BY EMEKA EJERE
There is high optimism among Oil and gas experts and economic analysts that the target of expanding gas consumption in Nigeria would be substantially achieved with appropriate deployment of the N250bn gas intervention fund set aside by the Central Bank of Nigeria.
The use of cooking gas in Nigeria increased to one million metric tonnes in 2020 from about 400MT consumption level recorded four years ago. But operators attribute the increase to the removal of the subsidy on kerosene, noting that Liquefied Petroleum Gas (LPG) penetration was still far from the national target of five million metric tonnes set for next year.
It is no longer debatable that Nigeria is endowed with enormous natural gas resource. However, how to use this resource to develop and transform the nation’s economy and add significant value to the lives of its citizens remains a major issue for decades.
According to the Department of Petroleum Resources (DPR) –the regulator of activities in the Nigerian oil and gas industry, as at January 2020, Nigeria’s proven gas reserves stood at 203.16trillion cubic feet. The nation’s unproven gas reserve is still at about 600trillion cubic feet. These numbers no doubt put Nigeria as a major player in the world gas market, ranking as the ninth largest gas producer globally and the number one on the African continent.
For long, there have been conversations around how Nigeria can leverage the vast opportunities in its gas resource to open up the country for investments, which will in turn lead to massive job creation, enhanced energy efficiency, increased productivity as well as increased revenue to both government and businesses.
Although, Nigeria prides itself as a major exporter of LNG to the world via the Nigeria LNG Limited, making gas available for domestic use through business-friendly government policies and actions will help a great deal in driving economic diversification and competition.
Players in the country’s gas sector are of the view that there is no better time to optimise the potential of the gas resources than now that the whole world is struggling to survive the impact of coronavirus pandemic.
To them, the pandemic and its attendant economic turmoil has presented an opportunity for the country to look inward by prioritising in-country utilisation of the abundant gas resources. They believe there should be increased attention to the development of gas infrastructure in Nigeria and the deepening of domestic consumption and utilisation of the commodity in order to boost the country’s economic development.
However, despite the abundant gas potential, Nigeria still struggles to develop and grow its economy, a situation that makes jest of the country at the international front.
“Nigeria does represent quite an interesting paradox. We are major resource holders, major exporter of gas, at the same time we struggle on the domestic front with de-industrialization, with unmet domestic gas demand and insufficiency in gas supply to the power sector for power generation,” President of the Nigerian Gas Association (NGA), Mrs Audrey Joe-Ezigbo, once said.
CBN to the rescue
In order to make Compressed Natural Gas (CNG) the fuel of choice for transportation and LPG the fuel of choice for domestic cooking, captive power and small industrial complexes, the federal government introduced the National Gas Expansion Programme (NGEP). Under the NGEP, the CBN is providing N250 billion loan to help stimulate investment in the gas value chain as part of its efforts to stimulate finance to critical sectors of the economy.
In a guideline titled ‘Framework for the implementation of intervention facility for the national gas expansion programme’, CBN set N10bn as the maximum loan an obligor can access under its N250bn intervention fund for the gas sector.
Part of the term loan conditions for manufacturers, processors, wholesale distributors, was that the term loan, “Shall be determined based on the activity and shall not exceed N10bn per obligor. Working capital is maximum of N500m per obligor.”
It said the objectives of the facility included improved access to finance for private sector investments in the domestic gas value chain; and also to stimulate investments in the development of infrastructure to optimise the domestic gas resources for economic development.
The facility, the apex bank said, also aimed to fast-track the adoption of CNG as the fuel of choice for transportation and power generation, as well as LPG as the fuel of choice for domestic cooking, transportation and captive power.
It would also fast-track the development of gas-based industries particularly petrochemical (fertilizer, methanol, etc) to support large industries, such as agriculture, textile, and related industries; provide leverage for additional private sector investments in the domestic gas market; and boost employment across the country.
Eligible activities under the intervention include establishment of gas processing plants and small-scale petrochemical plants; establishment of gas cylinder manufacturing plants; establishment of L-CNG regasification modular systems; and establishment of auto gas conversion kits or components manufacturing plants.
Others are establishment of CNG primary and secondary compression stations; establishment and manufacturing of LPG retail skid tanks and refilling equipment; development/enhancement of auto gas transportation systems, conversion and distribution infrastructure; and enhancement of domestic cylinder production and distribution by cylinder manufacturing plants and LPG wholesale outlets.
It also involves the establishment/expansion of micro distribution outlets and service centres for LPG sales, domestic cylinder injection and exchange; and any other mid to downstream gas value chain related activity recommended by the Ministry of Petroleum Resources.
“The intervention fund by CBN is a welcome development because it will not only support in deepening the consumption of gas but will help ameliorate sicknesses caused by the use of firewood,” an economic analyst with interest in public health, Mr. Bath Onwuachu, told our correspondent.
He urged operators in the gas industry to take advantage of the fund to further expand the sector and increase the penetration of gas consumption. According to Onwuachu, deepening of gas usage would reduce the rate of deforestation, a development that would impact positively on the environment.
Mr. Lambert Ojo, a gas processing and evaporative cooling specialist, believes the intervention for local investors in the gas sector would stimulate the economy. He, however, called for a transparent and seamless process when obtaining the facility from the apex bank in order to encourage industry players.
“We have enough to do in the domestic gas space. What is happening internationally in the near future should not affect us because there’s a lot we can do with our resource,” he said.
Recently, the Executive Secretary, Petroleum Equalisation Fund (PEF), Ahmed Bobboi, stated that PEF was aligning with the CBN and the federal government to further deepen the consumption of gas in Nigeria. He said to achieve this, the agency was planning to equalise gas price so as to ensure that more citizens had access to gas.
He said, “We are trying to introduce the bridging scheme to gas because government has declared this year till 2030 as a decade of gas.
“And we say if this (petrol price equalisation) is working for the economy for over 45 years now effectively, if we can extend the practice to gas we believe that it will add value to the economy in so many ways in the value chain.”