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In a decade of gas, why is the NGFCP stuck in the pipeline?

A decade of gas with no substantial gas legislation/regulation and operational framework is both ironic and befuddling.

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In December 2019, the Federal Government of Nigeria through the Minister of Petroleum for State, Chief Timipre Sylva declared 2020 as the year of gas for Nigeria. After one year of attempting to pursue this goal, the Minister at the Joint International Energy Forum and International Gas Union (IEF-IGU) Ministerial Gas Forum in Malaysia, declared the period of 2021 to 2030 as the Decade of Gas.

According to him, the government was “pursuing programmes to grow [Nigeria’s] gas economies through the development of industrial and transport gas markets, in juxtaposition with gas-to-power initiatives.”

Speaking sometime in February this year at a public hearing of the House of Representatives on gas flaring, the Minister said, “We believe that with all the programmes we have in place, we are on course to achieving complete elimination of gas flaring by the year 2025,” veering away from the country’s initial goal of ending gas flaring by 2020, a curiously earlier target than the global target of the World Bank Global Gas Flaring Reduction Partnership (GGFRP) to which Nigeria belongs.

READ: How Nigeria can make more money from Oil?

Having failed at its 2020 target, the country has in its typical manner set another goal for 2025. This is unsurprising since the first target date to end gas flaring in Nigeria was in 1984 – 37 years ago – a target missed without remorse. After that, the country set targets for 2007, 2008, and 2010, none of which were met. There is very little confidence in its promise to meet any goals it purports to have now.

At the recently concluded Nigeria International Petroleum Summit (NIPS), the Minister highlighted a point that has been obvious in Nigeria since the days of NEPA. He said, “In the area of domestic utilisation of gas to power the economy, there is a chronic shortage.” Perhaps it is necessary to point out to the Minister that this chronic shortage is fuelled by government inefficiencies, like the failure to proceed with the Nigerian Gas Flare Commercialisation Programme (NGFCP) with investors on the queue. Nigeria, while in dire energy poverty was recorded by the International Energy Agency in 2020, as the 7th top gas flaring destination in the world.

One report reveals that between January and November 2020, alone, the country flared 198.12 billion SCF of gas, amounting to an estimated loss of $507.19m (or N192.22bn). This is not to mention the environmental effects of gas flaring, which PwC has estimated to amount to some N28. 8 billion (US$94 million) annually. Yet, the NGFCP launched in 2016 is yet to roar to life five years after it was conceived. When the programme launched in December 2016, it was greeted with fanfare, as many were excited about the possibility of ending gas flaring and utilising flare gas to improve the economy.

The programme crawled along until 2019 when it seemed to crackle to life before it died again. For a government that has claimed overly ambitious gas flare reduction target dates, declared a decade of gas, and included emission reduction targets under its Nationally Determined Contributions for the Paris Agreement, it is disgraceful that it has failed to play its part in bringing the gas flare programme to fruition.

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One cannot blame investors here, as over 850 participants indicated an interest in the programme, and 238 of them submitted Statements of Qualification for the second stage, but the selected 205 participants have been made to wait without an end in sight to receive their Request for Proposals. This is bad for investor confidence.

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According to the programme manager of the NGFCP, Justice Derefaka, “the NGFCP has the potential of generating approximately $3.5 billion of inward investment into Nigeria, [and] to impact the country’s Gross Domestic Product (GDP) by an estimated $ 1 billion per annum.”  He further stated that the programme could “potentially unlock 2 to 3 LNG trains, around 3000MW electricity generation as well as generate circa 600,000MT of LPG per year, giving 6 million households access to clean energy through LPG.”

This means that not only is Nigeria losing money and killing its population flaring gas, it is also depriving itself of money and the economic and social development it could have gained if it had put in place the requisite regulatory and operational infrastructure. In fact, the NGFCP alone could be a major driver of Nigeria’s COVID-19 recovery. For a programme in which it would not be spending any federal funds to set up infrastructure, one wonders what has led to such long-winded delay.

Nigeria is adept at paying lip service to developmental commitments. At first, when the NGFCP process failed to proceed with its 2020 timelines, the pandemic was to blame. In the same period of the pandemic, however, the NLNG Train 7 deployed, the ANOH gas project deployed, the Brass Methanol Plant deployed, the Dangote fertiliser deployed and the Dangote refinery is underway.

The common thread among these is that they are private-sector-led. While these have gone on, the government has failed to play its part in putting in place the operational framework for the NGFCP and the Petroleum Industry Bill. A decade of gas with no substantial gas legislation/regulation and operational framework is both ironic and befuddling.

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Caleb Adebayo is an LLM Candidate, Energy and Environmental Law at New York University School of Law. His interest lies at the intersection of Energy, Environment and Finance and he is keen on the interplay between Law, Policy and Energy Markets. Prior to taking up his LLM, he worked on the Energy team of a tier 1 Nigerian law firm. A nominee for The Future Awards Prize for Lawyers, he has written widely on the subject of Energy and Environmental Law. He is also a member of the New York City Bar Energy Subcommittee

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CIFI: Despite CBN funds, can the creative industry thrive in this environment?

The Nigerian technology ecosystem is at its nascent stage, and beyond money, there is the need to ensure an enabling environment for operators.

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Despite a frail 2020 for the Nigerian economy, there was a bit of silver lining. The Nigerian Information, Communication, and Technology (ICT) sector emerged as the leading segment of the economy aiding the country’s exit from recession by a whisker in Q4 2020.

The development, in effect, justifies to some extent, the earlier decision of the Central Bank of Nigeria (CBN) to create the Creative Industry Financing Initiative (CIFI) to support businesses in the following areas:

  • Fashion
  • Information Technology
  • Movie Production and Distribution
  • Music

The CBN began to contemplate the idea of the CIFI following the influx of private investment into the technology space in 2019. For instance, according to the African Tech Start-ups Funding report for 2019, Nigeria got foreign exchange inflows totalling US$137.9m in the period.

This continued into 2020, considering that despite the pandemic, the sector still attracted an additional US$122m in seed funding. Furthermore, the sector contributed 13.12% of the total real Gross Domestic Product (GDP) of Nigeria which came to N19.53tn as of Q4 2020.

Evaluating the progress made so far with the CIFI, as of Q3 2020, the CBN had reportedly disbursed c. N3.12bn in intervention to 320 beneficiaries. While there are concerns around the tenor of the loan for Software Engineers and accessibility of funds to other technological entrepreneurs, we laud the CIFI and encourage relevant agencies to do more.

The Nigerian technology ecosystem is at its nascent stage, and beyond money, there is the need to ensure an enabling environment for operators. For instance, the recent BVN concerns that rocked the financial technology space and the regulatory uncertainty which is a key risk for telecommunication operators among other concerns, are issues that should be decisively dealt with.


CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange

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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. 

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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.


CSL Stockbrokers Limited, Lagos (CSLS) is a wholly-owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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