Bureaucratic bottlenecks, multiple fees threatening investments in gas sector, operators lament

Operators of OML 42, Neconde Energy Limited has decried the impact of bureaucratic hurdles and multiplicity of fees imposed by various regulatory agencies in the Nigerian Gas Industry, stating that it has become increasingly difficult for businesses to thrive in Nigeria.

Chichi Emenike, the acting Managing Director, and Gas Asset Manager, of the company stated this while speaking at the sidelines of the ongoing Nigerian Oil and Gas 2025 Conference on Wednesday in Abuja.

According to her, cost of doing business in Nigeria’s upstream sector has become extremely high, and sometimes stifling for even the most resilient investors. She added that most of the financing currently sustaining Nigeria’s oil and gas sector is sourced privately, while government indecision and institutional delays continue to stifle progress.

“If you look at the oil and gas industry today, whilst the government is still trying to figure out how it will attract financing on its side, most of the financing that has been moving the industry so far has been coming from the private sector.

“Financing is not Red Cross money. It is brought in to make a profit. So if you are bringing capital, you must be sure it can breathe. We are talking about operational bottlenecks that need to be unbundled, if we are serious. Operational bottlenecks, like I call them. We need to reduce it.

“You deal with this agency, then that one, and then another. There is multiplicity of fees. There are fees that must be paid in dollars. Sometimes it gets very stifling if you are not careful as a business person. There’s a lot of rent and regulatory fees, the minister said it’s around 273 levies but I think it’s around 500,” she said.

She however commended the recent policy statements from the Tinubu administration aimed at reforming the sector, particularly the signing of new executive orders and leadership changes at the Nigerian National Petroleum Company Limited, but insisted that such reforms must be felt on the ground.

“I must commend the current administration. Things are beginning to shift, especially with some of the changes at the NNPC. But these things must trickle down,” she said.

Calling for deregulation and full liberalisation of gas pricing and infrastructure, she compared the current gas investment environment to the early days of the telecoms revolution, where minimal government interference allowed market forces to thrive.

Emenike speaking further urged the Federal Government to look into the possibility of a cost reflective tariff for gas to power in order to address the challenge of illiquidity, adding that power sector consumes over 50 percent of gas produced in the company.

According to her, the operators can only repay their debts to sustain their businesses with a cost reflective tariff.

“Let what happened in the GSM industry happen here. When smart business people compete, it eventually balances out. Gas doesn’t enjoy the kind of global pricing crude has. It’s a perfect hedge, but it needs cost-reflective pricing.

“We need to release the gas price. Let people do business. If I borrow money, I need a clear path to repayment. That’s why some people are now doing just food or small-scale gas, not major development.

“If people can’t pay for the gas, how can producers stay afloat? The power sector must be unbundled, and pricing must be cost-reflective,” she added.

Emenike also disclosed the plan of the company to take a Final Investment Decision on its larger gas reserves before the end of the year, as part of efforts to expand Nigeria’s proven gas capacity beyond the stagnant 210 trillion cubic feet figure.

“For us, gas development is big. We have set up a gas commercialization strategy team with our partners. Before the year runs out, we need to take a definitive FID on the volumes that we have. If you look at the NNPCL report, I think it’s part of the last month’s report, you’ll see it’s written there OML 42.

“It’s going to take FID. So we have to take a definitive on the bigger gas volumes. On the smaller ones, we already have some things that we’re doing. Most of Nigeria’s gas is still in the ground. That’s the truth. We have taken some FIDs already, and more are coming.

“We want to run more efficiently, replace outdated technology, and bring in cleaner, faster systems. But we need the government to allow profit to breathe,” She added.