February 25, 2024

Prof. Ezigbo, MD Falcon Ltd recommends “intentional” single-digit, long-term local currency credit for gas infrastructure

Prof. Joseph Ezigbo, Managing Director Falcon Corporation Limited

Emmanuel Oduara, Abuja

 

The Nigerian government has been asked to implement policies that would enable the financing landscape to transition to one where single-digit and long-term local currency credit can be accessed through intentional policies, to ease the capital-intensive nature of developing gas infrastructure across Nigeria.

 

Prof. Joseph Ezigbo, Managing Director Falcon Corporation Limited, made this known during his presentation at the 2nd at the 2nd edition of the Domestic Gas Summit (DGGIS) in Abuja.

 

 

According to him, the development of gas infrastructure and facilities is capital intensive, and it may take several years to complete gas infrastructure.

 

 

He therefore said, “Considering the effect that exchange rates have on a company’s cash flows, the Nigerian financing landscape needs to transition to one where single-digit and long-term local currency credit can be accessed through intentional policies.

 

 

The MD Falcon further noted that regulated gas price in Nigeria is limiting investors’ confidence in the commercial viability of projects. He disclosed that pegged price may not be reflective of actual cost, adding that it would rather promote inefficiency.

 

 

He also revealed that gas suppliers continue to suffer from payment defaults and liquidity constraints from the power sector value chain.

 

 

Prof.  Ezigbo further noted the provision of the Midstream and Downstream Gas Infrastructure Fund (MDGIF) and other incentives to enhance the development of Gas infrastructure and supply more volumes to the domestic market.

 

 

Speaking about the impact of infrastructure on the gas sector, the MD Falcon stated that for many years, the gas sector was and still is being constrained by inadequate infrastructure, especially for the processing, transmission, and distribution of natural gas within Nigeria.

 

 

He said, “Storage, CNG facilities and haulage, Autogas, etc. For instance, it is no longer news that natural gas, in its various forms, is a major source of the needed fuels now and in the future.

 

 

“There is a strong medium-to-long-term future for natural gas as the country embraces energy transition. Natural gas is a potential complement to renewable energy as it can provide cover for the intermittency of power generated by renewables,” he said.

 

 

Ezigbo who is also the founding Chairman of the Association of Local Distributors of Gas (ALDG), therefore emphasised that over the last 20 years, there has been an increase in the expansion of the distribution pipeline network by the Local Distribution Companies (LDCs).

 

 

He stated that the Association for Local Distributors of Gas has functioned very well over the years in closing the gas infrastructure deficit.

 

 

He said, “Most of its members have built or are building gas infrastructure networks to further deepen domestic gas utilization in the country. Beyond the gas pipelines, members have increasingly invested in gas infrastructure such as small-scale LNG, and LPG.

 

 

He further disclosed that the Falcon, for instance, is currently developing a 10,000MT, the first phase of our 15,000MT Liquefied Petroleum Gas (LPG) storage facility, with a dedicated Jetty in Port-Harcourt, Rivers State as well.  as developing gas distribution infrastructure in Lagos free trade zone through Optimera Energy Limited.

 

 

He said, “Greenville LNG built and commissioned its $450m mini-LNG and gas processing plant at Rumuji in Rivers State. Phase 1 includes three liquefaction trains with a total LNG production capacity of 2,250 metric tons per day (MT/d).

 

 

“Axxela, who already runs several gas distribution networks in the country, is constructing a mini-LNG plant with an initial capacity of 20 MMscfd in Ajaokuta,” Professor Ezigbo stated.

 

 

Dr Al-Mujtaba Abubakar, President, President, Abuja Chamber of Commerce and Industry (ACCI) in his speech delivered at the opening ceremony of the 2nd at the 2nd edition of the Domestic Gas Summit (DGGIS) in Abuja stated that the rising global demand for cleaner energy sources has offered Nigeria an opportunity to exploit gas resources for the good of the country.

 

 

He added that gas has replaced coal as the fuel of choice for electricity production, with climate and air quality benefits. He said that the rapid decrease in the cost of solar, wind, and other renewable energy technologies makes these an even better alternative.

 

 

According to him, this is an opportunity to buy in for the development of our dear nation. He also reaffirmed that Nigeria currently accounts for 33 percent of the total gas reserves in Africa.

 

 

He said, “With a reserve base of 36.97 billion barrels of oil and 208.83 trillion cubic feet of gas which represents 33 percent of Africa’s total gas reserves of 620TCF, Nigeria can be described as a gas-rich nation ranking number one in Africa in reserves with a life index of 94 years.

 

 

“We are glad that this present administration pledged her unalloyed commitment to leveraging the domestic utilization, processing, and international export of Nigeria’s massive gas resources as a transition fuel to catalyze the fundamental restructuring of the nation’s economy for expansive growth during this tenure.

 

 

The Chamber’s President therefore commended President Bola Tinubu for efforts to remove all encumbrances to the entrepreneurial progress to create more opportunities for Nigerian companies and international partners to thrive.

 

 

This, according to him, was President Tinubu’s support for entrepreneurship to grow, while also pledging to build a partnership with investors that will guarantee job opportunities and skill development for Nigerian youths in the overriding best interest of the oil and gas producing environments.