NGA articulates new measures to develop gas, power, other sectors
As
stakeholders call for payment of N1trn gas debt by January 2019
By Udeme
Akpan
THE Nigerian
Gas Association (NGA), has articulated new measures targeted at achieving the
sustainable development of gas, power and related sectors of the nation’s
economy.
The
measures, which include the declaration of a state of emergency, development of
intervention plan and liquidation of N1trillion gas debts were arrived at
during the just concluded 11th annual International Conference and Exhibition
of the NGA in Abuja last week.
In its
communiqué sent to Vanguard over the weekend, NGA stated: “The conference noted
that the gas-to-power value chain is currently neither viable nor sustainable.
The nation is facing an energy crisis.
“The
conference calls for the Federal Government to declare a power sector emergency
in order to develop a holistic intervention plan to rescue the gas-to-power
sector from collapse, and to put in place plans for the immediate liquidation
of the over N1trillion debts within the gas-to-power value chain and
assurances for payment of generation and gas invoices from 1st January 2019.”
It stated:
“The illiquidity crisis in the power sector is exacerbated by added market
imperfections which do not provide for adequate incentivisation of the entire
value chain, including: a non-market reflective pricing framework; ineffectual
securitisation and guarantees; infrastructure deficits; inadequate tariffing;
and the current situation in the foreign exchange market which creates
significant exposures, losses and value erosion for investors.
“The
conference therefore calls on the FGN to urgently review the progress of the
incomplete Nigerian Electricity Sector reform and take necessary steps to
conclude the process and solve the pending issues. Emphasis was placed on
decentralisation of the national grid and making way for catchment power
generation across the nation.
“The
conference noted that pricing and payment assurance are strong determinants for
private sector operators and investors in gas projects, particularly for gas
supply to power. The power sector represents the largest gas off-takers in the
domestic market and as such, appropriate legislation and regulations should be
put in place to set market-reflective tariffs that assure operators can recoup
their investments.
“The
conference notes the drive to attain parity of domestic gas price to export to
encourage entrepreneur investments in the gas sector. However, consideration
must be given to the fact that the gas supplied to NLNG, based on export
pricing, is unprocessed gas, whereas the requirement for domestic gas supply is
for processed gas which requires significant additional capital investment.
“The
conference noted that the challenge of a shallow domestic financial market
works against the local financing of the sector through high interest rates and
shorter-tenured credit facilities and a mismatch of investment currency in US
dollars and income in naira.”
Natural gas
It
indicated: “The conference is in alignment with the Minister of State for
Petroleum Resources, Dr. Emmanuel Ibe Kachikwu who reiterated the relevance of
natural gas in economic development and industrialisation and noted that there
is still a huge amount of work to be done in the Gas sector towards actualising
the FGN’s aspirations.
“The
minister stated that infrastructure development is key and informed the
conference of the FGN’s plans to launch the Gas Infrastructure Rebirth which
will open up tariffs and create policy positions that enable investment by the
private sector in critical gas infrastructure, to progress our national
aspirations for gas-based industrialisation.
“The
conference calls on the FGN to maintain a concerted push towards monetisation
of Nigeria’s gas resources, noting that Natural Gas is a key ingredient for the
success of the FGN enunciated ERGP key priority areas of: 1. Achieving
Agriculture and Food Security – Natural Gas resource abundance supports
increase in fertilizer production 2. Attaining Energy Sufficiency in Power and
Petroleum Products – Natural Gas fuelled power generation remains the lowest
cost option for immediate and massive increase in national grid power
generation as well as increased LPG production 3. Improving Transportation
Infrastructure – Natural Gas vehicles will enable in the first instance mass
transit and large fleet operations 4. Drive Industrialisation by focusing on
SMEs – Natural Gas will provide the fuel and energy required for local
manufacturing including Petrochemicals to grow, providing the necessary
platform for Industrialisation.”
It quoted
the International Gas and Union (IGU), as predicting that Nigeria would become
a major gas destination in the world as the Nigeria LNG Limited takes the Final
Investment Decision (FID), on train 7 project, targeted at increasing output
from 22 million tonnes to 30 million tonnes per year.
It stated:
“With the signing of the Final Investment Decision (FID) on NLNG TRAIN 7, the
IGU sees Nigeria playing an increasing role in the global energy market. The
IGU recommendation is for Nigeria to keep gas development as a key focus area
for the economy and leverage its gas reserves for industrialisation.”
Also,
Managing Director, Nigeria LNG Limited, Mr. Tony Attah, stated: ‘‘Gas is
really a very big opportunity for Nigeria and Nigerians on the back of the
multiple potential attraction of more investment value.”
I would like
to call your attention to a you tube video a friend showed me recently titled –
It’s not about the nail! “ Some critics argued it is not about the hammer
either but I would like to align with Richard quest of CNN in his just a penny
statement – It is not about how much resource you have; it is about what you do
with it. That is why Nigeria LNG was incorporated in 1989 to harness Nigeria’s
vast natural resources, eliminate gas flaring and to monetise Nigeria’s gas
with a vision of being a global player…helping to build a better Nigeria.
“The company
has since its first export in 1999 generated over $100 billion in revenues,
paid over $15 billion in dividends to government and well over $6 billion in
taxes to date. With the demand for cleaner energy, the time is now for
NLNG to increase its output. Our Train 7 project which is currently going
through FEED is set to deliver FID to increase capacity by 35per cent from the
current 22mtpa to 30mtpa in the next four years. We have to utilise Nigeria’s
resources to lift the economy going forward having ridden on the back of oil
for the last 50 years, we are set to fly on the wings of gas into the future.”
Local
content
However, NGA
added: “The conference enjoined industry operators to invest heavily in
training and capacity building of their indigenous Nigerian contractors to grow
their capacity and maintain regular stakeholder engagements with their host
communities to ensure the attendant outcomes of curbing vandalism and enhancing
community development.”
Source:
https://www.vanguardngr.com/2018/10/nga-articulates-new-measures-to-develop-gas-power-other-sectors/
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