Once again Nigeria has entered the World Bank records for the wrong reason. This time it is about gas flaring. The World Bank has identified Nigeria as the second in its list of countries flaring gas. Nigeria is second only to Russia in gas flaring. Nigeria flares 220 million cubic meters of gas annually.That is more than N800 billion in monetary value.
Gas flaring is a dangerous phenomenon in a world battling global warming. It emits carbon dioxide into the atmosphere and worsens the global warming process which is now being blamed for the calamitous flooding in some parts of the world and catastrophic droughts in other parts.
Nigeria is among the world’s top five countries flaring gas. The other countries in the gas flaring list are Russia, the United States of America (USA), Iran, Iraq and Venezuela.
Nigeria has an elaborate plan to end gas flaring by 2030, but no one in the oil industry takes that plan seriously. Nigeria has missed several deadlines on ending gas flaring. Consequently, the 2030 deadline is regarded by oil companies as one of those gimmicks by government.
One of the factors inhibiting the ending of gas flaring in Nigeria is the debt contagion in the power industry. The federal government owes power generating companies (GenCos) and power distribution companies (DisCos) the sum of N4 trillion.
The debt is the subsidy in electricity tariffs that the federal government uses to reduce consumers bills. On the other hand, the DisCos owe the GenCos well over N1 trillion. Consumers owe the DisCos the sum of N497 billion. The debt contagion makes it extremely difficult for the GenCos to pay gas producers regularly.
The debt problem is so endemic that it has inhibited the oil companies’ ability and willingness to invest in gas processing plants since the returns on investment are so discouraging.
That has resulted in a situation where the GenCos are often starved of essential gas supplies as the oil companies would rather flare the gas associated with the crude oil they produce.
Irregular gas supply is responsible for the incessant collapse of the national grid. The federal government has enunciate an elaborate plan to end gas flaring by 2030. However, the plan itself is plagued with several obstacles some of which are seemingly insurmountable under the current circumstances.
Nigeria has one of the world’s lowest per capita consumption of cooking gas. It stands disdainfully at a paltry 2.6kg per annum. Tiny Senegal which is relatively poorer than Nigeria musters an annual per capita cooking gas consumption of 9kg.
There are several reasons for Nigeria’s low per capita consumption of cooking gas. The first one is the price of cooking gas itself. Five years ago, consumers could fill the 12.5kg cylinder of cooking gas with a paltry N5,000. Today a similar quantity of cooking gas is obtained at the prohibitive price of N18,000.
Cooking gas appliances are as prohibitively expensive as the gas itself. An empty 12.5kg cooking gas cylinder sells for anything from N70,000.
The cheapest gas cooker is in the range of N20,000. Consumers who invested in cooking gas appliances when 12.5kg of gas was N5,000 have now switched to firewood since kerosene is even more expensive than gas, despite the fact that it leaves a thick layer of black smoke on the cooking pots.
The government’s attempt at reducing cooking gas price by abolishing the 7.5 per cent value added tax (VAT) on the commodity failed as the price did not even reflect government’s gesture. Logistic problems and selfish interest of gas dealers crowded out the government’s modest attempt.
Meanwhile, government plans to increase gas consumption through diverse uses of the commodity. Besides the plan to increase the consumption of cooking gas, government plans to promote the use of gas in vehicles.
The conversion of vehicles to the use of compressed natural gas (CNG) is government’s plan to boost gas consumption and reduce flaring. Government has invested huge sums in the training of personnel for the acquisition of knowledge to convert vehicles powered by diesel or petrol to the use of CNG.
Right now government is encouraging secondary school leavers to acquire the knowledgeable free of charge. It has also invested in the construction of the facilities for converting vehicles to use CNG. However, the constraint is enormous and at the moment remains seemingly insurmountable.
There are fears that only the government is involved in the establishment of facilities for converting vehicle to the use of CNG. That probably explains why there are very few such facilities at the moment.
Besides, the cost of conversion remains prohibitively high. The minimum cost at the moment for converting a car to gas consumption is in the range of N250,000 even as it is being subsidised by government.
At a time when many motorists are battling with very high cost of petrol and diesel, very few are able to fund the cost of the conversion. The number of stations for refilling the CNG is another hindrance.
There were complaints recently that motorists queued for 10 hours to refill their cars with CNG in a certain city. The establishment of more gas refilling centers has become something of a dilemma.
There are enormous gains in converting from petrol or diesel to CNG. A motorist who dared to do it despite the prohibitive cost recently narrated the gains. He said that when his car was powered with petrol he used to spend N50,000 on petrol for the return journey from Lagos to his home town in Akure, Ondo state.
However, since he converted to CNG, he now spends a paltry N6,000 on gas for the same journey. Everyone wants to convert, but the prohibitive cost of doing so and the scarcity of refilling facilities are major constraints.
No one knows precisely how to overcome them.There are fears that given the numerous constraints on ground, the 2030 deadline for ending gas flaring may remain elusive.