Nigeria, Africa’s economic powerhouse, stands on the cusp of a transformative and industrial revolution. With a population surpassing 200 million and a rapidly expanding economy, the quest for sustainable and efficient energy sources has reached a paramount significance. In this article, KINGSLEY JEREMIAH delves into how natural gas assumes a central role in propelling economic growth, curbing environmental impact and fortifying energy security to boost industrialisation.
Nigeria’s natural gas reserves are nothing short of astounding. As of June 2022, British Petroleum (BP), in its ‘June 2022 Statistical Review of World Energy’, rated Nigeria sixth globally among liquefied natural gas (LNG) exporters. Nigeria claimed the continent’s largest natural gas reserves.
This colossal reservoir of natural gas offers a unique opportunity for the nation to harness this resource for its industrialisation ambitions and economic diversification. Recently, natural gas has gained worldwide acceptance as a cleaner substitute for coal and oil due to its lower carbon emissions. This transition towards cleaner energy aligns with global sustainability goals, rendering investments in natural gas infrastructure economically significant and environmentally responsible.
However, despite boasting approximately 209.5 trillion cubic feet (tcf) of proven natural gas reserves, as per data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Nigeria grapples with energy scarcity due to inadequate infrastructure for processing and transporting natural gas for energy utilization. This deficiency in sustainable energy access has compelled numerous businesses to resort to self-sufficiency to meet their energy needs.
Consequently, Nigerian industries rely on costly, inefficient, and polluting energy sources, while hundreds of millions of households lack access to modern energy. Rather than primarily benefiting domestic energy needs, Nigeria’s abundant gas resources seem to serve the export market.
One of the primary avenues through which natural gas boosts industrialization in Nigeria is as a dependable and efficient source of power generation. Recent data from the Nigerian Electricity Regulatory Commission (NERC) underscores this fact. Natural gas-fired power plants consistently contribute over 70 per cent to the country’s total electricity generation, ensuring a consistent and reliable electricity supply to industries. These power plants operate at high-capacity factors, minimizing downtime and ensuring uninterrupted manufacturing operations.
In recent years, leading organizations, including manufacturers, have shifted their focus to natural gas to power their operations.
Natural gas, a versatile and clean-burning energy source, has gained prominence for its potential to replace more carbon-intensive fuels like coal and other traditional fossil fuels. Its role in power generation, manufacturing processes, and residential consumption is pivotal, directly influencing the trajectory of industrialization and economic growth.
Recent data and market analyses reveal that adopting natural gas in industries enhances competitiveness. On average, natural gas is often 50 per cent to 60 per cent cheaper than diesel, resulting in substantial annual savings for energy-intensive industries. Furthermore, the energy efficiency of natural gas makes it an attractive energy source for manufacturers. For instance, natural gas-fired equipment, such as combined heat and power (CHP) systems, can achieve 70 per cent to 90 per cent overall efficiency, far surpassing the efficiency of traditional coal-fired power plants, which may hover around 30 per cent. This heightened efficiency translates to significant reductions in energy costs.
Natural gas equipment also tends to require less maintenance due to cleaner combustion, resulting in maintenance cost savings ranging from 10 per cent to 30 per cent compared to equipment using other fuels. Consequently, manufacturers leveraging natural gas experience reduced production costs, enabling more competitive product pricing and a stronger position in domestic and international markets.
In the current global push for sustainability, the availability of environmental impact data assumes paramount importance. Natural gas, substantiated by recent insights, exhibits a clear advantage in this regard. Environmental studies and emissions data indicate that natural gas power generation emits approximately 50 per cent less carbon dioxide (CO2) per unit of energy produced than coal-fired power generation. These data-backed environmental advantages position natural gas as a key contributor to Nigeria’s commitment to combat climate change while fostering industrial growth and adhering to sustainable practices.
At the forefront of Nigeria’s natural gas revolution, Axxela Limited shines as the pioneer private sector developer of natural gas distribution and one of Africa’s prominent gas and power companies. The company’s substantial investment, exceeding $500 million, in natural gas infrastructure and virtual pipeline expansion programs is an impressive testament to its commitment to advancing the natural gas landscape.
A recent milestone for the company was the commissioning of a natural gas city-gate in Ibefun, Ogun State, boasting a capacity to supply 150 million standard cubic feet per day (mmscfd) to the Sagamu industrial clusters in the state. Axxela operates through its various subsidiaries, including Gaslink Nigeria Limited, Central Horizon Gas Company, Gas Network Services Limited, and Transit Gas Nigeria Limited, establishing its pipeline presence across major industrial clusters in Lagos, Port Harcourt, and Ogun State.
In a recent interview, Axxela’s Chief Executive Officer, Bolaji Osunsanya, expressed the company’s ambitious vision to expand access to more industrial hubs. He stated, “For us, the short-term focus is on facilitating business growth, primarily directed towards fostering industrialisation. We aim to open up as many new territories as possible, both locally and regionally, to the benefits of natural gas while deepening its utilisation. In the long term, we aspire to extend our reach, encompassing not only Ogun State but the entire Sub-Saharan African region with natural gas infrastructure. While Sagamu marks a significant milestone, our vision extends far beyond to cover more areas.”
As Nigeria propels itself towards a gas-based economy, with natural gas spearheading industrialisation, transportation, power generation and various other applications, data and insights consistently validate the transformative potential of natural gas. Its affordability, accessibility, environmental advantages and reliability as an energy source firmly establish it as a cornerstone for the nation’s economic growth and sustainable development.
Chief Executive Officer of Auto Lady Engineering Technology, Joyce Daser-Adams had said one of the major challenges in converting a vehicle from fossil fuel to LPG or CNG is the non-availability of parts.
According to her, the parts are not in Nigeria, though she noted that when converted, it was very safe and the risk of an explosion in the event of a collision was very minimal.
Energy expert at PwC, Habeeb Jaiyeola, equally noted that a full analysis of the programmes remained sacrosanct to determine the comprehensive benefits and risks, adding that identifying the comprehensive benefits and risks will enable the government to determine if the benefits outweigh the risks and if measures could be put in place to mitigate the risks.
A professor of economics at the University of Ibadan, Adeola Adenikinju, said incentives to convert to gas-powered vehicles were not there under the subsidy regime.
“Once the subsidy goes, economic agents, including vehicle owners, would assess the relative costs of both options and choose the more feasible one. The higher fuel prices would trigger incentives for the use of alternative fuel like electric vehicles and gas-powered vehicles,” he said.
Recently, Innoson Vehicle Manufacturing (IVM) announced the mass production of CNG buses, while NIPCO — an indigenous downstream petroleum and gas operator –- leads in the conversion of petrol-powered vehicles to autogas.
More cheering is the recent disclosure by oil marketers that about 800 tankers that formerly transported petrol to filling stations were being converted to start moving gas to retail outlets, in addition to the existing 4,000 trucks of Dangote’s companies running on gas. The icing on the cake is the government’s identification of over 10,000 stations across the country that would dispense autogas to the public.
Embracing gas as an energy source is crucial for our sustainable development. By leveraging its abundant gas reserves, industry experts say the country can address environmental concerns, diversify its energy mix, improve power generation, stimulate industrial growth, meet domestic energy needs and unlock significant economic opportunities. Ultimately, it is a win-win for the government, the governed and our environment.
