A new wave of optimism is sweeping across Nigeria’s industrial sectors following the awarding of gas distribution licenses to six companies, including the NNPC Gas Marketing Company, Shell Nigeria Gas Limited, NIPCO Plc, Central Horizon Gas Company, Falcon Corporation Ltd, and AXXELA.
The newly awarded licenses issued by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) cover a cumulative gas distribution capacity of approximately 1.5 bscf/d (15.5 bcm/year) with over 1,200km of gas distribution pipeline network as well as over 500 customer stations.
The licenses issued, aimed at promoting domestic gas utilisation, cover franchise areas in Lagos, Ibadan, Port Harcourt, and Benin City.
According to George Eni -ita, director of public affairs of NMDPRA, he stated that the exercise is in fulfilment of the Petroleum Industry Act ( PIA )2021 sections 125-126, 111, 148-152, and many others.
He said that the implementation is in line with the Gas Distribution Regulations 2023 provisions, which are meant to unlock the extensive gas opportunities for the energy-intensive industrial sectors, power generation, mobility CNG, energy parks, and special economic zones.
Impact on Industrial Clusters
Nigeria’s industrial clusters – including Lagos, Port Harcourt, Aba, and Kano hubs – have long struggled with unreliable and expensive energy sources.
Many businesses in these areas have relied heavily on expensive diesel generators to supplement the intermittent power supply from the national grid.
The new distribution licenses are expected to alleviate this challenge by improving the availability and reliability of natural gas, a cleaner and more affordable energy source.
Among the clusters, the Agrara, Ota, and Badagry Local Gas Distribution Zone will be operated jointly by NNPC and Shell, with a capacity of 102 million standard cubic feet per day. The Greater Lagos Industrial Area (GLIAS Local Gas Distribution Zone), with a capacity of 130 MMSCF/D, will be operated by NNPC and Gaslink.
The Ikorodu Local Gas Distribution Zone, operated by NNPC and Falcon, has a 25 MMSCF/D capacity.
Similarly, the Kara Bridge-Ibafo-Sagamu Interchange Local Gas Distribution Zone, with a capacity of 150 MMSCF/D, will be managed by NNPC and Nipco.
The Lekki Free Trade Zone Local Gas Distribution Zone will be operated by NNPC and Nipco, with a capacity of 25 MMSCF/D.
Additionally, the Ogere-Ibadan-Oluyole-Olorisako-Asuire-Ajoda Local Gas Distribution Zone, managed by NNPC and Nipco, has a capacity of 150 MMSCF/D.
In the South-South region, the Port Harcourt Cluster 2 Local Gas Distribution Zone, operated by CHGC, has a capacity of 50 MMSCF/D.
The Port Harcourt Cluster 1 Local Gas Distribution Zone, managed by Shell, will operate with a capacity of 30 MMSCF/D.
The Ada Local Gas Distribution Zone, with a capacity of 30 MMSCF/D, will be managed by NNPC.
Finally, the Benin Local Gas Distribution Zone will be operated by Nipco, with a capacity of 20 MMSCF/D.
Impact on economy & environment
The expansion of gas distribution networks is expected to reduce operational costs for manufacturers, making Nigerian goods more competitive in both local and international markets.
This could lead to increased production, job creation, and a boost in export earnings.
Moreover, the shift to natural gas will help reduce carbon emissions, supporting Nigeria’s commitments under the Paris Climate Agreement. Industrial clusters, which are often significant sources of pollution, will now have access to a cleaner energy alternative, contributing to improved air quality and public health.
Read also:Relief for industries as FG awards gas distribution license to Shell, NIPCo
‘Last mile gas’
Ekperikpe Ekpo, minister of state petroleum resources (Gas) said the license regime, which is part of the federal government’s “last mile” gas expansion programme, is expected to bring gas supply closer to Nigerians across the country.
Ekpo noted that the licenses provide “an exclusive right to establish, construct, and operate gas distribution systems and ensure the non-discriminatory distribution and sale of natural gas within designated local distribution zones. Today’s event is a testament to our commitment to implementing the PIA in full alignment with the Gas Distribution Regulations of 2023.
He pointed out that the “issuance of the Gas Distribution License comes at a pivotal moment as we intensify efforts to harness the potential of gas as a critical resource for Nigeria’s energy transition and economic transformation.”
The minister informed that the continued exposure to carbon monoxide and lack of access to clean cooking has led to the death of 600,000 women and children in Africa.
He said even more worrisome is the fact that an estimated 1.2 billion women in the continent lack access to clean cooking.
He said, “By empowering license holders, this initiative opens extensive opportunities across several key sectors: Energy-Intensive Industries: Facilitating affordable and reliable energy supply to drive industrial growth and competitiveness.
“Power Generation: Supporting the generation of cleaner and more efficient energy to enhance power availability across the nation,” he stated.
Ahmed Farouk, the authority chief executive of the NMDPRA stated, “Ten licenses are being issued today as part of Phase 1 of the Gas Distribution Licensing regime to operators who have invested significantly in developing gas distribution infrastructures in the designated Gas Distribution Zones and have met the prescribed minimum requirements.
“A cumulative gas distribution capacity of approximately 1.5 bscf/d with over 1,200 km of gas distribution pipeline network as well as over 500 customer stations are covered by the licenses being issued today.
“This license regime holds a significant opportunity to support the development of our domestic gas market through the supply of gas to our energy and testing industries, industrial parks, special economic zones, embedded captive power generation, mobility CNG schemes, and any other downstream gas utilisation programme.
“We appreciate that this license regime shall not only support the accelerated development of our domestic gas market, but that it shall create opportunities for profitable investment for various classes of stakeholders, improve the socio-economic impact of gas resources across Nigeria, and support our national energy processing sectors.”
Ahmed explained that the gas distribution license regime “is expected to lay a solid foundation for long-term growth and prosperity, unlock the full potential of our natural gas reserves, enable the development of new and tech markets, and create new sources of revenue and employment for our nation.
“These licenses are expected to be a catalyst for investments. Pipeline natural gas provides continuous supply, is cost-effective, is safer, and eliminates storage challenges”, he added.
He stated that NMDPRA will continue to “encourage public-private partnership to speed up the development of gas infrastructure, with the government playing a vital role in providing support through regulatory oversight, a mid- and downstream gas infrastructure fund that is embedded under the authority, while the private sector or private companies will bring in expertise and investments needed to drive the projects forward.”
The license regime, according to him, shall not only support the accelerated development of Nigeria’s domestic gas market but also create opportunities for profitable investments for various classes of stakeholders, improve the socio-economic impact of gas resources across Nigeria, and support our national energy transition plans.
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