By CHIKA IZUORA, Lagos
The Independent Petroleum Producers Group(IPPG) is seeking funding alternative for $150billion power project in the country.
IPPG, while outlining the challenges at an engagement meeting with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), in Lagos yesterday, chairman of the group, Abdulrazaq Isa, said the current downward price trend for gas is a big disincentive to potential investors as significant investment is required to meet the 10 billion cubic feet of gas development opportunity in the midstream sub sector.
Isa said, the group is considering a $150 billion investment to deliver 50 Giga Watts of power, but huge outstanding arrears owed to gas suppliers has become a major hindrance to additional investments for gas projects.
According to him, a transition to a market driven price regime is a key imperative for the growth of the gas sector, and it has become imperative to explore modalities for repayment mechanisms to offset huge gas invoice arrears.
Isa, who is also chairman at Waltersmith Petroman Oil Limited, said the IPPG fully aligns with governments ‘Decade of Gas’ initiative as it seeks to utilise the nations abundant gas resources to power the economy and address underlying issues.
He also said, the group is fully aligned to global decarbonization initiatives and adoption of renewable energy.
“With the current global shift to cleaner energy sources, Nigeria can utilize its domestic gas reserves as a lower-carbon bridge to energy transition. Ultimately, gas must serve as the transition feedstock for Nigeria and facilitate the transition to larger scale renewable energy,” he stressed.
The chairman said, in the last decade, crude oil production from indigenous players has grown from 3 per cent to 16 per cent with present production capacity in excess of 252,000 barrels per day, bpd of crude oil and 650 million standard cubic feet of gas daily, representing 14 per cent and 9 per cent respectively.
One of the challenges he raised was lack of access to funding of projects which he described as critical to survival and optimal performance of assets in the industry.
To solve this problem, he said an Energy Bank establishment and alternative funding mechanism for the industry should be critically considered by government.
Responding to those issues, the commission’s chief executive(CCE) of the NUPRC, Gbenga Komolafe, said federal government intend to improve on all the processes with regard to establishing a funding alternative.
Komolafe, said the commission fully understood the critical challenges facing the group and challenged them to draw up a proper funding option that will also consider offshore sourcing of funds.