The rolling out of gas distribution licenses to qualified players in the sector, by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) would no doubt be a game changer in the various subsectors of the Nigerian economy, as the action aims to expand gas utilization in those subsectors.
The award of gas licenses has significant implications for the Nigerian economy, analysts remarked
To energy industry analysts, the steps taken so far by NMDPRA are meant to deepen gas utilization in the country and to extend access to gas supply by expanding the national grid system.
Other sectors of the economy such as the power sector, the liquefied Petroleum Gas, and the compressed Natural Gas sectors would have ample resources available for their development to continue uninhibited.
According to George Eni -ita, Director, Public Affairs, NMDPRA, he stated that the exercise is in fulfillment of the Petroleum Industry Act ( PIA )2021 sections 125-126, 111, 148-152, and many others.
He said that the implementation is in line with the Gas Distribution Regulations 2023 provisions, which are meant to unlock the extensive gas opportunities for the energy-intensive industrial sectors, power generation, mobility CNG, energy parks, and special economic zones.
This will also support the socio-economic development of Nigeria through employment and revenue generation, sustainable development of our gas resource, enhancing the growth of the domestic gas market through the deepening of gas consumption, promoting the availability/accessibility of gas, and accelerating the development of gas infrastructures (pipelines, city-gates, stations etc.)
According to the Gas Distribution License (GDL) implementation roadmap, spelt out by The Authority, between the first quarter and second quarter of 2024, the Authority conducted due diligence on gas distribution operations. This was followed with processed GDL for existing operations. By Q1 2025, the award phase of GDLs was carried out, and between Q2-Q4 2025, grid award to new GDLS in Phase 2 will take place, to expand gas distribution network (grid award to new GDLS) in Phase 2
GDL- An Investment Driver of the Gas Sector
Operating gas distribution systems have an installed natural gas distribution capacity of approximately 1.5 bscf/d, 1281.978 Km of installed pipeline system and currently supply over 600 customers
GDL has an exclusivity right of 25 years.
Key requirements of GDL are: Natural gas availability,
Connectivity with an existing or proposed Natural gas transmission pipeline system for the supply of wholesale gas to the city gate,
Potential demand for the gas distribution license & economic viability
Submission of a distribution development plan, Payment of statutory fees, and Integration of mobility CNG scheme in the GDZ development plan.
The rollout of the license is to enable gas utlisation through a robust expansion of the existing national distribution grid system.
For the first time, the long-established Ajaokuta, Abuja, Kaduna AKK gas pipeline and the OB3 pipeline, these two distinct gas pipelines stand to profit from the 10 companies that are given the licenses by the time they come on stream.
This development key – in to Nigeria’s Decades of Gas objective and the Renewed Hope agenda of President Bola Tinubu
The companies that were given the 10 Gas Distribution Licenses by the Federal Government are six top-tier firms, marking a significant leap toward deepening gas utilization in the country.
The beneficiary firms are NNPC Gas Marketing Limited, Shell Nigeria Gas Ltd, AXXELA, NIPCO PLC, Central Horizon Gas Company and Falcon Corporation Limited.
Economic Benefits
. Increased Gas Supply: The licenses will lead to an increase in gas supply, supporting the growth of industries, power generation, and other sectors.
. Job Creation: The development of gas infrastructure and projects will create employment opportunities for Nigerians.
Revenue Generation: The licenses will generate revenue for the government through fees, taxes, and royalties.
Energy Security
. Reduced Dependence on Importation: By increasing domestic gas production, Nigeria will reduce its dependence on imported gas and petroleum products.
. Improved Power Generation: Increased gas supply will support the growth of the power sector, improving electricity generation and supply.
. Enhanced Energy Mix: The development of gas resources will enhance Nigeria’s energy mix, reducing reliance on oil and promoting a more diversified energy sector.
Industrial Growth
. Growth of Industries: Increased gas supply will support the growth of industries, such as manufacturing, petrochemicals, and fertilizers.
. Development of New Industries: The availability of gas will attract new industries, promoting economic diversification and growth.
. Increased Competitiveness: The development of gas resources will increase Nigeria’s competitiveness in the global market.
The exercise has environmental benefits which lead to a reduction in gas flaring. The licenses will promote the development of gas infrastructure, reducing gas flaring and environmental pollution.
Improved Environmental Management: The licenses will also promote improved environmental management practices, reducing the environmental impact of gas operations.
Challenges and Opportunities
In terms of Infrastructure Development, the development of gas infrastructure, such as pipelines and processing facilities, will require significant investment and planning.
On security and community engagement: The licenses must be accompanied by effective security and community engagement strategies, ensuring that local communities benefit from the developments and are protected from potential negative impacts.
The minister of state for Petroleum Resources and gas, Ekperikpe Ekpo in his remarks at the event stated that the issuance of the Gas Distribution License comes at a pivotal moment as we intensify efforts to harness the potential of gas as a critical resource for Nigeria’s energy transition and economic transformation. By empowering license holders, this initiative opens extensive opportunities across several key sectors:
According to him, the President of the African Development Bank – Dr. Akinwunmi Adeshina, said, over 600,000 women and children die annually in Africa due to lack of access to clean cooking. Even more worrisome is the fact that an estimated 1.2 billion women in the continent lack access to clean cooking. The continued exposure to Carbon Monoxide during cooking leads to very severe air pollution and this is the leading cause of death among women and children.
“President Bola Ahmed Tinubu – GCFR, has shown visionary leadership in making today’s ceremony possible. Our president gave gas its unique identity and has enabled several opportunities in the gas space. The gas industry has expanded rapidly regarding business opportunities and governmental directives because of Mr. President’s crucial position,” he said.
“As you may know, section 148 of the Petroleum Industry Act (PIA) 2021, mandates the NMDPRA to issue Gas Distribution Licenses to qualified individuals and organizations. This provides an exclusive right to establish, construct, and operate gas distribution systems and ensures the non-discriminatory distribution and sale of natural gas within designated local distribution zones. Today’s event is a testament to our commitment to implementing the PIA in full alignment with the Gas Distribution Regulations of 2023.”
In the final analysis, the most important thing in all of these is that the NMDPRA must ensure that the regulatory framework is robust and effective, promoting transparency, accountability, and competition.
Source: BusinessStandard
Comment here