Nigeria could generate as high as $18.3 billion from maximizing its use of gas sources amid its energy transition journey, The World Economic Forum (WEF) has said.
However, this potential may be dampened by the lack of infrastructure and investment need to achieve this, it added.
This was revealed in the ‘Mobilizing Investments for Clean Energy in Nigeria’ report compiled by the WEF, Renewable Energy and Energy Efficiency Associations Alliance (REEEA-A) and Marsh McLennan.
“Maximizing the use of gas sources can foster some $18.3 billion in gross value added (GVA) to the local economy; This potential, coupled with the global difficulties the gas sector is facing, can create exponential growth in the nation’s domestic value chain,” it stated.
The report revealed that currently over 80 percent of power generation nationwide is derived from gas reserves, with most of the remainder from oil, adding that Natural gas remains the primary source of power in future short-term plans, despite the shift to other renewable sources.
Highlighting some barriers to this inflow, the report stated that challenges such as inadequate infrastructure, a high level of energy poverty, limited investments, etc.
“The majority of gas reserves are non-associated due to the current lack of exploration infrastructure; Capital availability is limited, which limits the ability of developers to access finance; Gas distribution infrastructure lacks capital investment to support consistent gas distribution, which has led to a fluctuation in pricing and a lack of reliability for consumers,” it stated.
Despite these challenges, the report says that some government initiatives such as the Energy Transition Plan, Nigeria Climate Change Act, Long-Term Low Emissions Development Strategy, etc along with the country’s vast natural resources oil and gas, provides a platform to combat these problems.
“In streamlining existing and new government-related energy transition legislation, the next couple of decades present a unique opportunity for foreign capital providers to enter a market that is abundant in energy resources, has a capable workforce, and is enabled by government support plans to foster $1.9 trillion in energy investments by 2060,” it adds.
Providing some recommendations to these challenges, the report states that more projects must be funded by with local naira to enable the growth of community-based developers.
“The availability to finance capital costs for clean energy investments in dollars is limited and currency fluctuations pose a risk to foreign investors and project developers; Blended finance structures are crucial to building a local currency facility, drawing private investment, and attracting domestic institutional,” it states.
Furthermore, it added that policy recommendation is necessary to incentivize natural gas producers to prioritize domestic production
“Policy actions can help align the interest and efforts of industry actors throughout the gas value chain and help maximize efforts to improve the overall production process,” it added.
According to Nigeria’s Energy transition plan, Gas will play a critical role as a transition fuel in Nigeria’s net-zero pathway particularly in the Power and Cooking sectors however $1.9 Trillion is required to get to Net Zero by 2060, including $410 Billion above projected usual spending