Home Business OTL 2024: MDGIF Seeks Sustained Govt Incentives to Boost Nigeria’s Gas Infrastructure

OTL 2024: MDGIF Seeks Sustained Govt Incentives to Boost Nigeria’s Gas Infrastructure

by ArmadaNews
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The Midstream and Downstream Gas Infrastructure Fund (MDGIF) at the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), has emphasized the need for increased incentives by the government to boost investments into gas processing, transportation, storage, and distribution. 

This follows the recent disbursement of ₦122 billion aimed at bolstering Nigeria’s gas infrastructure.

Executive Director of MDGIF, Mr. Oluwole Adama, made the call at the OTL Africa Summit in Lagos, with the theme: “New Energy Order: Updates on Gas, CNG, and LPG.”

According to him, a supportive regulatory framework is the key to enhancing the growth and stability of the sustained incentives from the government would be instrumental in fostering a robust environment for private-sector investment in critical infrastructure for Compressed Natural Gas (CNG), Liquefied Petroleum Gas (LPG), and overall gas sector improvements.

He added: “The injection of funds is only a step; consistent policy support and incentives will pave the way for increased private investment, enhancing our domestic gas value chain and promoting Nigeria’s economic growth,” Adama stated.

The ED of MDGI underscored the importance of a comprehensive approach that integrates policy, infrastructure, and technology investments to fully realize Nigeria’s gas potential.

Adama stated, “Nigeria is sitting on gas, and in line with the global energy order of cleaner fuels, we must position our gas as the energy transition fuel.” He pointed out that the country, endowed with more gas than crude oil, needs to leverage this resource effectively.

Highlighting the vision of the MDGIF, the ED stated that the Fund is focused on financing projects related to Liquefied Natural Gas (LNG), Compressed Natural Gas (CNG), Liquefied Petroleum Gas (LPG) processing plants, gas transportation and distribution, bulk storage and terminals, and capturing gas flares in alignment with the federal government’s net-zero carbon commitment.

He noted that the key goal of the Fund is to enhance local utilization of gas, particularly at the retail level, targeting widespread end users through initiatives like mother-and-daughter stations.

According to him, projects to be funded must align with Nigeria’s National Gas Expansion Program (NGEP), energy security, and the strategic goals for gas utilization.

He added that the projects must possess economic value, be commercially/technically viable, and align with Sustainable Development Goals (SDGs) and Environmental, Social, and Governance (ESG) standards.

“We focus on promoting and supporting viable projects while leaving the execution to project owners to drive gas production and utilization,” Adama explained.

“We have already announced six project promoters who met our funding criteria, ensuring that these projects are positioned to boost the domestic gas market and advance our energy transition objectives”, he stressed.

Furthermore, he noted that as MDGIF is primarily an enabling body, its role is not to initiate projects but to provide the financial and strategic backing needed to encourage private-sector investment and optimize Nigeria’s gas resources.,

He elaborated on the MDGIF’s recent disbursement of ₦122 billion, which aims to close the infrastructure gap across Nigeria.

He said further added: “This investment will be supported by a 1.5% levy on wholesale petroleum product prices and is expected to generate income from equity investments made by MDGIF project partners, as well as penalties from gas flaring across oil fields.

“Our primary objective is to ramp up the use of gas through various projects and attract investors by alleviating their burden from commercial bank interest rates.

“The MDGIF is also working to secure multilateral and bilateral funding for gas infrastructure development. The organization prides itself on its strong corporate governance, which is crucial for attracting both foreign and local partnerships,” he noted.

“We have received considerable encouragement and commendation for our efforts to enhance infrastructure in the gas sector. Our processes are guided by transparency, utilizing top consultants for due diligence to ensure funds are disbursed effectively.”

The MDGIF has announced six project promoters, as the fund does not initiate projects but promotes existing ones for execution.

“Among the key projects is a 5,000 MT butane storage facility, expected to support 13,200 MT of NLNG, set for completion by the end of the year.

Another significant project by one of the beneficiaries of the recent disbursement is targeting the establishment of 20 mobile CNG refueling stations, which will help reduce dependency on traditional fuels as more partners convert their vehicles to CNG.

He urged the private sector to ramp up investments in Nigeria’s gas sector, highlighting its potential as a key driver for the nation’s energy needs.

According to Adama, Nigeria’s current gas pipeline network covers less than 10% of what is required to meet national demand, underscoring the urgency for accelerated infrastructure development.

“Our gas infrastructure will remain crucial for at least the next 20 to 30 years in meeting Nigeria’s energy needs,” Adama stated, calling on stakeholders to invest more and lead the expansion process”, Adama said.

 

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