The federal government has lamented that with over 76 per cent of the country’s gas reserves not developed, it will find it difficult to meet the nation’s energy demand.
The government equally admitted that the country was facing a revenue crisis with its attendant harsh economic realities. However, the government on Friday in Abuja inaugurated the Governing Council of the Midstream and Downstream Gas Infrastructure Fund (MDGIF) aimed for over $200 billion needed capital to develop gas infrastructure in the next decade.
This was revealed by the Special Adviser to the President on Energy, Mrs. Olu Arowolo Verheijen, who spoke at the 4th ministerial press briefing to explain the rationale behind the three policy directives introduced during the week by President Bola Ahmed Tinubu as part of his administration’s effort to create a more enabling business environment.
She stated that the government’s ambition to accelerate economic growth and diversify the economy requires timely, credible, clear, and consistent policies.
“We are faced with a revenue crisis which is impacting all Nigerians. To urgently address this, Tinubu is actively seeking ways to grow revenue and forex to stabilise our economy and currency,” she said.
She further said the oil and gas sector is critical to government’s ability to do so, adding, however, that the current oil and gas production and investment levels fall significantly short of the potential.
She said in 2016, Nigeria accounted for only four per cent of Africa’s total oil and gas investments, despite possessing 38 per cent of the continent’s hydrocarbon reserves.
“A society is not rich because of its resources but because of what it does with those resources,” she said.
She stressed that Tinubu is determined to reverse this trend and take decisive steps to ensure a conducive business climate and reposition Nigeria as a preferred investment destination for the oil and gas sector.
Verheijen said to achieve the objectives, Tinubu issued a presidential directive to streamline and clarify the scope of the two regulators in the petroleum sector to provide certainty and create a conducive business environment.
She said Tinubu has directed the NSA and Special Adviser on Energy to coordinate enhanced security measures in the Niger Delta.
She further said that owing to this directive, the TNP pipeline, which had been repeatedly vandalised, is now enjoying improved uptime, availability has practically doubled since the directives were implemented.
“This has translated to increased liquids of over 200,000 barrels/day being transported over the last 6 months. It has increased the availability of NLNG Trains 1-6 from 57 per cent in 2023 to 70 per cent in Q1 2024.
“The President has also introduced fiscal incentives to deepen Compressed Natural Gas (CNG) and Liquified Petroleum Gas (LPG) penetration,” she said.
Verheijen said the incentives were designed to ease the impact of fuel subsidies on transportation costs and enable the displacement of PMS/Diesel contribute to stabilising the price of cooking gas in the market and support the transition to clean cooking.
She stated that following extensive engagements, analysis, and benchmarking, with industry operators and regulators, Tinubu has taken further action to address foundational issues identified in the course of the engagements.
She noted that Tinubu has initiated the amendment of primary legislation to introduce fiscal incentives, reduce project execution timelines, and promote cost efficiency.
She said, however, recognising the urgency to accelerate investments to stabilise the economy, Tinubu
executed the policy directives to signal the policy direction of this administration to both the market and regulators.
She said the policy directives were fiscal incentives for Non-Associated Gas (NAG), Midstream, and deepwater oil and gas developments.
Verheijen said this explains why despite possessing one of the largest gas reserves globally, Nigeria lacks sufficient gas to meet their domestic needs for industry, power, and cooking.
She stressed that the fiscal incentives introduced will attract the much-needed investments to enhance energy security, catalyze economic activity, attract essential foreign exchange, and promote job creation.
“Streamlining of contracting processes, procedures, and timelines the President has issued directives to reduce contracting timelines and project delivery.
“Benchmarking and analysis revealed that the contracting cycle takes up to 36 months. This Directive should have the effect of compressing this cycle to less than 6 months in line with global averages,” she said.
She stated that this will expedite the delivery of oil and gas products to the market and enhance overall value for the country.
