President Muhammadu Buhari would have helped himself to a quick win, in a broad push to step up the pace of economic reforms in his second term, when the Nigerian Gas Flare Commercialisation Programme (NGFCP) reaches its final execution point this year.
The gas flare commercialisation programme, which seeks to bring an end to gas flaring in Africa’s largest oil producer, will see investors bid for the approximately 178 gas flare sites spread across Nigeria’s Niger Delta region.
President Buhari approved the Flare Gas Regulation, which is the legal basis for the implementation of the NGFCP, in 2018.
The first bid round for the flared gas was targeted for completion in the third quarter of 2018, but the process suffered a delay.
In latest developments, the deadline for expression of interest (EOI) by investors seeking to be off-takers of the flared gas has been extended to March 15, according to a source close to the Federal Ministry of Petroleum Resources.
While some 700 prospective investors have registered with the Department of Petroleum Resources (DPR), about 200 have actually indicated Expression of Interest as at last weekend for the NGFCP, our source said.
Investors that would be off-takers of the gas being flared by joint venture companies would save the country some $800 million annually and provide an estimated 300,000 indirect jobs. The gas flared can also provide additional 3,000 megawatts (MW) of electricity to the country per day.
Justice Derefaka, the NGFCP manager, said $3.5 billion worth of inward investments was required to accomplish the flared gas commercialisation target by 2020.
One source familiar with the matter told BusinessDay that the interest shown so far has been encouraging but expressed hope that more investors would step up to the plate before the deadline of March 15, so that the country can actually benefit from monetising gas flaring within the shortest possible time.
“Investors are already registering for the programme and Expression of Interest has been indicated by many investors,” said Derefaka.
He said whoever is interested should go the website of the programme and apply.
Another source at the Ministry of Petroleum Resource told BusinessDay that immediately after the deadline, the DPR would begin the evaluations of the proposals submitted by interested parties and this would lead to the selection of those that meet the criteria laid down by the government.
“We want to be sure that it is those investors that are serious that are actually selected for the programme,” he said.
Some stakeholders have recently called on the Federal Government to release the framework for the gas flare commercialisation programme. They also want the government to hands off the pricing of gas and allow the forces of demand and supply to determine the price.
This action, they said, would allow for active participation of the private sector operators since the idea is to market associated gas, emphasising the importance of the right price for gas.
Key driving principles of the NGFCP are to reduce gas flaring, benefit Niger Delta communities, impact the Nigerian economy, present a market-driven solution for the flares, and make it bankable for investors and lenders.
The NGFCP has been designed to implement various government policy positions on gas flaring, commitments for stricter regulation of flaring, and a pathway to ultimate flare-out, including the Paris Climate Agreement.
The goal of the NGFCP is to attract competent third parties to access and use flared gas through a competitive open bidding process.
President Buhari was given a second chance to restore and stabilise the economy after emerging winner of the presidential election on February 23.
Although there was a combination of uncertainty, confusion and anxiety following Buhari’s election victory, that has faded as focus returns to macroeconomic conditions.
Buhari’s re-election suggests continuity, something that offers the nation a chance to build on its economic recovery and growth strategy, analysts say.
Buhari faces an extensive to-do list within a four-year timeframe, including rekindling economic growth, boosting infrastructure and, most importantly, diversification. On top of all of this, there are external risks in the form of trade tensions, slowing global growth and lower oil prices, all of which have the potential to threaten the nation’s recovery.
In recognition of the hurdles that lie in wait, the 76-year-old has since said the next four years would be “tough”, and finalising the gas commercialisation programme could be viewed as a right step in the right direction for an economy still growing sluggishly two years after exiting a recession.
OLUSOLA BELLO & LOLADE AKINMURELE
