Nigerian Government must encourage gas investments to grow gas penetration across Africa’s biggest economy — NGA President Akachukwu Adeyinka Nwokedi

Akachukwu Adeyinka Nwokedi (Aka) is the General Counsel and Company Secretary of Nigeria LNG Limited (NLNG) and was elected President of the Nigerian Gas Association (NGA) for the 2023-2025 mandate. He is an accomplished legal professional with over 20 years of experience and holds a first degree and a master’s degree in law from the University of Buckingham, United Kingdom. Over the course of his career, he notably delivered the Gas Supply Agreements (GSA) for NLNG’s Trains 3, 4 and 5 and the financing agreements for the NLNGPlus Project. He was also NLNG’s lead legal counsel for the development of the NLNG Trains 4 & 5 Sales and Purchase Agreements (SPAs) with TFE and Iberdrola and a part of the team that developed the NLNG’s shipping strategy in 2005.

What could be done to accelerate gas penetration across the Nigerian economy?
The NGA calls for a refocusing of the National Gas Expansion Programme (NGEP) to promote the accelerated and broad utilization of gas across sectors. In particular, we see a need to review the premises for the promotion of CNG, LPG and LNG as alternative fuels to enable the development of appropriate strategies for their greater utilization.
Now that Nigeria offers a level playing field for gas with attractive pricing economics, more practical issues
must be addressed around the availability, accessibility, infrastructure, safety, and convenience of using gas. For instance, even if LPG is 17% cheaper than PMS, switching comes with conversion costs that can be offputting, particularly given accessibility challenges. CNG is also significantly cheaper than PMS but its adoption requires investments into conversion kits and the setting up of refueling stations.

Akachukwu Adeyinka Nwokedi, President, Nigerian Gas Association

What is the NGA’s response and position on policy interventions and reforms implemented by the administration of President Tinubu since May 2023?
The NGA commends the administration of President Bola Tinubu for the bold steps in driving key policy interventions and reforms since coming into office. Key
reforms worthy of mention include the forex harmonisation policy, PMS subsidy removal, Presidential CNG Initiative (PCNGI), and the signing of the Finance Act and the Electricity Act. The NGA notably supports the removal of fuel subsidies which have stifled investments in the sector over time and resulted in sector-wide inefficiencies and waste. It is expected that with the removal of subsides, the downstream sector will be able to attract long term capital. Furthermore, removal of subsidies is an opportunity for the nation to maximise the use of gas to give the citizenry a credible and more reliable alternative. We believe that in the long term, based on Nigeria’s huge gas resources as well global and local energy transition goals, natural gas will dominate Nigeria’s energy mix. We also commend the Federal Government for the establishment of the Presidential Compressed Natural Gas Initiative (PCNGI) which targets over 11,500 new CNG- enabled vehicles and 55,000 CNG conversion kits for existing PMS-dependent vehicles. The PCNGI seeks to ease the impacts of fuel subsidy removal on the citizenry by reducing energy costs using CNG as an alternative fuel.
“The Nigerian Gas Association commends the robust regulatory framework for gas retail and urges the NMDPRA to develop Autogas-specific regulations to guarantee increased Autogas penetration in Nigeria.”

What additional measures could further unlock investments into Nigeria’s gas industry?
Nigeria plans to be net zero by 2060, an ambition that is backed by the Climate Change Act. To achieve this, we must maximise the value and the use of natural gas. The NGA continues to advocate that gas is the most suitable energy resource to achieve the twin challenges of energy security and energy transition. To get there, the Nigerian government needs to test the current policy, legal and regulatory frameworks against the level of investment attracted and continue engaging the industry to adjust where necessary. These frameworks must have clear, measurable investment objectives and targets and relevant government functionaries must be tasked on these targets as a means of assessing performance. There must also be consistency in its administration and application. To improve the ease and cost of doing business, we also see the need to improve the speed to market by streamlining the contracting cycle with the regulators and harmonising the approval process of projects. To reduce the pressure on the naira, the government could also prescribe through law or regulation the option for payment of Federal Government dues and levies in Naira equivalent. The payment of royalties, fees, penalties, licences and permits in US dollars without a naira option remains a major challenge for industry players across the value chain. Improving fiscal terms is another way to encourage gas investments. We continue to face a multiplicity of taxation and an inconsistency of fiscal policy. The key
primary legislatures in this regard are the PIA 2021 and the Finance Act 2023, where there seems to be some disharmony in approach and objectives.

Removal of subsidies is an opportunity for the nation to maximise the use of gas to give the citizenry a credible and more reliable alternative.

We also see a need to review fiscal incentives and develop commercial and fiscal terms for gas development to propel competitive investment – particularly offshore and in deep-water. Nigeria has some 32 Tcf of gas reserves located in deep-water, whose development would boost and sustain gas supply to meet the nation’s needs. It will certainly unlock feedgas for Nigeria LNG (NLNG) and other critical projects being planned by the Nigerian government. Last but not least, and because the power sector is the biggest domestic off-taker of gas, we need to address the legacy debts which currently stands at some $800m. A framework to deal with this is currently being studied by the Decade of Gas initiative.

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