Columnists
Gas flaring: A never-ending dark tunnel
World Bank’s Global Gas Flaring Reduction Partnership (GGFRP) ranks Nigeria as the 6th largest gas flaring country globally.
According to satellite data from Nigeria’s environment ministry, oil companies in the country flare over 313.0mscf of gas annually which ultimately results in 16.5m tonnes of CO2 emitted into the atmosphere. In a similar fashion, World Bank’s Global Gas Flaring Reduction Partnership (GGFRP) ranks Nigeria as the 6th largest gas flaring country globally.
Gas flaring in Nigeria has been a perturbing problem over the past years since the commercial exploration of crude oil started in the country. This comes despite the official banning of gas flaring in Nigeria in 1984. We recall that Nigeria set a deadline of 2020 to eliminate routine gas flaring while President Muhammadu Buhari commissioned the Nigerian Gas Flare Commercialisation Program (NGFCP).
Yesterday, Local media sources reported that the Federal Government has shortlisted 200 investors to bid for gas flare sites after evaluating statement of qualification submitted by the interested companies. This was announced by the Department of Petroleum Resources (DPR) even as it stated only 45 gas flare sites are up for auction as part of the first phase of the NGFCP.
According to the Director for DPR, Mr Sarki Auwalu, the department received expression of interest from 800 investors but decided to trim the list down to 200 on the basis of capacity and quality.
We recall the Nigeria LNG Limited (NLNG) was established in 1989 to harness Nigeria’s vast natural gas resources to produce Liquefied Natural Gas (LNG) and Natural Gas Liquids (NGLs). The company is the arrowhead of Nigeria’s efforts at curbing gas flaring. According to the company, it has helped reduce Nigeria’s flaring profile from 65.0% to below 25.0%. However, Nigeria remains among the top gas flaring countries in the world.
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Gas flaring has been a severe menace, particularly in the Niger Delta, causing several economic and health losses for its citizens. On economic losses, the Federal government continues to lose potential revenue from gas flared. According to London-based “On Our Radar”, Nigeria lost potential income estimated at US$770.0m (N281.1bn) to gas flaring in 2016.
The agriculture ecosystem of the Niger Delta has been severely damaged. Due to increased soil temperature, crop yield has also been affected with many lands now barren. Furthermore, water bodies are now black while rainfall in the area is also black destroying many homes. The black water bodies have destroyed fishing potentials while burning bushes and lands have forced animals to desert the forests in the area.
The health of citizens residing in communities prone to gas flaring has also been severely impacted. Gas flaring has been linked to cancer and lung damage as well as neurological and reproductive problems which have become prominent among pregnant women and newborns in the region.
Furthermore, the rising spate of gas flaring which has worsened the economic situation of affected villages has led to the development of insurgency and security instability. Popular terror groups like Movement for Emancipation of the Niger Delta (MEND) and Niger Delta Avengers (NDA) destroy oil infrastructure and kidnap expatriates working on oil installations.
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Book of States 2020: Vast resources, low industrial development
State governments have been heavily reliant on FAAC distribution to meet recurrent expenditure, thus making no room for capital spending.
The Nigerian Investment Promotion Commission (NIPC) in a recent report titled “Book of States 2020” highlighted the investment prospects of the 36 states of the federation including the Federal Capital Territory (FCT) to steer attention to the subnational investment opportunities in Nigeria. We note that the report is an outcome of a partnership between the commission and the Nigeria Governors’ Forum (NGF) to showcase the key investment opportunities for each state.
The report focused on the key areas of physical capital (airports, railway stations and seaports), resources (natural and minerals) and demography (population and labour force) of each state including their Internally Generated Revenues (IGRs), budget spending and household consumption.
While we acknowledge the decrepit infrastructure as a major hindrance to the growth of businesses and economic prosperity of many states, we note the little emphasis placed by the states on financing capital projects to attract private sector investments. Over the years, state governments have been heavily reliant on FAAC distribution to meet recurrent expenditure, thus making no room for capital spending.
The truth is that as long as state governments do not make desperate efforts to develop their internal revenue-generating capacity, the states in the country would continue to operate an inefficient rent collection system where they rely solely on FAAC allocation to meet basic needs such as paying workers’ salaries.
In our view, we believe the efforts to revive the ailing status of many states depend on the effectiveness and soundness of policies made to propel investments. Currently, Nigeria has enormous potentials to improve tourism given its ample amount of resources to attract both local and international tourists. Many countries in the continent such as South Africa, Kenya and Morocco have made great fortunes from tourism.
Over 50% of the states have recorded no foreign direct investments over time due to little or no requisite infrastructure needed to attract capital inflows amid untapped resources in these affected regions. Also, we believe the Federal Government needs to relax its control on some of the state-owned resources to enable the states better exploit these resources.
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