Nigeria’s gas supply system is currently skewed to favour exports over domestic utilization, thus leaving unfulfilled what have always been the twin objectives of Nigeria’s gas policies –robust foreign exchange earner and stimulation of the national economy. The comprehensive data analysis and policy review conducted in this report has shown that neither of these objectives have been achieved – yet.
Robust foreign exchange earnings and stimulation of the national economy have always been the twin objectives of Nigeria’s gas policies. This report shows, neither of these objectives has been achieved – yet. FG earnings from export-oriented NLNG at $43 billion in the last twenty years since 1999 is about the same quantum distributed annually to the states via the Federal Allocation Accounts Committee (FAAC). At the same time, the domestic gas supply is sufficient to generate only 16W of power per Capita – the lowest in a peer comparison of select African countries.
However, gas did not always enjoy the prime focus in the energy policy ecosystem of Nigeria as it does today. Gas is receiving increasingly more attention as noted by deliberate policy actions taken at various times – the enactment of the NLNG fiscal act in 1989, the introduction of the Associated Gas Framework Agreement (AGFA) provision in the PPTA in 1998, the incentives for gas utilization projects in the Corporate Income Tax Act (CITA) introduced in 1998 and 1999, Gas Pricing policy of 2008, the National Gas Policy framework of 2016 and more recently the Flare Gas Regulations of 2018 – all targeted at the different components of the gas value chain – upstream production, market sector development, pricing, off-take, and related downstream utilization.
Global increase in natural gas utilization follows geopolitical dynamics such as climate change action, growth in emerging economies, and increased US shale gas production. Contextualizing Nigeria’s gas policies against the wider canvass of geopolitical concerns, which include the interplay with Nigeria’s energy security, suggests that Nigeria will have to take deliberate policy steps to refocus effort on channeling gas to deliver a “harder domestic punch.”
The full report can be downloaded here.