Strategic Assessment of Gas Sector for Power Africa Transactions and Reform Program (PATRP) in Nigeria

To achieve this goal, PATRP will deploy strategic consultants to perform a rapid assessment of current programs addressing gas sector issues in Nigeria. The consultants will generate a list of specific interventions and activities to "unblock gas to power transactions" and determine areas of collaboration with the government and donors. The assessment will focus on three broad areas: gas production, gas transportation, and gas flaring. In gas production, there are delays in completing gas supply projects and starting new projects. The consultants will identify which projects can be brought to a timely completion and what interventions could activate new projects. In gas transportation, there are existing gas pipeline projects that need to be completed and new projects identified in the Gas Master Plan. The consultants will review the status of these projects and identify impediments to completion. Gas flaring continues to be a significant problem in Nigeria, with both environmental and economic impacts. The consultants will identify practical barriers to further reductions and opportunities for parties to invest in practical solutions. The assessment will also consider wider contextual challenges to the development of the gas sector in Nigeria, including legislation, strategic management and regulation of the domestic gas market, the Gas Master Plan, industry structure, gas commercial regime, gas pricing, and gas utilisation. Legislation is a major challenge, with the failure to pass new oil and gas legislation having a significant impact on the development of the oil and gas sector. The main areas of uncertainty affecting gas-to-power are taxation, the structure and management of the domestic gas market, and the availability of funds for the development of the gas network. Strategic management and regulation of the domestic gas market are also critical, with the need for effective Ministerial intervention and independent regulatory oversight. The Gas Master Plan has been in place for several years, but there is a lack of transparency in its articulation and implementation. The plan may no longer be appropriate to meet immediate future needs, and there is a need to identify funding sources for projects, assess project feasibility, and provide early-stage financing. Industry structure is also a challenge, with a lack of clarity on the proposed structure of the domestic gas market, which has resulted in an uncertain environment for private investors. The gas commercial regime is another area of concern, with impediments to the gas market functioning in a commercial manner. The sale of government-owned power stations has necessitated the negotiation and agreement of gas sales and transportation agreements, which have not yet been activated. The Nigerian Gas Company needs to move away from being a monopoly gas business to becoming a separate gas retailing and transportation business. Power stations need to receive sufficient revenue from the Market Operator to honour their payment obligations under their gas supply and gas transportation contracts. Gas pricing is also a challenge, with Nigeria's domestic gas supply obligation and price aggregation approach may not be the best approach to encourage growth in gas supply. There is a strong case to move to a competitive gas supply pricing policy. The consultants will identify practical barriers to further reductions and opportunities for parties to invest in practical solutions to address these challenges and develop a practical work plan for the next 12 months.