Why investment would continue to elude Nigeria’s energy sector- operators
Operators in the Nigerian energy sector namely power, oil and gas have said that investment would continue to elude the sector except the frustrating obstacles put by the existing regulatory frameworks are removed.
According to them the existing legal and regulatory framework written primarily for oil does not provide robust technical and commercial framework for gas a such would not attract needed investment.
They insist that the gas sector policies will provide Nigeria with the opportunity to harness and get maximum value from its stranded gas resources and also vigorously pursue investment at the utilisation end.
The Analysts observed that Nigeria is endowed with abundant gas resources and the sector holds huge potentials for unprecedented growth, but are of the views that only a structured regulatory framework will attract investment to revive the sector currently challenged by lack of investor’s confidence.
Isreal Aye, Director, Aspen Energy Nigeria Group observe that the over centralisation of power generation or regulation of power is part of the problem we have in Nigeria adding that Nigeria does not need to generate the bulk of her energy needed to power this her economy from gas sources alone.
Aye opines that the challenge of power in Nigeria currently is that the technology required for the sector to function optimally is not available, saying that the fuel sources whether it is coal, solar or gas are abundantly available in Nigeria, just that the ability to convert these resources efficiently into power is lacking.
According to him, “The problem is not generation; it is an issue of investment. This can be trace to legislature. The sector was entirely locked in with legislation. Hopefully it is opening up now and we hope it opens up more so that money can find its way in so we can see more investment”.
“Nigeria needs to take immediate steps to open up to foreign investment; tackle issue around government monopolies in infrastructure; remove all obstacles to smooth business operations as this will make attract both local and foreign investments”. He said.
He advocated that State take the lead in the pursued of embedded power. “Each state should be allowed to lean on the resources readily available to them to generate their own power. They should backed by legislation to manage the generation and distribution of power within their locality”. He said.
Aye further disclosed that PIB should be passed and there is the need to invest in gas processing plants observing that there are frank conversations in terms of fiscal terms that would incentivize investors.
He sounded a note of warning to managers of the economy saying while making progress in the investment end, there is urgent need to look at intervention at the utilisation end particularly with respect to power.
Nigeria currently produces an estimated 7 billion scf per day and account for an estimated 182 trillion scf of gas reserve. Despite the country’s abundance of natural gas deposits, several challenges have over the years continue to stifle the translation of the benefits of this huge gas potential into improved power generation for domestic as it concern the gas to power projections.
Domestic Gas projects will become more profitable if indigenous companies are given access, Dada Thomas, managing director, Frontier Oil Limited observes.
According to him “the only incentive for indigenous companies willing to continue to invest in gas for domestic use is if government provides an enabling environment”.
Thomas opines that freeing gas for local investors is the first step toward encouraging willing investors to develop gas for the domestic market.
“A gas project 70 percent of it is in dollars because of the technology, the equipment is not resident in Nigeria. You have to spend dollars to get a gas project going. So if government does not address this investment and income currency mix match, there will be no future investment in gas project in Nigeria” he said.
KELECHI EWUZIE