Nobert Shialsuk, the Executive Director of Brio Group, shared his thoughts on how Nigeria can become a leading producer of natural gas and how the majority of its citizens can have access to the crucial commodity, among other issues relating to the natural gas sector, during a recent conversation held virtually with stakeholders to seek ways to mitigate current challenges in the natural gas sector. How does Nigeria’s gas business fit into the global battle to achieve net-zero emissions by 2050, and he said Nigeria reiterated its commitment to reversing climate change during COP 26 and also filed a nationally defined pledge to do so.
Since then, Nigeria has proclaimed a “Decade of Gas,” which has established the country’s next major oil and gas development. The government’s main goals are to make Nigeria a top gas producer and consumer, which can be broken down into two main goals. Nigeria has estimated gas reserves of 600 trillion cubic feet (Tcf) and above 206 Tcf and is a significant gas exporter. One of the government’s major policy initiatives is to advocate for the conversion of Nigerian homes from using firewood and charcoal as domestic fuel to gas and the introduction of natural gas cars. The world is moving in this way because, by 2050, natural gas and renewable energy sources are predicted to account for approximately 50% to 60% of global primary energy consumption. Thus, Nigeria is moving in the right direction because the future belongs to gas and renewable energy sources.
Challenges Nigeria faces in its effort to deepen the domestic gas market.
Let me talk about the four challenges of energy access in Africa: accessibility, affordability, availability, and awareness. Energy is scarce in Africa. We are addressing the biomass issue. About 35% of urban dwellings and over 80% of rural homes still use firewood, respectively. Let’s begin with accessibility. You must first make natural gas accessible if you want Nigeria to become a major consumer. Deepening gas pipelines is necessary to make natural gas more accessible.
Extending the distribution networks to all of Nigeria. The Ajaokuta-Kaduna-Kano (AKK) pipeline is commendable since it would expand gas supplies and open up the hinterland. You must also make the liquefied petroleum gas (LPG) product available. The DOMGAS project of NLNG has increased LPG accessibility. Accessibility is the next problem that needs to be solved. These goods must be available to the public. The cylinders must be reachable. The conversion kits are required if you want someone to drive a natural gas car that wasn’t made that way from the factory.
LPG means providing cylinders for homes to be able to access the product.
Simply put, it entails delivering cylinders so that homes can obtain LPG. The government should concentrate on these important policy issues. I’ve spoken with the mid-stream and downstream infrastructure fund’s management, and they want to solve this issue in particular. By establishing the midstream and downstream gas infrastructure fund to close the infrastructure deficit in the nation and promote accessibility, the Petroleum Industry Act (PIA) is spot on. Affordability is the third and most significant obstacle to converting Africa to cleaner energy.
Costs have increased over the previous 12 months. According to an assessment of Nigerian households conducted by the African Clean Cooking Alliance between 2020 and 2021, monthly household spending in Nigeria is between N2,000 and N3,000. Take a look back to 2015, when a KPMG survey revealed that Nigerians who used LPG were willing to spend N2,000 on it. The average cost per cylinder between 2010 and 2015 ranged from N2, 000 to N3, 000. LPG is currently N10,000. A significant barrier is cost; most people cannot purchase conversion kits. The government needs to figure out a means to distribute that conversion kit.
The amount of a cylinder is between N20,000 and N30,000.
A fee on the consumption of petroleum and gas products, which amounts to 0.5 percent, will be allocated to the Nigerian mid-stream and downstream gas infrastructure fund. Therefore, the infrastructure for gas is already being paid for by individuals. Since the Petroleum Industry Act includes a means for recovering the cost, I fail to see why the government cannot offer these conversion kits to citizens (PIA). The cylinder is similarly priced between N20,000 to N30,000. How many Nigerians, whose minimum pay is N30,000, can afford to purchase the cylinders?
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