Nigeria’s gas sector suffers N10tr foreign investment loss
Nigeria LNG Limited (NLNG) has put the immediate loss of foreign investment due to the delay in the takeoff of its Train 7 plant at $25 billion (N10 trillion).
According to the company, another impact will be the potential loss of about 18,000 jobs required for the construction activities of Train 7. Speaking at the on-going 2017 Nigeria Oil and Gas Strategic Conference and International Exhibition in Abuja titled: “Nigeria’s Gas Sector – The Catalyst for Economic and Industrial Growth,” the Managing Director of NLNG, Tony Attah, said the Federal Government should focus on how to grow the Nigeria oil and gas sector.
Attah emphasised the need to focus on NLNG model and get moving on the Natural Gas Policy, implement fiscal reforms in joint ventures, production sharing contracts and service contracts as well as embed adequate institutional reforms while ensuring that the Petroleum Industry Bill (PIB) is passed into law without delay.
But the Minister of State for Petroleum, Ibe Kachikwu, said that the Federal Government has initiated gas policy interventions that would move the economy from oil to gas.
He disclosed that the country will diversify the gas supply options within Nigeria, to ensure security of supply; extend gas penetration in the domestic market in order to facilitate the growth of the electric power, agricultural, and industrial sectors; gain a presence for Nigerian gas in international markets; and operate a gas industry with a clear division of roles between private and public sectors
Also, the Group Managing Director Nigeria National Petroleum Corporation (NNPC), Dr. Maikanti Kacalla Baru, said about $51 billion investment opportunities exist today in the midstream and downstream gas sector to achieve the growth phase in the Industry in Nigeria.
Baru posited that about $35.4 billion investment will be required in the gas exploration and production activities, power plants projects, fertilizer plants, virtual pipelines and flare gas commercialization initiatives.
The GMD added that $16 billion investment will also be needed in the Free Trade Zones (FTZ) infrastructure development and concessioning, port infrastructure, central gas processing facilities, gas transmission, LPG plants, real estate development, pipe milling and local fabrication yards among others.
Speaking further, Attah said that hopes for economic and industrial growth will be dashed if inhibitors such as the removal of legislative frameworks like the NLNG fiscal incentives, Guarantees and Assurances Act, are permitted in the Nigerian gas industry
Attah stated: “It is time for gas. We need deliberate decisions and policies to decouple oil from gas and attract investment. We need to do that now. Investments in the gas and LNG industry are declining. It is already difficult as things stand. To find Foreign Direct Investment (FDI) and growth in the gas industry has been cautious after the recent down-beat global crude oil price. In addition to this, Nigeria is ranked 167 of 189 countries in the ease of doing business index.”
“Yet, experts maintain that there is the strong likelihood of increased gas demand in future and that is where the silver lining is. However, if we continue with the self-inflicted barriers in our gas industry, we might miss the opportunity to make this country a major player in the global energy mix,” he said.
“The industry has benefited the economy, diversifying the revenue and export base as well as channelling FDI into the country, creating jobs and contributing significantly to the local manufacturing capacity in the country, but all that would be laid waste if we continue shift policies and renege on international agreements that put some framework into the business and generated investor confidence. We need to be creative with incentives that will attract investments and preserve the sanctity of contracts and agreements for all of this to come together in our national interest.
“Take Nigeria LNG for instance. Only recently, the House of Representatives began moves to amend the NLNG Fiscal Incentives, Guarantees and Assurances Act, a key enabler responsible for the success of the company. NLNG is a successful Nigerian company, with an asset base of $11 billion as well as the fourth largest LNG plant in the world. It has generated $90 billion in revenues as at 2015, paid $5.7 billion in taxes as well as committed more than $200 million to corporate social responsibility projects especially in the areas of capacity building and infrastructure development. All these were achieved with a management staff entirely made up of Nigerians, with 95 per cent of the total workforce made up of Nigerians.