Toward a gas-powered development

Gas is good for Nigeria, good for the economy and good for Nigerians,” says Mutiu Sunmonu, managing director, Shell Petroleum Development Company. Companies like Dangote Cement, Nestle, GlaxoSmithKline, Unilever and Cadbury will concur.

Margins at the Dangote Cement in Ibese, Ogun State, improved markedly when the plant ran on 100 percent gas last September. The company, which has begun exporting cement from Ibese to Tema and Takoradi in Ghana, relies on gas to drive its profitability, which enables it to supply cement to land-locked West African countries.

Gas supply is boosting Nigeria’s development, slowly. Industrial clusters in Lagos and Ogun States are manufacturing fast moving consumable goods for teeming consumers in Nigeria and West Africa.

According to Ogun State Governor Ibikunle Amosun, “Power is crucial to business success.” The state government has urged businesses to take advantage of the gas hubs in Olorunsogo, Onijanganjangan, Sagamu and Ota. It has also expressed its willingness to collaborate with investors – a joint partnership with Shell will see to the repair of a road in Ota.

The quiet megacity revolution in southwest Nigeria is most likely to be the immediate beneficiary of a gas-powered development. Ball, an aluminium-canning company, which began operations in 2012, has increased capacity from its 900 million cans a year. From its location in Agbara Industrial Estate, Ogun State, Ball plans to serve national and regional customers. Demand for canned drinks is growing; both local and foreign beer and soft drink brands are seeking to put their brands in cans for Nigeria’s young and growing consumers.

Sunmonu is confident that a gas-fed electricity industry will transform the economy by unlocking the entrepreneurial drive and determination of Nigerians. Nigeria’s untapped gas potential requires $25 billion investment for a sustainable power reform, according to experts. Gas fields, procession and transport networks will take up 40 percent of this.

A ‘Gas Revolution’ in Nigeria is still in its infancy. To really take off, it needs enablers. These will catalyse jobs in world-class petrochemical and fertiliser industries and agribusinesses. For a gas galore to truly happen, huge investments in infrastructure are needed, e.g., an interconnected gas grid, new gas production facilities, power generating plants, etc.

But investors are wary. Current domestic gas prices do not cover the cost of development; fiscal incentives, they contend, will encourage investment. Otherwise the price of gas will hinder development of a gas value chain. Though gas can be stored (condensed into liquefied natural gas), it requires infrastructure to transport it. If produced for local industrial and household consumption, efficient transmission and distribution are essential.

Government (the minister of petroleum and the NNPC) must ensure that the Gas Revolution agenda synchs with the Power Roadmap. With adequate incentives, gas from Escravos-Lagos to the southwest and beyond will spur clusters of FCMG factories, agro-allied businesses and electricity to homes to keep fans and fridges humming.