Nigeria: Nation's Challenges Threaten Gas Flare Programme - Investigation

13 March 2023

The nation's current challenging socio-economic and political environment has threatened to scuttle Nigeria's Gas Flare Commercialization Programme, NGFCP 2022, targeted at selling 50 gas clusters to investors for development.

The government which looks forward to generating about $1 billion in the process and an additional $100 million yearly income had shortlisted 139 companies from the Request for Qualification (RFQ) to the Request for Proposal (RFP) phase that would close on March 14, 2023.

But checks by Vanguard, weekend, indicated that the current hostile socio-economic and political situation in Nigeria has impacted negatively on the promising programme.

NUPRC reacts

Despite the challenges, the Commission Chief Executive, Nigerian Upstream Petroleum Regulatory Commission, NUPRC, Engr. Gbenga Komolafe, expressed optimism toward the successful completion of the NGFCP 2022.

In a written response to Vanguard, weekend, he stated: "Following the successful conclusion of the evaluation of the Statement of Qualification (SOQ) submitted by interested parties to the NGFCP 2022, One Hundred and Thirty-Nine (139) companies were pre-qualified to participate in the next phase of the Programme. These entities were awarded the Qualified Applicant Status and have been formally notified of their qualification for the ongoing Request for Proposal (RFP) phase.

"The Request for Proposal phase represents the stage where Qualified Applicants (QAs) access available flare data from the virtual data room hosted by the Commission through the National Data Repository (NDR). At this point, QAs have undertaken data prying and leasing to enable the packaging of credible bids in line with the RFP package issued by the Commission in January 2023. The RFP phase will close with the upcoming evaluation of submitted proposals at the end of the Bid Submission Due Date which is slated for Tuesday, 14th March 2023. Following evaluation, all successful bidders will be granted the "Award of Preferred Bidders Status" before the end of Q1 2023.

"The main thrust of the relaunch of the NGFCP by the Commission Q3, 2023 is the accelerated delivery schedule that ensures the completion of the auction process and the commencement of project development by Permit Holders during the life of this administration.

"In line with the Flare Gas (Prevention of Waste and Pollution) Regulations, 2018, Flare Gas Buyers will emerge with the execution of the Suite of Commercial Agreements by the Preferred Bidders with the Commission and the respective producers as the case may be. Execution of the aforesaid agreements enables the bankability of the Programme."

New govt should demonstrate commitment - EnergyHub

The Lead Promoter, EnergyHub Nigeria, Prof. Felix Felix Amieyeofori, who some of the potential buyers approach for professional advice, said the socio-economic and political situation in Nigeria has affected activities in many sectors, including oil and gas.

"The investors are waiting for stability and there is hope. If Bola Tinubu scales through at the Supreme Court, he appears to be a strategic leader whose tenure would likely impact the oil and gas industry.

The nation also needs to attract more investments into oil and then generate revenue for its Energy transition."

Past challenges

However, in a recent response to Vanguard, Komolafe said that the programme had previously scaled through some hurdles in the past, including administrative bottlenecks, prolonged effects of the COVID-19 pandemic and its impact on the global oil and gas industry which adversely affected the previous bid process.

These and other factors culminated in the elongation of the previous bid process and, as such the production profile and flare forecast data upon which the earlier programme was based, became questionable and could not support credible proposals or projects.

Expected impact

He stated: "The multiplier effects of the NGFCP on the economy are many, including job creation, direct and indirect, creation of cottage industry and other economic activities around flaring communities, improved health, and social economic well-being in producing areas, and enhanced social license to operate. When considered holistically, the total Gross Domestic Product, GDP impact of implementing the NGFCP could be over one billion US dollars.

"We expect additional sources of revenue for the government from taxes collected from new ventures created and modest revenues from the fees charged during the auction process. It is, however, anticipated that the commission will generate between $80 million and $100 million per annum from sales of flared gas, in addition to tax revenues. Following its inauguration in August 2022, the NGFCP team indeed hit the ground running and we are confident that an accelerated implementation will be realized as intended."

Focus more on gas --AEC

However, in its latest report, The State of African Energy 2023 Outlook, obtained by Vanguard, the African Energy Chamber, AEC, said Nigeria should focus more on gas not only for domestic utilization but also for export.

AllAfrica publishes around 600 reports a day from more than 100 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.