Relief as CBN moves to unlock NGEP with N250bn, create 2m jobs annually

Nigerians will heave a sigh of relief as the Central Bank of Nigeria (CBN) in partnership with the Ministry of Petroleum Resources, moves to drive the National Gas Expansion Programme (NGEP) with N250 billion.

The development is expected to fast-track the adoption of CNG as the fuel of choice for transportation and power generation, as well as LPG as the fuel of choice for domestic cooking, transportation and captive power as well as driving the development of gas-based industries particularly petrochemicals (fertilizer, methanol, etc) to support large industries, such as agriculture, textile, and related industries.

Reports say, the country may create about 12 million direct and indirect jobs by harnessing existing gas resources to spur other critical sectors of the economy, especially industrial activities.

Insisting that a gas-based industries, most especially the petrochemical (fertilizer, methanol, etc) must be enabled to support large industries, such as agriculture, industrial applications, textile and so on, CBN had noted “as part of efforts at stimulating finance to critical sectors of the economy, CBN introduces the N250 billion intervention facility to help stimulate investment in the gas value chain.”

The apex bank noted that large-scale projects under the intervention would be financed under the Power and Airlines Intervention Fund (PAIF), in line with existing guidelines regulating the PAIF, while small-scale operators and retail distributors will be financed by the NIRSAL Microfinance Bank (NMFB) or any other Participating Financial Institution (PFI) under the Agribusiness/Small and Medium and Medium Enterprises Investment Scheme (AGMEIS).

The objectives of the scheme according to the bank includes improved access to finance for private sector investments in the domestic gas value chain and stimulate investments in the development of infrastructure to optimize the domestic gas resources for economic development.

The bank revealed further in the framework for the implementation of intervention facility for the national gas expansion programme that the initiative was critical to provide leverage for additional private sector investments in the domestic gas market and boost employment across the country.

Indeed, with over 50 per cent of gas being imported into the country despite the huge gas reserves of about 206 trillion standard cubic feet, stakeholders believe that domestication could reduce the price, spur investment opportunities, reduce burden on foreign exchange, provide unemployment and strengthen the development of the downstream sector.

Faced with energy poverty, carbon intensive energy usage is damaging the environment and potentially changing the climate in Nigeria while cities are becoming unbearable due to outdoor pollution. Although the NGEP offers a unique opportunity in unlocking gas molecules as a favourable combination of solution to a mirage of issues in the country, deforestation persist as people turn to biomass (firewood) in search of cheaper energy option.

Stakeholders had expressed concerns that the number of women, who die in the country yearly from biomass may double. Recall that the African Refiners and Distribution Association (ARDA) and other experts had warned of imminent danger if Africa fails to quickly adopt modern clean cooking energy as over 600,000 Africans, especially Nigerians may die yearly due to household air pollution like firewood and charcoal.

Similarly, over 14 per cent of primary forest has already been lost between 2002 and 2020 due to collection of wood for fuel.

The high demand for fuel wood for cooking and income increased the rate of deforestation as the development pushes Nigeria to the verge of environmental disaster, especially desertification, loss of ecosystem, loss of biodiversity, land degradation, soil erosion, as well as economy risk.

Currently, a kilogram of cooking gas, which traded for about N300 earlier this year now sell for over N500 across the country on the backdrop of vulnerable economic indexes, especially the continuous weakness of the naira and the increasing price of natural and refined gas at the international market.

In May, naira was devalued from N379/$1 to N410.25/$1. As of yesterday, naira was exchanging at N510/$1 on the parallel market, where most Nigerians purchase their foreign exchange.

The global price of natural gas has also witnessed over 60 per cent increase, trading close to $4 per Million British Thermal Unit (MMBtu) yesterday.

The Petroleum Products Pricing Regulatory Agency (PPPRA) had earlier disclosed that the current consumption of gas stands at about one million metric tonnes, indicating that a five million consumption target set for this year may wobble.

The Minister of State for Petroleum Resources, Timipre Sylvia had said that funding initiative would push job creation from NGEP to the NGEP will create over 12 million direct and indirect jobs with approximately 2million jobs annually and human capacity development nationwide.

Also, the Executive Director, International Support Network for African Development (ISNAD-Africa), Adedoyin Adeleke stated that if Nigeria continue to import over 70 per cent of gas product, especially LPG without domestication, boosting local utilisation at an affordable rate could be a mirage.

“The importation of LPG inflates the cost of gas in the country making it unaffordable for most Nigerians. Coupled with the increasing cost of living in the country, increasing unemployment, unabated increase poverty rate; the vast majority of Nigerians will be pushed to resort to fuelwood for cooking hence increasing deforestation in the country,” Adeleke said.

According to him, there is need for the government to attract, induce and support the private sector for massive investment in gas production in Nigeria.

Adeleke noted that the consequent exclusion of importation associated cost, economies of scale and participation of multiple players would catalyse competition which would crash the price of LPG in the country.

“Local production for local consumption is the way. While it would be good to export, local consumption should be the priority. Farmers do not sell their seeds, Nigeria must not continue to sell out the seeds that could catalyse her much needed development, yet without undermining the sustainability of our environment, conversation of nature, and loss of biodiversity,” he stated.

An energy expert, Charles Majomi noted that unless domesticated, gas prices would continue to increase, saying: “the market is likely to tighten further as uncertainty, around finance and investments in fossil fuels projects, brought about by the advance of renewables, is likely to cause a pull back in upstream production.

According to him, the development will lead to firewood being the cheapest alternative, high female mortality and increased deforestation, which will have negative environmental impact in the rural zones and lead to more economic hardship for the Nigerian masses.