Proshare, a leading economic intelligence reporting platform, has expressed optimism that the recent facility released by the Central Bank of Nigeria (CBN) to facilitate gas distribution and exploitation through the value chain will create vast opportunities in the economy.
Traditionally, the subsidy on petrol and low levels of investment in the oil and gas industry in Nigeria have led to minimal production and utilization of Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) as clean alternative energy sources. However, with the recent removal of the subsidy and the N250 billion intervention facility by the CBN to stimulate investment in the gas value chain, the narrative surrounding gas production and usage in the country is expected to change. This presents a highly profitable opportunity for banks and investors to explore the gas sector in Nigeria.
According to the CBN’s framework for the implementation of the N250 billion facility, the midstream and downstream activities in the gas value chain are eligible sectors for the fund. The intervention fund will be disbursed through Deposit Money Banks (DMBs) and NIRSAL Microfinance Bank (NMFB), which will handle credit appraisals, assist customers in accessing the funding, and administer loan disbursements under the supervision of the CBN. The monitoring of projects funded under the scheme will be a collaborative effort between the participating banks, the Ministry of Petroleum Resources, and the CBN.
The implementation of the National Gas Expansion Programme (NGEP) has been hindered by two major challenges: the existence of petrol subsidy as a cheaper alternative and the lack of infrastructure for gas extraction, processing, storage, and distribution. However, with the post-subsidy regime and the N250 billion intervention facility, the NGEP is expected to receive the necessary infrastructure and private financing access to harness the country’s vast gas resources and attract increased investments in gas-related industries. This is projected to create a minimum of 750,000 jobs in the LNG sector and 250,000 jobs in the CNG sector.
Proshare Analysts believe that this intervention will significantly boost the gas sector, foster economic growth, and unlock the potential of Nigeria’s gas resources, contributing to job creation and increased investments in the gas industry.
