per cent of gas products, especially LPG, without domestication.

 

“The importation of LPG inflates the cost of gas in the country making it unaffordable for most Nigerians. Coupled with the increasing cost of living in the country, increasing unemployment, unabated increase poverty rate, the vast majority of Nigerians will be pushed to resort to fuel wood for cooking, hence increasing deforestation in the country.

 

“Local production for local consumption is the way. While it would be good to export, local consumption should be the priority.

 

Farmers do not sell their seeds, Nigeria must not continue to sell out the seeds that could catalyse her much needed development, yet without undermining the sustainability of our environment, conversation of nature, and loss of biodiversity.”

 

Stressing the need for government to attract, induce and support the private sector for massive investment in gas production, he disclosed that the consequent exclusion of importation associated cost, economies of scale and participation of multiple players would catalyse competition to crash the price of LPG. Also speaking to the grave issue, Special Adviser to the Min

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