Group advocates effective funding of Nigeria Gas Master PlanBusiness, Energy, Latest News Thursday, September 3rd, 2015
By Eric Ojo, Abuja – The Centre for Social Justice (CSJ), an indigenous non-governmental organization (NGO) has harped on the need for a robust and effective funding of the Nigerian Gas Master Plan (NGMP) in order to boost the revenue base of economy in the light of the dwindling oil prices at the international market.
The NGMP is conceived to address the huge demand for gas and low investments in the sector over the years. It is a four-step plan that takes gas gathering, processing and utilization from ground zero through kick-starting viable domestic market to attaining full commerciality in the domestic market.
In addition, the Plan is also designed to attain full liquidity in the sector and fully market driven status. Meanwhile, Nigeria has abundant reserves of associated and non-associated gas estimated in excess of 187 trillion (standard) cubic feet. However the cost of implementing the NGMP is estimated at $25 billion.
The Centre said the Federal Government should consider incentives benchmarked with the incentives offered by other African Gas Producing nations with a view to encouraging investments in gas exploration in order to increase Nigeria’s reserves.
CSJ added that the government collaboration with the private sector should create special purpose vehicle to tap resources from small and medium scale Nigerian investors to fund the NGMP and to avoid over-reliance on the proverbial foreign investors who, according to the group, do not have a developmental, but strictly profit agenda.
The group further suggested that funding for the NGMP can also be sourced from special and dedicated funds such as deploying and ring-fencing the proceeds from the Federation Account dividends and tax from existing Bonny LNG Company to new gas investments, adding that the Federal Government may also consider dedicated bonds and developmental loans including Diaspora Bonds to fund the Master Plan.
The Centre said government can also consider guaranteeing loans and bonds for reputable companies to invest in the gas sector, noting that government will only incur contingent liabilities which will crystallise if projects are well managed.
It also pointed out that scrapping of fuel subsidy can yield about N1 trillion a year which the Federal Government in collaboration with states and local governments can dedicate a part of it to the funding of the NGMP.
“The recovering of $4.1 billion gas flare outstanding penalty identified by the Nuhu Ribadu led Petroluem Revenue Special Task Force and if the $18 billion unremitted oil fund identified by Nigeria Extractive Industry Transparency Initiative (NEITI) is recovered, a part of it may be dedicated to the NGMP, the group added.
The group equally posited that the Central Bank of Nigeria (CBN) may consider the establishment of special low cost intervention fund for the Gas Industry, adding that the final investment decisions in respect of the Brass and OK LNG and Train 7 of the Bonny LNG should be speeded up for the projects to proceed to the implementation stage.
The Centre noted that the demand in the Nigerian domestic market far outstrips the supply and that there is insufficient infrastructure to meet the needs of the market. “Full implementation of Domestic Gas Supply Obligation should be vigorously pursued and sanctions activated against defaulting firms” it further recommended.
CSJ also reiterated the need to reduce vandalisation of gas pipelines and other related infrastructure in the country, noting that such a trend is a threat will affect the realization of gas to power policy of the Federal Government.
The group further advised that the NGMP should be properly documented and made available to the public for their input and review, adding that it should also be located within the context of an overall energy policy which promotes the harnessing and use of different energy sources and mainstream renewable energy.
These recommendations were contained in a recent study conducted on the Nigerian Gas Master Plan by the Centre with the support of Heinrich Boll Stiftung Nigeria Office.
While considering the bulky nature and delay in the passage of the Petroleum Industry Bill (PIB), the Centre suggested that the government should consider breaking up the PIB into about four to five different bills for ease of passage by the 8th Assembly and that the parts dealing with gas can be isolated and immediately passed into law.
CSJ also tasked the National Assembly to improve its oversight of the Petroleum and Gas Industry and ensure that all fund due the Federation Account are recovered, stressing that the importance of natural gas to Nigeria’s economic and social development cannot be over emphasized.
The group equally urged the Civil Society Organisations (CSOs) in the country to take more than a passing interest in the oil and gas industry and seek to acquire special skills and expertise in analyzing the intricacies of the industry.
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