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Nigeria loses $22.9bn to gas flaring in 9yrs

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By Abraham Adekunle

RMAFC to collaborate with agencies to implement management strategies.

According to the World Bank, gas flaring is the burning of the natural gas associated with crude oil extraction. Amidst the heightened awareness and activism against carbon emissions, fracking, or the standard process of refining crude oil, has contributed significantly to environmental degradation and global warming. In addition to the oil spills happening mostly in the Niger Delta region, fracking pollutes the atmosphere, releasing pollutants like carbon monoxide, carbon dioxide, sulfur dioxide, polycyclic aromatic hydrocarbons, and soot, while oil spillages contaminate farmlands and water bodies. As a result, residents of such communities are rendered jobless as they cannot farm or fish.

Now, in a period of nine years, Nigeria has lost $22.9 billion to the activity. The country has flared over 4.2 billion standard cubic feet of gas, which has resulted in a revenue loss of more than $14.6 billion from 2012 to 2021. In addition, the country has incurred a penalty of $8.3 billion for this wastage. In total, the loss amounted to $22.9 billion. The World Bank states that the practice has persisted since the beginning of oil production over 160 years ago.

Wasted resources could be reused productively.

Oil refiners and extractors engage in the activity due to a range of issues, ranging from market and economic restraints, to a lack of appropriate regulation and political will. Flaring wastes valuable natural resources that should be used productively, such as for generating power. For instance, the amount of gas currently flared each year all over the world was estimated to be about 140 billion cubic meters. This could power the whole of sub-Saharan Africa, which is currently struggling with power failure.

To address this huge financial loss, the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) intends to collaborate with the Nigeria Upstream Regulatory Commission (NUPRC) and the Nigerian Oil Spill Detection and Response Agency (NOSDRA) to enhance revenue generation by implementing effective gas flaring management strategies. These disclosures were made during an interactive forum between delegations from RMAFC, NUPRC, and NOSDRA recently in Abuja. Director of ICT at NOSDRA, Margaret Adeshida, highlighted the need for proper monitoring of the activity in Nigeria.

The country is doing well with managing the activity.

Also speaking at the event, Babajide Fashino, the Director of Economic Regulation and Strategic Planning at NUPRC, painted a rosy picture of Nigeria gas flaring practices. He said that Nigeria is currently doing well by managing it in accordance with global best practices for achieving economic growth and sustainability. The agency was able to achieve this through the implementation of a metering system accompanied by thorough calibration procedures for the meticulous monitoring and recording of all gas management activities.

As a result, the director noted that the activity has remarkably reduced from an alarming 40 percent to an impressive seven percent. In his remark, the RMAFC Chairman, Mohammed Bello Shehu, emphasized the importance of prioritizing the gas sector in the nation’s drive to boost revenue generation. He highlighted the need for regulatory bodies such as NUPRC and NOSDRA to play a significant role in assessing the quality and quantity of gas production, as well as ensuring strict adherence to environmental standards for the benefit of host communities.

Shehu urged stakeholders to collaborate to develop strategies.

In light of this, Mohammed Shehu urged all stakeholders involved in the gas economy management, including the revenue-monitoring committee of the current administration, to join forces and develop effective strategies. According to him, the goal is to transform flared gas into valuable economic resources, resulting in increased revenue generation that will contribute to the growth of the Federation Account. He said that this collaborative effort will play a crucial role in salvaging the country and maximizing the economic potential of gas flaring.

Related Link

World Bank: Website

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