NMDPRA To Unveil Regulatory Gas Swap To Facilitate Domestic Delivery Obligations
By Stephanie Odiase
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) is planning to unveil regulatory gas swap to facilitate the delivery of natural gas to the domestic market.
The plan is aimed at enabling the transfer of a specific volume of natural gas to support meeting the performance targets of the Domestic Gas Delivery Obligations (DGDO).
Engr. Farouk Ahmed, the NMDPRA boss, who stated this while speaking as a special guest at the NNPCL Gas and Power Investment Retreat on the topic, ‘Strategic direction of the Nigerian midstream and downstream petroleum regulatory authority – enabling gas and power businesses,’ particularly identified the production of natural gas through the NNPCL Exploration and Production Limited (NEPL) and the operation of a natural gas transportation network through NNPCL Gas Infrastructure Company Limited (NGIC), as strategic.
Ahmed who described the Retreat with the theme, ‘Re-Igniting Nigeria’s gas revolution: collaboration, innovation and sustainability,’ as timely and epochal, at a time when Nigeria is transiting towards a more cost-reflective gas to power industry that thrives on market competition and operational efficiency to address the myriad of challenges bedeviling the sector.
The Authority Chief who listed the challenges confronting Nigeria at this time to include the unavailability of natural gas for power generation, appropriate pricing of natural gas to match power tariffs, payment defaults for gas supplied, and inadequate transmission capacity, however, added that despite the challenges, the gas-to-power business in Nigeria is thriving, and emanating challenges are constantly being addressed through a dynamic feedback system.
While using the opportunity to laud President Bola Tinubu for signing Executive Orders 40, 41 and 42 of 2024 which are targeted at spurring the gas business, he said: “These include providing incentives to spur production of non-associated gas with investment tax credits as investment allowances, and midstream gas utilization (plant and equipment) capital allowance through the Oil and Gas Companies (Tax Incentives, Exemptions, Remission etc). Reviewing and funding the “Gas Supply Stabilization Fund” to ensure timely payment for gas supplied to the power sector.”
The NMDPRA boss further noted that the implementation of the Petroleum Industry Act (PIA 2021) and other enabling edicts necessitated the NMDPRA to adopt several technical, operational, and commercial measures to support operators of the midstream and downstream sector that will, inadvertently, impact positively on the Gas-to-power business.
In line with the NMDPRA’s statutory responsibility, Ahmed hinted that the release of the 2024 domestic base price that provides natural gas pricing thresholds for the strategic sectors’ sustainable operations and mobility CNG pricing will result in progressive adjustments in prices over the years which is expected to motivate the transition to market-based regimes.
According to him, the Authority, in the coming days, will issue statutory instruments for wholesale supply of natural gas to close demand-supply shortfalls, adding that it is aimed at supporting the evacuation of natural gas and petroleum liquids, and institute better inventory management practices.
He disclosed that the Authority will soon commence nationwide implementation of measurement systems audit, especially at custody transfer points, to ensure all parties are confident of volumes of gas delivered or received. “This is the bedrock of the repeated accountability and transparency we have all been preaching,” Ahmed said.
He added that, “By encouraging transparency, we can attract investments and develop a strong working relationship between investors and the relevant stakeholders. The NMDPRA will remain steadfast in its dedication to promoting a sustainable energy supply that meets the needs of Nigeria. As an enabler of business, the NMDPRA will continue to collaborate with industry stakeholders to issue more Regulations, review existing ones, and come up with measures to support growth and retention of value by actively promoting the implementation of responsible practices.”
He further pointed out that notwithstanding the technical constraints faced by the power sector such as ageing infrastructure, capacity constraints, social and political factors, what must be taken into cognizance is the low-capacity generation and installed capacity. “It must be noted that the utilization of gas for power generation holds the promise of cleaner, more efficient energy. This implies that our collective attention and support to the federal government efforts must not be taken trivially,” Ahmed stated.
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