Govt requires N453bn to achieve Gas Masterplan – Report

Gas line.

Gas line.

*Says Nigeria lost N225bn to gas flaring last year

Oscarline Onwuemenyi

12 August 2015, Sweetcrude, 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 (CSJ) has revealed.

The report reasoned that if an average amount of $1m is required to build a kilometer of pipeline, then the country would require $2.3bn to implement the NGMP.

The report, which was made available to journalists in Abuja 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 further noted that 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.

“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 stated.

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.

Meanwhile, Onyekpere had noted during a media presentation on issues in implementing the Nigerian Gas Master Plan (NGMP), on Monday, that Nigeria has lost over N225 billion ($1billion) to gas flaring in 2014 alone, while about 295 billion standard cubic feet of natural gas was flared in nine months.

According to him, the volume of gas flared in the country could fuel about 7,000 mega watts of efficient thermal electricity power, adding that Nigeria is rich in energy resources yet poor in energy supply.

He said, “In 2014, Nigeria lost about $1 billion as oil companies operating in the country flared a large proportion of the gas produced from January to September 2014. Nigeria flares about 1.2 billion cubic feet (bcf/d) of gas per day, which could fuel about 7000mw of efficient thermal electricity power, over 1,400 agro-processing facilities, 350 textile plants, 70 fertilizer plants with opportunities for creating over one million jobs.”

Quoting the Nigerian National Petroleum Corporation (NNPC), Onyekpere added that “about 295 billion standard cubic feet of natural gas was flared in the nine-month period.”

He also said that the failure of the seventh National Assembly to pass the Petroleum Industry Bill (PIB) has robbed the nation a huge sum of revenue.

Onyekpere stressed that the country seems to lack a comprehensive implementable energy policy.
CSJ therefore recommended that President Muhammadu Buhari should dust the bill and represent to the National Assembly for quick action.

Besides, CSJ advised that the PIB be splitted into four parts because of the bulky nature of the bill, with the part dealing with gas isolated and immediately passed into law.

Onyekepere also said Nigerians should be encourage to participate in funding of the gas master plan which is to the tune of $25 billion.

While noting that the country’s inability to end gas flaring in the past was due to lack of political will, the CSJ Lead Director said the government with the industry stakeholders should fix a definite time frame to end flaring of associated gas and fully implement the gas re-injection Act, with the new rules carrying stiff sanctions for defaulters.

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