• Thursday, March 28, 2024
businessday logo

BusinessDay

How Nigeria can speed-up industrialisation with natural gas

How Nigeria can speed-up industrialisation with natural gas

Nigeria has an opportunity to leverage its vast gas resources to quicken industrialisation if the countries over 200 million people are to enjoy the quality of life those in the league of the first global 20 economies have.

The unexploited opportunities in Nigeria’s gas-based industries have the capacity of leapfrogging Africa’s most populous country’s quest to further diversify its economy away from crude oil and uplift over 86.9 million Nigerians now living in extreme poverty since industrialisation correlates with manufacturing and job creations, elements Nigeria needs to become the giant it has continuously failed to be.

Natural gas has a multitude of industrial uses, including providing the base ingredients for such varied products as plastic, fertilizer, anti-freeze, and fabrics. The industry is the largest consumer of natural gas, accounting for 43 percent of natural gas use across all sectors. Natural gas is the second most used energy source in industry, trailing only electricity.

In a study conducted by the United Nations Industrial Development Organisation (UNIDO) in 2017, as far as developing countries are concerned, both the data and the existing empirical evidence seem to support the belief that industrialisation drives economic growth.

Read also: Factories running on Compressed Natural Gas point to investment opportunities

Industrialisation also promotes savings, boosts the process of capital accumulation and offers higher investment opportunities. Policies obviously play a decisive role. Sustainable industrialisation rides on a robust manufacturing sector.

Traditions of endogenous growth, evolutionary economics, and institutional economics recognise manufacturing (industrialisation) is important for economic development. Successful industrialisation needs technological progress.

Here is how gas can drive a manufacturing boom and spur technological progress in Nigeria:

Gas-to-power: average energy consumption per head in Nigeria for a year is 126 kWh as against Brazil’s 2, 516 kWh and Indonesia’s 1, 058 KWh. Energy consumption is a window into the quality of life obtainable in a country. The lower the energy level consumed, the poorer a country is.  Gas utilisation among households, businesses, and industries to power equipment will lead to more reliable, cleaner energy. This has the potential to increase energy consumption per head in Nigeria. Nigeria’s domestic gas sector is struggling to capitalise fully on the potential of its sizable gas reserves even though some big-ticket projects are emerging in the country.

Seplat Petroleum’s planned $700mn gas joint venture with the state-owned Nigeria Gas Company in Imo state is emblematic of what the government would like to happen more often – a high impact project run by a homegrown company. The Assa North-Ohaji South plant will process wet gas from Niger Delta crude producing blocks 21 and 53. It is slated to have a capacity of 300mn cubic feet a day (f3/d) with the first supply due in 2021.

The Assa North/Ohaji South Gas Development Project ranks top among the Federal Government’s Seven Critical Gas Development Projects aimed at accelerating Nigeria’s aspiration for energy sufficiency and diverse industrial growth.

Green revolution: Fertilizer, made with natural gas, has lifted nations out of near starvation, and made modern lifestyles possible. Bangladesh, a south Asian country used gas to drive its green revolution in the 1950s. The natural gas value chain is versatile. Ammonia is the second-largest chemical product produced in the world, behind sulfuric acid. The demand for ammonia is driven by the demand for fertilizers. Of the world’s nitrogen demand, 85 percent is for fertilizer primarily derived from ammonia. Natural gas is the preferred feedstock. Nigeria can create a green revolution in agriculture through clear policies that incentivise investors.

In Nigeria, the world’s largest single-train urea plant has created over 50,000 jobs across the agriculture value-chain, while its affordable fertilizer is boosting farm yields and putting big smiles on farmers’ faces.

The benefits that come from higher-yield farming are increased food, education for the children of farmers and the ability to pay medical bills. Low productivity brings despair. Local production of fertilizer helps shore up foreign exchange reserves, and some of Nigeria’s previously flared natural gas will be channeled into fertilizer production.