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Nigeria needs proper fiscal, legal and commercial frameworks for gas sector – Thomas

Nigeria needs proper fiscal, legal and commercial frameworks for gas sector – Thomas

President of Nigerian Gas Association and Managing Director of Frontier Oil, Engineer Dada Thomas, has said that the gas sector could generate substantial revenue provided the legal, fiscal policy and commercial frameworks are encouraging for investors and provide a fair share for the Nigerian government and investors alike.

Speaking on some challenges affecting the sector, he said that government is still regulating gas prices but has mid-wifed an increase in gas prices over the years from $1 per thousand standard cubic feet ($1/Mscf) to a minimum of $2.5 per thousand cubic feet plus a transportation tariff of $0.80/Mscf.He however said that operators are clamouring for an immediate transition to a free market willing-buyer-willing-seller commercial framework.

He also added that the lack of sanctity of contract in Nigeria has worsened over the years with government-owned gas powered plants not taking the volumes of gas contracted for and then not actually paying for the gas taken. Furthermore, he added that gas producers in the country are now being subjected to unfair foreign exchange risks and exposure.He said although efforts are ongoing by the government to improve the situation via the recently approved Gas Policy, much more important is the eagerly anticipated Petroleum Fiscal Policy which is expected to be approved in the coming months. “If the fiscal policy provides sufficient incentives for investors and steps are taken to clear the current power sector illiquidity issues and debt overhang, we are likely to see an increase in gas investments,” he said.

On the current level of gas flared in Nigeria annually, Dada noted that Nigeria has really done well in reducing flaring over the years from two billion standard cubic feet per day in 2015 to about 750 million standard cubic feet per day today making us the fifth largest nation flaring gas in the world.This still equates to burning $700 million annually or wasting fuel that could have been used to generate nearly 3000MW of electricity.

However, he pointed out that the Federal Government appears to be very determined this time to achieve zero routine flaring by 2020 and has initiated the Nigerian Gas Flare Commercialisation Programme to help achieve this objective.The programme according to him is progressing as several meetings were held in September by the Minister of Petroleum Resources’ team and industry stakeholders to deepen engagement and ensure the programme process is understood by participants.‘’I look forward to the progress of this programme and hope that government and stakeholders can reach a common understanding on how to effectively implement this programme. He stated.

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