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NLNG’s investment in gas infrastructure hits N1.8tr

By BusinessNews Staff on December 1, 2013

Gross investment from the Nigerian Liquefied Natural Gas (NLNG) Limited to aid production of gas in the country has been estimated to have hit about $12 billion (about N1.92 trillion).

The Managing Director,NLNG, Babs Omotowa, who disclosed this at the third yearly conference of the Nigerian Liquefied Petroleum Gas Association (NLPGA) in Lagos yesterday, said the company is currently producing 22 million tonnes per year from its six trains.
However, the stakeholders in the sector have advocated for removal of kerosene subsidy, due to its alleged mismanagement over the years.

Omorowa, who was represented by a top officer of the company, Ahmed Abdul Kadiri, stressed that the company is commited to increasing domestic supply, even as he cited infrastructure challenges as a limitation.
Nigeria presently produces about 22 million tonnes yearly, but consuming only 150,000 tonnes.
Omotowa said NLNG now supplies product to domestic market through 10 offtakers, adding that initial gas reserve for domestic consumption was 150,000 tonnes, which has now been increased to 250,000 tonnes due to growing demand.
Considering this fact, Omotowa said “the capital consumption in Nigeria compared to the huge population is grossly inadequate”, suggesting a synergy between the private and public sector to move the industry forward.
He therefore enjoined the Federal Government to provide incentives to aid industry performance, citing the cases in Brazil, India and Senegal.
Meanwhile, other stakeholders in industry bemoaned the current pricing mechanism in the industry, clamouring for urgent review, in other to ensure return on investment.
The Managing Director, Longview Gas Limited, Femi Fanoiki, who spoke on challenges of operating in the LPG sector, said the issues of low margin and low volume of supply is critical, as about 200 operators scramble to share 150,000tonnes.
He therefore urged the NLNG to improve supply and government to enhance the infrastructure base, which was said to be critically poor at the moment.
Fanoiki stressed that government should also strengthen the regulators and ensure that best practices becomes the norm in the industry.
The Managing Director and Chief Executive Officer, World Liquefied Petroleum Gas Association (WLPGA), James Rockall, said LPG business has grown to $300 billion a year gpobally.
He said “Nigeria is a significant producer, but a small consumer”, puting its consumption level at 0.8kg per person yearly, which is “too low”.
Rockall however expressed optimism that Nigeria can get up to 20 million tonnes consumption if the regulatory framework is redefined to encourage investment.
He therefore joined the stakeholders to canvass for removal of kerosene subsidy, noting that Nigerian need to switch to clean energy to earn from the carbon credit set asside by the United Nations.
The President, NLGPA, Dayo Adesina, also explained that the subsidy removal would create a level playing ground for LPG to thrive in the country.
He noted that kerosene consumption has done more harm to the nation that the good, as it contributes to carbon emission and yet drain the national purse through subsidy.