Uche Cecil Izuora
A major concern has been raised about the potential achievement of gas production target set by the Nigerian National Petroleum Company Limited (NNPCL).
The Company is targeting more than 600 trillion cubic feet of gas reserves and national production of 12 billion cubic feet per day by 2030, as industry experts say the country must first fix longstanding policy, infrastructure and payment challenges that have limited gas commercialization.
According to industry analysts investor confidence depends less on new announcements alone and more on whether government policies are sustained over time.
They feared that frequent policy reversals or conflicting regulations can undermine long-term capital deployment in a sector that requires large upfront spending and long payback periods.
Speaking in a CNBC Africa interview, Temi Kolade, associate director in the energy, mining and maritime practice at Andersen Nigeria, said the core problem is not a lack of proven gas resources but the structure and history of Nigeria’s oil and gas sector, which was originally built around crude oil rather than gas monetization.
“People came into these operations with the mind of exploring oil, and it’s never been so much about the gas,” Kolade said. He noted that gas was historically treated as a byproduct, with flaring dominating for years before policymakers began pushing investors toward gas development and commercialization.
Nigeria currently holds about 215 trillion cubic feet of gas reserves, according to figures cited during the interview, meaning NNPCL’s 2030 ambition implies a sharp increase from current levels. The production target of 12 billion cubic feet per day would also require substantial upstream investment, gathering infrastructure, processing capacity and stronger offtake arrangements across domestic and export markets.
Kolade said recent fiscal incentives and government directives aimed at supporting gas development are steps in the right direction. He pointed to Nigeria LNG as evidence that commercial gas projects can work at scale when the policy setting and project structure are supportive.
“It’s also very important that these policies are sustained and that we don’t begin to have counter policies down the line,” he said. “That’s what makes investors assured.”
He added that gas development should balance domestic supply needs with export opportunities, especially as Nigeria tries to deepen industrial use of gas and improve power generation while still participating in global energy markets.
On pricing, Kolade said there may be limited room for Nigeria to diverge significantly from international gas market realities. Instead, he argued that the more pressing issue is whether investors can operate in a stable business climate, recover their capital and repatriate returns without major administrative obstacles.
“What is more important, if you ask me, would be that we have a stable investment environment and we also ensure that investors can take out their returns very easily without any sort of bottlenecks,” he said.
He also highlighted the role of gas swap structures, which could allow domestic obligations to be met more flexibly by matching supply and offtake arrangements without forcing every producer to move molecules across long distances. Such arrangements, if implemented effectively, could ease logistics and support commercialization.
The discussion also underscored how Nigeria’s gas ambitions are closely tied to problems in the electricity market. Kolade said the country’s power shortfalls cannot be pinned on one segment alone, arguing instead that generation, transmission, distribution and payment collection are all linked in a weak value chain.
He said generating companies have often shown a willingness to produce, but transmission constraints prevent the grid from absorbing enough power. At the same time, gas-fired generation is weakened when gas suppliers are not paid consistently, while distribution companies struggle with low collections and technical and commercial losses.
“So it’s a value chain problem,” Kolade said, adding that transmission is often the easiest part of the chain to blame, even though the sector’s weaknesses run much deeper.
A major part of that weakness is metering. Kolade said revenue assurance is impossible without broader meter rollout, and he pointed to persistent shortfalls in parts of northern Nigeria. He said legacy attitudes toward electricity as a subsidized public good have also contributed to non-payment and resistance to formal billing.
For that reason, he said smart meters should be prioritized over conventional meters. Smart systems can improve visibility, reduce theft and help operators monitor supply and usage remotely, strengthening billing accuracy and collections.
“Smart metering is the way to go,” Kolade said. He added that better metering would help ensure that “whatever is supplied is being paid for” and improve cash flow across the electricity value chain.
The interview also touched on the federal government’s 729 billion naira ($0.46 billion) Series 2 bond under the 4 trillion naira ($2.52 billion) power sector debt reduction program, as well as broader efforts to inject liquidity into the market. Kolade said the intervention should not be viewed only as a balance sheet exercise for generating companies.
Instead, he said the liquidity support helps address legacy debts, including unpaid obligations linked to gas supply. But he warned that one-off interventions will not restore confidence unless they are followed by stronger market discipline and more consistent payments from end-users through to distributors and generators.
Kolade said the long-term test is whether the sector becomes self-sustaining. In his view, that means reducing technical and commercial losses, enforcing payment discipline and ensuring the industry no longer depends on repeated state rescues.
The conversation also turned to off-grid power, where about 5 million new connections were cited over the past year through September. Kolade said that growth is significant and should be encouraged, particularly given Nigeria’s vast untapped solar potential.
He rejected the idea that off-grid adoption necessarily means consumers are giving up on the national grid. Instead, he said it reflects the need for a more diversified energy mix in a fast-growing country where centralized supply is unlikely to meet demand on its own.
“I would encourage this to continue and then see the possibilities that indeed we can achieve economic growth beyond relying on the national grid,” he said.
Kolade acknowledged that off-grid solar typically carries a higher upfront cost than traditional grid connection. But he said lower maintenance needs and the prospect of avoiding recurring monthly electricity bills can improve the economics over time for households and businesses.
As Nigeria pushes its gas expansion plan, the broader challenge will be whether it can align upstream investment, gas commercialization and electricity market reform quickly enough to turn large reserve targets into usable energy for homes, businesses and industry by the end of the decade.