To check gas flaring in the country, operators in the gas industry have been asked to leverage a $500 billion funding arrangement between the Bank of Industry (BoI) and the Bank of China (BOC) to finance the import of equipment for flare Gas capture.
The arrangement which requires the intending borrowers to advance about 25 per cent of their funding needs and import their equipment from China, is expected to check flaring activities in the country.
The operators also asked the Federal Government to remove all forms of royalties on locally consumed gas, noting that Nigeria must enhance the fiscal and operational policies required to attract the right investments to realise the objectives and aspirations outlined within the nation’s Gas programmes.
This is contained in a communique released by the Nigerian Gas Association (NGA) at the end of the second edition of the industry multilogues held recently.
The World Bank had stated that estimates from satellite data show global gas flaring rose to levels not seen in more than a decade, to 150 billion cubic meters (bcm), equivalent to the total yearly gas consumption of sub-Saharan Africa.
With 7.83bcm last year, up from 7.44bcm in 2018, the World Bank ranked Nigeria as having the seventh-largest volume under the Global Gas Flaring Tracker Report (GCFR), despite having a low level of energy access.
This further reiterates the call for the gas-to-power initiative, and the implementation of the 2018 gas flare regulations, which underpin the Nigeria Gas Flare Commercialisation Programme (NGFCP).
Gas flare, the burning of natural gas associated with oil extraction, takes place because of technical, regulatory, and/or economic constraints. It results in more than 400 million tonnes of CO2 equivalent emissions every year, and wastes a valuable resource, with harmful impacts on the environment from un-combusted methane and black carbon emissions.
The industry stakeholders agreed that the government needs to urgently resolve legacy debts, payment guarantees, and other commercial impediments, including power delivery bottlenecks in the gas-to-power programme.
“The panelists called for the total removal of royalties on gas supplied and consumed in the domestic environment to encourage more supplies that catalyze more significant development in the overall domestic economy,” the communique reads.
“They demanded non-discriminatory pricing mechanisms that offer suppliers equal opportunity for returns on investments and cost-reflective tariff structure across the Gas value chain.
“The Central Bank of Nigeria (CBN) and other development banks need to prioritise the Gas industry, underpinned by concessional interest rates and guarantees for dollar-denominated transactions, to assure lender confidence in Gas projects.”
The communique noted that PENCOM will make $32 billion pension funds available to natural gas investors as priority funding for critical gas infrastructure.
It also noted that cost-reflective pricing mechanism, favourable fiscal regime, ease of repatriation of dividend/capital, stable exchange rate, and national industrial policy stability are critical conditions for spurring equity and loan financing in the local gas market.
“There is a need to warehouse world-class local capacity to adapt imported technologies for the local conditions to reduce over-dependence on Original Equipment Manufacturers (OEMs), improve local content know-how, deepen innovations, curtail maintenance costs and the overall cost of production.”