Nigeria needs an investment of $6 billion to produce about two billion standard cubic feet (SCF) of gas per day to generate 10,000 megawatts of electricity, according to stakeholders in the gas sector. Addressing newsmen at the Gas Aggregation Company of Nigeria’s, GACN, Gas Buyers’ Forum in Abuja, yesterday, Senior Commercial Adviser, Upstream Gas of Shell Petroleum Development Company, SPDC, Mr. Emmanuel Anyaeto, however, stated that investors are willing to bring in the needed investment but are hindered by a number of factors.
He identified the factors hindering investments in the gas sector to include payment and regulatory issues, noting that this was creating a disconnect in the country’s gas value chain. He said, “The amount of investments needed to get two billion SCF is about $6 billion —both plant, pipeline network and infrastructure. What people do not understand is that the way the gas business works, the problem is not with the investment. There are producers to do the investment. The challenges is if they produce, are they consumers that would pay? “If the power sector can work in a way where the consumer pays, and from what it pays, every other person in the value change is paid, and then these things would work.”
He further stated that gas producers in the country are currently being owed about $500 million, mainly by power companies, which are majorly owned by the Federal Government, adding that the high debt owed the producers was another major disincentive to gas production and exploration.
Anyaeto noted that this was one of the reasons while power plants are starved of gas, irrespective of the fact that the country flares 800 million SCF of gas per day. He added that the N701 billion power intervention fund, which was earmarked to pay for electricity generation, was inadequate, as the duration of two years stipulated by the World Bank, was too short to allow t he loan make any meaningful impact in the growth of the power sector.
Also speaking, Managing Director/Chief Executive Officer of GACN, Mr. Morgan Okwoche, said the company called on the Federal Government and the Central Bank of Nigeria, CBN, to include it in the disbursement of the N701 billion intervention fund, due to its strategic role in the sector.
Okwoche noted that the GACN had developed synergy and was in a position to satisfy any invoice, prevent disputes in payment s, and advise the Nigeria Bulk Electricity Trading Company, NBET on companies to be paid. Furthermore, he explained that a major challenge to effectively ending gas flaring was the fact that the different quantity of the commodity is stranded in different and dispersed locations, making it unviable to harness.
He said, “Another thing with Nigerian gas is that they are scattered in different isolated fields, difficult to harness. It would never make economic benefits where there are allocated in small volumes. The gas gathering facilities would make it so expensive that it would not be worth it. Unless we have mobile arrangement, which is technology evolving, that you can go there. That is how naturally, we have the deposit.”
