Operators in the midstream oil industry, have advocated for the deployment of Nigeria’s $32 billion pensions fund to execute critical infrastructure projects in the sector.
They advised that the National Pension Commission (PENCOM) should make the money available to natural gas investors as priority funding for critical gas infrastructure.
Panelists at the recent Nigerian Gas Association(NGA) multilogues,who gave the advice,explained that the development was necessary to boost economic diversification and sustained industrialisation in the country.
They also advised the Central Bank of Nigeria (CBN) and other development banks to prioritise the gas industry, underpinned by concessional interest rates and guarantees for dollar-denominated transactions, to assure lender confidence in gas projects.
A communiqué issued at the end of the conference and signed by the association’s president,Ed Ubong quoted the panelist as agreeing that cost-reflective pricing mechanism, favourable fiscal regime, ease of repatriation of dividend/capital, stable exchange rate, and national industrial policy stability are critical conditions for spurring equity and loan financing in the local gas market.
They revealed during the sessions that the Bank of Industry (BOI) has a $500 billion funding arrangement with the Bank of China (BOC) to finance import equipment for flare Gas capture, which requires the intending borrowers to advance about 25 per cent of their funding needs and import their equipment from China.
They added that similar arrangements with the US Exim Bank are also available for players that want to import their flare capture equipment from the United States.
They emphasized the need for Nigeria to enhance the fiscal and operational policies required to attract the right investments to realise the objectives and aspirations outlined within the nation’s gas programmes.
They advised the government to urgently resolve legacy debts, payment guarantees, and other commercial impediments, including power delivery bottlenecks in the gas-to-power programme.
The panelists called for the adjustment of royalties on gas supplied and consumed in the domestic environment to encourage more supplies that catalyse more significant development in the overall domestic economy.
They demanded nondiscriminatory pricing mechanisms that offer suppliers equal opportunity for returns on investments and cost-reflective tariff structure across the Gas value chain.
“There was consensus that the Gas supply industry must be anchored on a willing-seller willing-buyer framework to unlock further investments in Gas exploration and delivery infrastructure. There should be a removal of price controls and concessional gas tariffs for sections of the market that are critical to achieving overall economic growth objectives,” they suggested .
They agreed that gas based industries such as fertiliser and cement constitute key consumption centres that could grow the country’s domestic Gas consumption and unlock the economic growth required to take over 90 percent of Nigerians out of extreme poverty.
The conference highlighted the need to create and develop regional infrastructure across the West African economies to deliver Gas supplies to markets through various marine, rail, road, and pipeline channels.
They also called for improved regional collaboration on maritime security to arrest the Gulf of Guinea’s rising piracy incidents for safer virtual Gas shipping through marine transport.