A Review of the Nigerian Energy Industry

Govt requires N453bn to achieve Gas Masterplan  

Oscarline Onwuemenyi 18 August 2015, Sweetcrude, Abuja – The Federal Government would require a total amount of $2.3 billion (N453.1 billion) for the 2,300 kilometres of pipelines identified under the Nigeria Gas Master Plan, NGMP, a study conducted by the Centre for Social Justice, CSJ, has revealed.

Gas line.
Gas line.

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

The report, which was made available 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 $2 million to develop a kilometre 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 kilometre and $2 milliion per kilometre (for large diametre projects over rugged terrains).

“If we take the average cost of $1 million for each kilometre of gas pipeline and 2,300 kilometres of pipelines identified under the NGMP will require about $2.3 billion.

“Due to a number of reasons, mainly the risk of politically-inspired violence, vandalism, 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.

It 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 $18 billion 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 N1 trillion a year subsidy budget to the funding of the gas masterplan, as well as floating dedicated bonds and developmental loans including Diaspora Bonds to fund the gas masterplan.

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