‘Nigeria’s Gas Output Can Deliver 32 Gw of Power’

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If dysfunctional gas facilities are fixed and fiscal and regulatory policy issues in the gas subsector addressed, the current gas production can deliver 32 gigawatts (32,000Mw) of power, oil and gas industry operators have said.

This was contained in a communiqué at the end of the three-day international gas conference of the Nigerian Gas Association (NGA) held in Abuja.

It was signed by the association’s president, Mr. Dada Thomas, and made available to The Nation

Giving the verdict, they said there is a need to urgently fix the dysfunctional gas-to-power value chain, to attract investment to the sector. There is also the need for the government to respect the sanctity of contracts and agreements.

According to them, the illiquidity of the power market requires urgent attention. “We suggest a rethink of the quality and capitalisation of players, and a readjustment of the tariff structure may be required. Without a doubt, we must find creative securitisation mechanisms that improve bankability,” they added.

On gas policy, the communiqué noted that the conference recognised the role of the NGA in creating sustained awareness on issues, and the opportunities within the gas sector. It posited that the association should continue to work with the government and stakeholders to harness gas as a catalyst for sustained economic development with the right regulations and policies.

“The emerging gas roadmap by the government is a welcome development that could provide the much-needed clarity on issues of ownership, infrastructure development, gas gathering and pricing.

“The association will mobilise the sector to do a proactive review of the Draft Gas Policy to provide a win-win document that will attract the required investment for the sector. The intent would be the reduction of lead-time between policy formulation, legislation and implementation to enhance the competitiveness of Nigeria as a preferred gas investment destination,” it said.

According to the communiqué, the conference recognised the need to nurture the willing buyer-willing seller commercial model that will encourage and sustain the gas value chain, from the reservoir to the consumer.

It also saw the need to encourage investment in exploration for gas to increase national reserves and facilitate access to such reserves by competent operators. It recognised the threat to security in the Niger Delta and acknowledged the progress being made to address the menace. “We agree that the sector must join hands with government to support intelligence based security arrangements.

“NNPC Joint Venture funding continues to constrain rapid development. We support the efforts towards finding alternative funding mechanisms.

“There is slow decision making by policy makers and regulators and conference strongly recommends a collaborative model to find fast track processes and solutions that achieve the desire for Nigeria to be a gas-based industrialised hub meeting both local and export demands.

“Conference believes that financing is possible if the right conditions for success such as fixing the gaps in the value chain, avoiding policy summersault, honouring sanctity of contracts, stabilisation of the exchange rate, long term view of fiscal policies are in place.

“There exists the need for approximately $51 billion in investment in the sector to cover gas exploration, processing, transportation and general infrastructure. Whilst acknowledging the funding constraints of government at this time, we still agree that such investments must be Government led. It might require creative schemes to leverage the existing assets and infrastructure,’’the communique added.

“The need to establish a Gas Promotion Council that will address investment opportunities in the sector was raised. The NGA puts itself forward to midwife same if it finds government’s interest,” the communiqué added.

Source: The Nation

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