NDMPRA boosts economic recovery with gas distribution licences

The award of a Gas Distribution Licence (GDL) to 10 firms by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) is expected to boost the nation’s economic recovery.

With a projection to rake about N1.8 billion into the coffers of the Federal Government, the licence would open up economic activities in the northern part of the country, and deepen Compressed Natural Gas (CNG) as a viable source of energy.

CNG’s adoption as an energy source that is cleaner and cheaper is facing infrastructural deficiency in most parts of the country, as investment in the sub-sector remains a challenge.

The manufacturing sector is to receive a major boost, as those interested in generating their independent power supply, will be able to do so since gas would be readily available.

Indeed, Director of Public Affairs, NMDPRA, George Ene-Ita, was upbeat about the impact of the licenses.

He stated that the award is in fulfilment of the Petroleum Industry Act (PIA)2021, Sections 125-126, 111, 148-152, among others.

He added that the implementation is in line with the Gas Distribution Regulations 2023 provisions, meant to unlock the extensive gas opportunities for the energy-intensive industrial sectors, power generation, mobility CNG, energy parks, and special economic zones.

“This will also support the socio-economic development of Nigeria through employment and revenue generation, sustainable development of our gas resource, enhancing the growth of the domestic gas market through the deepening of gas consumption, promoting the availability/accessibility of gas, and accelerating the development of gas infrastructures (pipelines, city-gates, stations etc),” he said.

According to the Gas Distribution Licence (GDL) implementation roadmap captured by the NMDPRA, between the first quarter and second quarter of 2024, the Authority conducted due diligence on gas distribution operations. This was then followed with processed GDL for existing operations. By Q1 2025, the award phase of GDLs was carried out, and between Q2-Q4 2025, grid award to new GDLS in Phase Two will take place, to expand the gas distribution network (grid award to new GDLS) in Phase Two.

Operating gas distribution systems have an installed natural gas distribution capacity of approximately 1.5 bscf/d, 1281.978 km of installed pipeline system and currently supply over 600 customers

GDL also has an exclusivity right of 25 years.
The licence rollout is primarily targeted at enabling gas utilisation through robust expansion of the existing national distribution grid system.

For the first time, the long-established Ajaokuta, Abuja, Kaduna AKK gas pipeline and the OB3 pipeline, were given licences by the time they came on stream.

The companies that were given the 10 GDLs by the Federal Government are six top-tier firms, marking a significant leap toward deepening gas utilisation in the country.

The beneficiary firms are NNPC Gas Marketing Limited, Shell Nigeria Gas Ltd, AXXELA, NIPCO PLC, Central Horizon Gas Company and Falcon Corporation Limited.

Listing the economic benefits, Ene-Ita explained that the licences would lead to increase in gas supply, supporting the growth of industries, power generation, and other sectors.

“The development of gas infrastructure and projects will create employment opportunities for Nigerians. The licences will generate revenue for the government through fees, taxes, and royalties. By increasing domestic gas production, Nigeria will reduce its dependence on imported gas and petroleum products. Increased gas supply will support the growth of the power sector, improving electricity generation and supply. The development of gas resources will enhance Nigeria’s energy mix, reducing reliance on oil and promoting a more diversified energy sector,” he stated.