Celebrating Independence: Nigeria’s Gas Wealth Versus Energy Shortages.
As Nigeria celebrates 64 years of independence, the nation finds itself in a curious position. Despite boasting the largest natural gas reserves in Africa and ranking 8th globally, Nigeria continues to face persistent energy shortages. These issues, including frequent power outages, high electricity costs, and unreliable energy supply, are paradoxical given the country’s vast natural gas resources—estimated at 209 trillion cubic feet of proven reserves.
Nigeria’s gas dilemma is long-standing. Despite efforts from successive administrations to unlock the sector’s potential, progress has been slow. One of the key challenges has been the absence of comprehensive legislation for natural gas until recently. Before the enactment of the Petroleum Industry Act (PIA) in 2021, Nigeria lacked a statutory framework for developing its gas reserves. According to Ayodele Oni, a partner at Bloomfield Law Practice, gas projects require significant investments and long lead times, making a solid legal foundation crucial for progress.
Gas-to-Power Challenges
Natural gas is Nigeria’s most common source of electricity, accounting for 79.5% of the country’s power production in 2023. However, despite its reliance on natural gas for electricity generation, Nigeria has struggled to deliver reliable power to its citizens. Over 85 million Nigerians still lack access to electricity. Gas shortages, infrastructure gaps, and regulatory inefficiencies have all contributed to this ongoing crisis.
Nigeria’s gas-to-power initiatives, including the Decade of Gas programme launched in 2021, aim to make gas the cornerstone of the country’s energy sector by 2030. However, these efforts have been stymied by various challenges, including a lack of investment, unclear pricing models, and slow project execution. Kelvin Emmanuel, an economist, points out that gas flare commercialisation and domestic gas delivery obligations have yet to be adequately addressed. These issues have resulted in Nigeria’s Liquefied Natural Gas (LNG) exportation capacity dropping, while the sector attracted less than $1 billion in investments last year.
Additionally, Nigeria continues to flare large quantities of gas that could be used to generate electricity. In the first half of 2024, the country flared an estimated 148.7 million cubic feet of gas, which could have generated enough electricity to power over 3 million homes.
Compressed Natural Gas (CNG) Deployment
Compressed Natural Gas (CNG) has been touted as a cleaner, more sustainable alternative to petrol and diesel in Nigeria’s transportation sector. While the government has been promoting the adoption of CNG as part of its efforts to reduce reliance on petrol, the conversion process is costly. Converting a vehicle to run on CNG can cost between N750,000 and N2.5 million, making it an unaffordable option for many Nigerians. Although CNG offers long-term savings, the high upfront cost has been a significant barrier to widespread adoption.
Ifeoluwa Darius, a Lagos-based bank worker, shared her experience, explaining that she spent nearly N1 million converting her SUV to CNG. While the cost of CNG is cheaper than petrol, the initial financial burden has discouraged many from making the switch.
Gains and Reforms in the Gas Sector
Despite these challenges, there have been some positive developments in Nigeria’s gas industry. The government has introduced several policies and laws designed to attract private sector investment, such as the Gas Pricing & Domestic Demand Regulations (2023), the National Nigerian Gas Masterplan, and the Petroleum Industry Act (2021). The PIA also established the Midstream and Downstream Gas Infrastructure Fund (MDGIF) to encourage investment in gas infrastructure.
According to Ekperipe Ekpo, Nigeria’s Minister of State for Petroleum Resources (Gas), these reforms aim to create a more conducive environment for private sector involvement in the gas sector. The government is offering incentives to encourage investment in midstream and downstream gas projects that contribute to national economic growth.
However, as David Ige, former Group Executive Director of Gas & Power at the Nigerian National Petroleum Company (NNPC) Limited, notes, progress has been slow. Nigeria’s gas pipeline infrastructure is still underdeveloped, operating far below capacity. Despite modest growth in the gas sector, the country continues to face significant challenges in meeting its energy needs.
Social Media Reactions:
- @Energy4Nigeria: “Nigeria’s gas paradox is frustrating. How can a gas-rich country still face energy shortages in 2024?”
- @CNG4Africa: “CNG is a great alternative, but the upfront cost is too high for most Nigerians. We need more affordable conversion options!”
- @PowerForAll: “85 million Nigerians without power, yet we’re flaring gas that could light up 3 million homes. Something’s not adding up.”
- @NaijaEngineer: “Decade of Gas sounds promising, but we need better execution. Regulatory bottlenecks are holding us back.”
- @SustainableNG: “Flared gas could be powering homes and industries. We need to stop wasting our resources!”
- @LagosDriver: “CNG is a cheaper, cleaner option, but who has N1 million lying around for conversion? The government needs to subsidize this.”
- @GreenEnergyNG: “Why is it so hard for Nigeria to get its energy sector right? We have the resources but lack the political will.”
- @PolicyWatchNG: “The PIA is a step in the right direction, but more needs to be done to attract the necessary investments in gas.”
- @ClimateActionNG: “Flaring gas in 2024? It’s time to get serious about climate change and energy efficiency.”
- @FarmersUnitedNG: “Reliable gas-powered electricity could boost agricultural productivity. We need better access to energy!”
- @TechInAfrica: “Nigeria has the potential to be a gas-powered tech hub, but we need consistent electricity first!”
- @WomenInEnergy: “We need more women in the gas sector to drive innovation and progress. Let’s break the glass ceiling.”
- @CleanEnergy4All: “CNG adoption is too slow. The government should make it more accessible to everyday Nigerians.”
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