Adopting the PPP investment approach to West Africa gas development

Nigeria and a handful of other West Africa countries collectively account for 75 percent of all the known gas reserves on the region and each are at different stages of developing the industry.

Figures show that in the last few years, the regions reserves increased by almost 40 percent, and over the last 10 years the picture is even rosier, with a 145 percent increase.

A cursory look at West Africa’s gas potentials indicate that Nigeria is home to over a quarter of the region’s gas reserves. This gives her the potential to produce abundant cheap energy, and drive an industrial revolution, while also solving the environmental problem of excessive gas flaring from the oil industry.

Those who know in the gas industry observe that major discoveries of gas reserves by several West African countries seemed to herald the prospect of an additional export product to boost foreign currency income.

They opine that although currently the picture is very different having been stalled by West Africa’s general infrastructure challenges, but the underlying catalyst for change remains.

To enable investment into this industry, the government created Public Private Partnership (PPP) legislation, a PPP regulator, and initiated the Nigerian National Integrated Power Project (NIPP). This gave some (but arguably not sufficient) clarity in terms of legislation, policy and regulations.

Private investors and the Nigerian government became involved with the gas field exploration, building of pipelines and finally the construction of power stations.

According to report, Nigeria’s major structural problems across its gas supply chain could result in an inadequate electricity supply over the next 10 years?

Industry close watchers observe that the risk posed by the volatility of commodity and the risk of terrorism, has large impacts and are difficult to predict in terms of timing.

According to them, “the double blow of realising both these risks at the same time, made the impact devastating. The slow upward creep of the oil price and the stabilisation of the currency seem to be slowly reviving interest in this programme”.

Industry close watchers opine that in order to get the buy-in of private investment into the gas industry, it is crucial to governments across the West Africa region move away from the previous state monopoly and set up a natural gas regulatory authority as this will open competition in the industry.

They argue that with private investment into the gas industry, the region may well become a net exporter of gas during certain periods of the year. It could also result in West Africa attaining energy self-sufficiency, increasing its regional security.

Those who know in the gas industry observe that in all the markets across the continent, the industry faces the same issues related to West Africa’s general infrastructure. Wide-spread private investment into the gas industry is currently in the early stages.

They opine that the development of this industry requires time, effort and engagement with all stakeholders to create the eco-system that is truly conducive for private investment. As with many things in West Africa, there is slow but encouraging, steady development.

There is no doubt that the combination of private investment and recent discoveries of gas reserves on the region can transform economies and strengthen nations.

With much of the region still unexplored, there may well be more undiscovered resources that will further drive its development.

KELECHI EWUZIE