Energy News

NMDPRA lauds NNPCL for promoting gas business in Nigeria

      *To unveil Regulatory Gas swap to facilitate delivery of natural gas to domestic market


By Oluwadamilare Daniel

 The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has commended the leadership role the Nigerian National Petroleum Corporation Limited (NNPCL) is playing in deepening the gas business in the country.

The NMDPRA boss, Engr Farouk Ahmed, who stated this while speaking on, ‘Strategic direction of the Nigerian midstream and downstream petroleum regulatory authority – enabling gas and power businesses’ particularly pointed at the production of natural gas through the NNPCL Exploration and Production Limited (NEPL) and the operation of a natural gas transportation network through NNPCL Gas Infrastructure Company Limited (NGIC),

The supply and marketing through the NNPCL Gas Marketing Limited (NGML), gas aggregation through the Gas Aggregation Company of Nigeria (GACN) and other critical roles in the natural gas investment space with tendencies to promote gas value chain such as engineering services.

Engr Ahmed, who was the special guest of honour at the NNPCL gas and power investment retreat, which had ‘Re-Igniting Nigeria’s gas revolution: collaboration, innovation and sustainability’ as the theme, described the gathering as a timely at an epochal moment when Nigeria transits towards a more cost-reflective gas to power industry that thrives on market competition and operational efficiency to address the myriad of challenges bedevilling the sector.

According to him, the challenges that are confronting Nigeria at this time include the unavailability of natural gas for power generation, appropriate pricing of natural gas to match power tariffs, payment defaults for gas supplied, and inadequate transmission capacity.

However, Ahmed was quick to add that despite the challenges, the gas-to-power business in Nigeria is thriving, and emanating challenges are constantly being addressed through a dynamic feedback system.  

Engr Ahmed also lauded President Bola Tinubu for signing Executive Orders 40, 41 and 42 of 2024 which are targeted at spurring the gas business.

“These include providing incentives to spur production of non-associated gas with investment tax credits as investment allowances, and midstream gas utilization (plant and equipment)) capital allowance through the Oil and Gas Companies (Tax Incentives, Exemptions, Remission etc). Reviewing and funding the “Gas Supply Stabilization Fund” to ensure timely payment for gas supplied to the power sector,” he stated.

The NMDPRA boss noted that the implementation of the PIA 2021 and other enabling edicts necessitated the NMDPRA to adopt several technical, operational, and commercial measures to support operators of the midstream and downstream sector that will, inadvertently, impact positively on the Gas-to-power business.  

In line with the NMDPRA’s statutory responsibility, he hinted that the release of the 2024 domestic base price that provides natural gas pricing thresholds for the strategic sectors’ sustainable operations and mobility CNG pricing will result in progressive adjustments in prices over the years which is expected to motivate the transition to market-based regimes.  

Engr Ahmed hinted that the Authority plans to unveil a Regulatory Gas swap to facilitate the delivery of natural gas to the domestic market, saying this will enable the transfer of specific volume or value of natural gas to support meeting performance targets of the Domestic Gas Delivery Obligations (DGDO).

He revealed that in conformity with an assessment of gas processing plants to sustain higher onstream efficiency, the focus will be on implementing corrective actions to resolve non-conformances as against direct action on penalties.

According to him, “the Authority, in the coming days, will issue statutory instruments for wholesale supply of natural gas to close demand-supply shortfalls, adding that this is to support the evacuation of natural gas and petroleum liquids and institute better inventory management practices.”

Engr. Ahmed disclosed that the Authority will soon commence nationwide implementation of measurement systems audit, especially at custody transfer points, to ensure all parties are confident of volumes of gas delivered or received. This is the bedrock of the repeated accountability and transparency we have all been preaching.  

“By encouraging transparency, we can attract investments and develop a strong working relationship between investors and the relevant stakeholders. The NMDPRA will remain steadfast in its dedication to promoting a sustainable energy supply that meets the needs of Nigeria. As an enabler of business, the NMDPRA will continue to collaborate with industry stakeholders to issue more Regulations, review existing ones, and come up with measures to support growth and retention of value by actively promoting the implementation of responsible practices,” he stated.

The NMDPRA chief noted that notwithstanding the technical constraints faced by the power business such as ageing infrastructure, capacity constraints, infrastructure limitations, and social and political factors, what must be taken into cognizance is the low-capacity generation and installed capacity.

He added: “It must be noted that the utilization of gas for power generation holds the promise of cleaner, more efficient energy. This implies that our collective attention and support to the Federal Government effort must not be taken trivially.”

The NMDPRA also lauded the derogation of regulatory powers to state governments to catalyze power generation and distribution capacity increases.

Ahmed assured that the NMDPRA will continue to collaborate with all relevant agencies of government and facilitate the effort of NNPCL in enabling the gas supply to the power sector.

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