A Review of the Nigerian Energy Industry

Institute appropriate sanctions for gas flaring – Clean Energy boss

04 vOctober 2015, Lagos – The Federal Government has been called upon to institute appropriate sanctions for erring gas flaring companies in Nigeria.

Shell gas flare at Kolo Creek - surrounded by agricultural fields.
Shell gas flare at Kolo Creek

This was the advice of the Chief Executive Officer of Clean Energy Group, Mr. Deepak Khilnani, in a chat with Sunday Vanguard. He said that the problem of stemming gas flaring in Nigeria is a technical one, not one to be put at the doorstep of government.

Gas flaring & solution

Khilnani said that when oil is produced, associated gas is emitted, but that in such situation what is done with the gas when produced matters.

He listed three options that are available which include re-injection into the firm, which he said is not always technically possible, the second, is the company flares for safety, otherwise if allowed, the gas will flow up into the atmosphere, which he described as poisonous.

And thirdly,  is to use it. He said what Clean Energy’s business has been about, right from the beginning and will continues to be on the basis is of the utilization of domestic natural gas. And once that grows, then you will find that the flaring will reduce substantially.

His words,  “all government need do, or say to all companies ‘is, we will fine you” but, if they fine them and the flaring continues, then they can shut them down. But when you shut them down, the oil production stops.  So actually, I do not put this at the door of government. Actually, the only real sustainable solution is to have a utilization of natural gas.”

Power generation and distribution

Looking  at government’s effort at power generation and distribution he said that government is toeing the right line in terms of privatization of  transmission and Generation

“I think everything might not have gone as quickly as we would have liked it to happen, but I strongly believe that the government is very much on the right part particularly now with the new government. They are taking things very seriously to compress the time-lines to achieve the objectives that were laid down.”

“I think you would see, and you are already seeing, many of my friends tell me just when the lights go off, that National Electric Power authority, NEPA, is much better. Some say the power availability now  is much better. One cannot make a summary as they say, but things are definitely getting better, and you will see, I believe that the national generation will continue to rise. So in a short answer, Yes, I do believe that the government and the present government particularly is taking very proactive steps to ensure that the privatizing and the growth of generation and transmission and distribution continues in a sustainable way.”

Speaking on challenges of doing business in Nigeria as a foreigner, he said, challenges in business abound everywhere.


Business challenges

Specifically in Nigeria, the availability of finance is always an issue. Money is very expensive in Nigeria, the interest rates are high. So that creates a higher challenge.

“All our projects are very capital intensive, that means that rather than if we did a project in Europe, maybe we will borrow 80 percent and put 20 percent of our equity. In Nigeria, the ratio is very different. We have invested a substantial amount of equity over the last so many years that we have been working in Nigeria, and continue to do so. And that is certainly a challenge that we have. Sometimes the traffic can be a bit of a challenge, that can sometimes be difficult.

In addition, he stated, I cannot also request people to come to my office for meetings which is always better. So, by and large as I said earlier, I believe Nigeria to be a very dynamic and exciting place to do business. We will welcome challenges as they arise.

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