Nigeria’s new government under President Muhammadu Buhari believes gas is the solution to the country’s power crisis.
The Azura thermal power plant deal has recently been signed off by Nigeria’s solicitor general. This is set to provide partial risk that will pave the way for all the guarantees and the loans, as construction work is set to commence in September.
Tilwea Adebajo, CEO of The CFG Advisory, said this would provide a major milestone in the power sector from a generation perspective in Nigeria because there are a lot of heavy investments that attract a lot of strong EPC (engineering, procurement and construction).
“It’s going to pave the way for many more generation projects… there’s a viable financial model, bankable, that will give a lot of the investors and financiers the comfort levels they need to put in heavy financing for the power sector," said Adebajo.
While a move towards gas presents an attractive alternative, Adebajo notes that the key limiting factor for Nigeria now is the availability of gas itself. He said it is merely a question of pricing.
“Most of the IOCs [international oil companies] have gas and can bring the gas from their offshore fields, provided that there’s an economic justification for that," he argued.
The gas supply structure also needs to be enhanced, according to Adebajo. “Nigeria is now looking at liquefied natural gas about 4 000 megawatts, but we have to remember that we also have close to 5 000 megawatts available with the NIPPs [National Industrial Participation Programme] which have been recently privatised. “
Adebajo highlighted that gas is a big opportunity for Nigeria, as he cited the example of LNGs (liquefied natural gas) which generate tax payments of 1.2 billion naira or 6 million dollars. He estimates that with more fluid investments in the two other LNG projects currently running, “Nigeria could easily be sitting on 15 billion dollars of revenue annually just from LNG gas related projects”.
According to Adebajo, “The future is in gas” despite gas flaring challenges, there has been a lot of progress in that, he said.