A Review of the Nigerian Energy Industry

Nigeria needs N453bn for gas pipelines – CSJ

11 August 2015, Abuja – The Federal Government would require a total amount of $2.3bn (N453.1bn) for the 2,300 kilometers of pipelines identified under the Nigeria Gas Master Plan, a study conducted by the Centre for Social Justice has revealed.

Iranian gas export to Turkey.
Iranian gas export to Turkey.

The report, a copy of which was made available to our correspondent in Abuja on Tuesday by the Lead Director, CSJ, Mr. Eze Onyekpere, revealed that depending on the terrain, it would cost between the sum of $800,000 and $2m to develop a kilometer of gas pipelines.

It said if an average amount of $1m is taken per kilometer, then the country would require $2.3bn to implement the NGMP.
It said going by the rise as well as the the risk of political violence, majority of the international oil companies are not willing to invest such an amount into the gas sector.
It said, “The construction cost of developing natural gas pipelines and infrastructure vary between $800,000 per km and $2m per km (for large diameter projects over rugged terrains).
“If we take the average cost of $1m for each kilometre of gas pipeline and 2,300 kilometres of pipelines identified under the NGMP will require about $2.3bn.
“Due to a number of reasons, mainly the risk of politically inspired violence, vandalisation, the risk of expropriation and the long gestation period before the investment becomes profitable, international oil companies are unwilling to invest in gas projects while government and citizens are desirous of gas investments.”
The report said since the multinational oil companies are not willing to invest in the sector, the Federal Government can take advantage of their unwillingness to channel resources for gas infrastructure.

It said the funding could be done through various dedicated financing channels.

Some of them are the channeling of part of the $18bn unremitted oil funds identified by the Nigerian Extractive Industry Transparency Initiative when it is recovered; dedicating the proceeds of Federation Account dividends and tax from existing Bonny LNG Company to new gas investments.

It also recommended the scrapping of fuel subsidy and channeling the about N1trn a year subsidy budget to the funding of the masterplan, as well as floating dedicated bonds and developmental loans including Diaspora Bonds to fund the gas masterplan.

– Punch

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