A Review of the Nigerian Energy Industry

GACN, NLPG, GENCO’s, DISCO’s and the Nigerian Gas Revolution

Nigerian Content Initiative30 December 2013, Sweetcrude, Lagos – The growth and development of natural gas utilisation in Nigeria has been constrained by a lack of political will to put in place the appropriate policy, incentives and fiscal regime that would stimulate domestic gas utilization. Now, we seem to be making progress as practically all the ingredients are in place to ensure a successful tie-in to the Obama Power Africa project. This is a good time to challenge the government of President Goodluck Jonathan to deliver uninterrupted power to Nigerians.

The Gas Aggregation Company Nigeria Limited, GACN, which exists to stimulate domestic gas utilization and was formed in line with the National Domestic Gas Pricing Regulations, NDGPR, of 2008 is now available to serve as a vehicle for the implementation of the Gas Master Plan, GMP. GACN must begin to engage stakeholders aggressively if it should actualize its role as a strategic aggregator of Nigeria’s gas. Two government policies: NDGPR and the Nigeria Domestic Gas Supply and Pricing Policy, NDGSPP, are also available for gas investors. It is hoped that with the privatization of PHCN, signing of agreements with GENCO’s and DISCO’s, stakeholders would be encouraged to maximize statutory provisions and utilise existing policies and agreements to bring about a positive change.

The Gas Sale and Aggregation Agreement, GSAA, simplifies a lot of complexities that had hitherto frustrated the efforts of well meaning investors. It requires that a buyer submits a Gas Request Form, GACN processes the form, the buyer completes a due diligence questions, GACN processes the questionnaire, Buyer is accepted or rejected into the demand pool, accepted buyer is issued a GPO and draft GSAA and an agreement is signed as soon as such is reached by the buyer, seller and GACN. Nigeria thus has a definitive legal and regulatory framework with the gas master plan that can empower investors to achieve projects of national repute whilst creating value. Another viable vehicle for domestic gas use is the Nigerian Liquefied Petroleum Gas Association, LPGA, an umbrella body of stakeholders with a primary objective of promoting the use of LP gas at an affordable cost.

It is expedient now that we push for the implementation of the GMP thus ensuring that the three main facets: The Domestic Gas Supply Obligation, which is the obligation on upstream companies to make available to the domestic market a specific volume of their total gas production, thereby creating a structured approach to ensuring availability of domestic gas; the Gas Pricing Framework which adopts a gas pricing framework that categorizes the demand sector into three strategic sectors and applies various and bespoke pricing regime for each sector and the Gas Infrastructure Blueprint which proposes an integrated infrastructure strategy to support domestic, regional and LNG export markets are implemented speedily.

Now is the time for Power and hydrocarbon industries to collaborate and bring about a transformational development. Nigeria has been plagued with epileptic power supply for over 25 years so there is no better time than now for us to wake up and shape up. We need to see connectivity between natural resources and societal development. Now is the time to encourage investment in the development of Central Processing Gas Facilities, CPFs, and kilometers of pipeline network. If the last set of NEPA/PHCN staff were recruited over 20 years ago, I am now bothered that if Nigerian Content is to be achieved, we must find Nigerian experts who understand the national and regional grid, who can repair and fix the equipments in the old substations and stations and up-skill experienced hands, craftsmen, technicians and vocational who can deliver in the construction, operations and maintenance of safe gas and power infrastructure.

Gas Utilisation requires the highest safety standards especially with pipelines and our culture of construction without recourse to the appropriate authorities and standards. From Leadership down to the grassroots we require a national reorientation on Procedure, Health, Safety, Security and the Environment. We cannot continue to look through rose tinted glasses and think that all is well with the hapharzard manner in which the Nigerian ship is floating above the oceans of life. Nigerian Content must address the competency mindset of every Nigerian. We need depth from inward looking and patriotic Nigerians who mean well. Gas is a more dangerous natural resource than oil. There is a need to establish standards for individuals, organizations and governments to implement. Compliance to standards is critical to the Power projects that the GENCO;s and DISCO’s are charged with and above all we must begin to nurture a culture of respect for life more than trying to make undue profit.

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