NGA calls for immediate review of PIA to address gas sector challenges, gives reason for gas price hike 

Oredola Adeola

 

The Nigerian Gas Association (NGA) has called for the immediate review of the Petroleum Industry Act (PIA) to develop commercial and fiscal terms for gas development to reduce the multiplicity of taxation, the cost of doing business, rising gas prices, and speed up the rapid adoption of natural gas in Nigeria.

 

 

Akachukwu Nwokedi, President of the Association, made the call during a media parley with Energy Correspondents on Wednesday, September 11, 2023, in Lagos, Nigeria.

 

 

Akachukwu while commending the government for the enactment of the PIA, which according to him has provided regulatory clarity for the petroleum sector and specific provisions for the gas industry, he however recommended a swift review of the PIA to address gaps currently hindering the gas sector’s growth.

 

 

Nwokedi expressed concerns over the multiplicity of taxation within the PIA. He noted that such taxation requirements increase the cost of doing business and, in some cases, result in higher end-user gas prices, reducing the attractiveness and rapid adoption of natural gas.

 

 

He said, “To truly unlock Nigeria’s gas potential and harness the forward-thinking nature of the PIA, the NGA belief, the time is now to fast track the review of the PIA in the light of the global realities and to ensure that the certain aspect of the legislature easing investment in the gas sector are addressed.

 

 

He said, “Another critical issue is the requirement to pay royalties, fees, penalties, licenses, and permits in US Dollars without providing a Naira payment option. While the oil and gas industry is internationally denominated in dollars, there is a need to alleviate pressure on the Nigerian currency, by prescribing through law and regulation the option of payment of Federal Government dues and levies in Naira equivalent, especially in this period of extreme FX fluctuations.

 

 

“There is also the need to develop Fiscal Incentives and develop Commercial and fiscal terms for Gas development (offshore, deepwater, and across the value chain), to propel competitive investment.t.  This will boost and sustain the gas supply to meet the nation’s needs.

 

 

Aka Nwokedi emphasized the crucial role the NGA plays in advocating for the Nigerian gas industry, promoting new investments, protecting industry interests, and facilitating a just energy transition.

 

 

He emphasised that the NGA is committed to strategic focus areas in the next two years, through increased advocacy for its members and the entire industry, by promoting new investments and supporting the transition to cleaner energy sources.

 

 

He said the NGA will actively participate in and coordinate the DoG initiatives, ensuring their successful and speedy implementation.

 

 

“The NGA will deliver industry events and training on gas-specific and broader energy sector topics to enhance the knowledge and skills of industry professionals.

 

 

“NGA will foster improved communication between the association and its members through an integrated online membership ecosystem.

 

 

“The NGA will engage in technical roundtables and other initiatives to enhance communication on industry governance and safety standards.

 

 

“The NGA will fully implement a resource center providing credible data and information about the Nigerian gas industry.

 

 

“The NGA will launch an annual training program for energy editors to ensure accurate reporting and knowledge dissemination within the sector.

 

 

“The NGA will advocate for and promote investment opportunities within the Nigerian gas industry globally, leveraging its membership in the International Gas Union (IGU).

 

 

“The association will continue to promote greater Nigerian involvement in the gas sector across the entire value chain.

 

 

“The NGA will drive the implementation of Diversity, Equity, and Inclusion (DEI) initiatives among its members, promoting a more inclusive gas and energy sector.

 

 

“The NGA will consolidate industry views, expertise, and experience to enhance the strategic focus of the Association and energy sector, ” the President of the Association said.

 

 

Nwokedi further noted that the media parley’s objective was to inform about industry issues and solutions while establishing strong partnerships with the media.

 

 

He said, “By working together, the NGA and the media aim to ensure accountability and disciplined delivery of proposed initiatives, unlocking Nigeria’s potential to become a gas economic powerhouse.”

 

 

Chichi Emenike, Ex-Officio and chairman of the Study Group on Diversity, Equality, and Inclusion, NGA, in her remark, urged the federal government to urgently review the fiscal terms in the PIA to encourage investment in the gas sector.

 

 

She said, “There is a lot of work to be done to keep the pace of advocacy in the gas sector up, and it is encouraging that President Bola Tinubu is focusing on AutoGas.

 

 

“We need to look at the country’s gas resources, not from a rent-seeking perspective. Unfortunately, all the fiscals including taxes, levies, and royalties are not encouraging investors and therefore making it difficult to repatriate funds,” she stated.

 

 

Emenike who doubles as Head of Gas Ventures at Neconde Energy Ltd, therefore bemoaned the multiple taxes and fees being imposed on the upstream players by the duo of Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

 

 

She emphasised that since the Department of Petroleum Resources (DPR) has been split into NUPRC and NMDPRA, the two agencies have been subjecting the operators to multiple taxations and all forms of regulatory issues discouraging investment.

 

 

She also complained about the regulated pricing regime for gas, which sets prices instead of introducing a market-based pricing regime that would allow producers to sell their products to the willing off-takers.

 

 

According to her, the gas business is a value chain, called “handshake”, from upstream to downstream, investors would have to repatriate what is invested upstream to flow to the entire value chain.

 

 

She said, “If the value chain is broken anywhere, which must happen in Nigeria, for instance, there are gas molecules that have been supplied three years ago.

 

 

“Today, at the upstream where I operate in the heart of the Niger Delta, to drill one gas well, it’s about $30 million. Now, when you invest such funds into exploration, of course, you have your plus or minus what your reservoirs are telling you, or you do all your work and to a great extent estimate your volumes, you bring it up, then you will need infrastructure and strategies to complete the task…”

 

 

“Then the government will approach the operator and insist that the gas molecules must be sold at a particular price and most likely to the biggest off-takers in the power sector,” Emenike said.

 

 

Emeke Iheme, the Financial Secretary of Nigeria, has emphasized the need to ensure that gas molecules utilized in the country, including Liquified Petroleum Gas (LPG), are domestically produced and processed.

 

 

He also stated that while the government is making efforts to deepen domestic gas utilization in Nigeria, it is enforcing some impediments to making the initiative a reality.

 

 

He said, “Nigeria LNG as the major LPG producer, therefore, needs to be given the right operational environment to increase its production volume.

 

 

“The key solution to this is to ensure regular gas supply from the upstream, this is because most of the gas available in the country is associated with gas that is dependent on crude oil production.

 

 

“The recurring cases of pipeline vandalism and insecurity in the oil-producing states are affecting gas production because the associated gas from the field goes into the NLNG facilities,” the NGA Financial Secretary noted.

 

 

Iheme, the CEO of Gasavant Africa, therefore emphasized that the Nigerian government needs to take action to remove Value Added Tax (VAT), fees, levies, and other charges that are responsible for the hike in the price of LPG.

 

 

He further noted that the ideal solution for the future of gas in Nigeria is for the government to completely pluck out those rent-seeking fees to make gas more affordable for Nigerians.

 

 

EnergyDay’s check showed that the Nigerian Gas Association (NGA) is the apex non-partisan organization representing various stakeholders within the Nigerian Natural Gas Industry Value Chain. The association is dedicated to promoting the development of Natural Gas in Nigeria to benefit the nation and its stakeholders.

 

 

The NGA plays a pivotal role in the Nigerian energy sector, with an unwavering commitment to advocacy, investment promotion, promoting standards and best practices, capacity building, and serving as the industry resource center of choice.