Getting investment right for gas infrastructure
If government does not address pressing issues bedeviling gas sector in the country, there will not be one penny investment in gas infrastructure development, operators have warned.
Gas infrastructure is a very expensive project, but the private sector is willing to invest provided there is a willing buyer willing seller system; provided they can earn decent rate of return for their investment.
Industry watchers observe that if the issues around credible and enforceable gas contracts coupled with a price regime are not tackled, willing local investors will continue to shy away from putting their money into production of gas for local use.
They are of the views that gas projects will become more profitable if indigenous companies are given access, stressing that it will be easier for local companies with proven track records to attract investors to execute projects that can unlock gas for Nigeria.
Thus, if there can be guarantee by the government in the areas of sorting out the bottlenecks associated with gas, there will be investment. Government has to work hand to hand with the private sector to grow this pipeline network.
Analysts are of the opinion that given the fact that NLNG is the only bulk producers of LPG in Nigeria with domestic supply still inadequate, there is the need to encourage indigenous operators because they are the ones willing to invest in domestic gas production.
They opined that the only way we can help increase the gas utilisation is to strategic reduction in LPG price to accommodate various consumers’ pockets.
“LPG can easily be produced here in Nigeria because we have 182 trillion cubits feet of gas from that we can easily meet all of Nigeria domestic demand. But that requires investment in LPG plants. This not free of charge and if the government does not make it attractive for local investors to produce LPG, the shortfall will continue”, experts insist.
Industry close watchers opine that short term gas availability will jump-start the domestic gas-based industries and more importantly, provide a base load of domestic gas volumes that will underpin a major investment in gas infrastructure.
They are optimistic that this will set the tune for a sustainable commercial framework underpinned by “credible and enforceable gas contracts, and a price regime that is commercially driven and recognises the long term affordability across different buyers.”
Analysts insist that government needs to do more in freeing gas for local investor because 85 percent of the gas in the country is locked up with the IOCs leaving indigenous companies starving for gas.
They further maintain that the infrastructure distributing gas around the country is poor and there is need for a public private partnership in growing this infrastructure.
KELECHI EWUZIE