Nigeria’s $200 Billion Plan: Boosting Energy and Investments in Oil and Gas

The Federal Government of Nigeria has expressed concern over the country’s energy crisis, with over 76 per cent of its gas reserves remaining undeveloped.

This revelation came during the inauguration of the Governing Council of the Midstream and Downstream Gas Infrastructure Fund (MDGIF) aimed at mobilizing over $200 billion in capital to develop gas infrastructure in the next decade. The inauguration, which took place in Abuja, was part of the government’s efforts to address the revenue crisis and harsh economic realities facing the nation.

Speaking at the 4th ministerial press briefing, the Special Adviser to the President on Energy, Mrs. Olu Arowolo Verheijen, highlighted the need for timely, credible, clear, and consistent policies to accelerate economic growth and diversify the economy. She emphasized President Bola Ahmed Tinubu’s commitment to growing revenue and stabilizing the economy and currency amidst the revenue crisis impacting all Nigerians.

Verheijen underscored the importance of the oil and gas sector in achieving these objectives, noting that Nigeria’s current production and investment levels fall short of their potential. Despite possessing 38 per cent of Africa’s hydrocarbon reserves, Nigeria accounted for only four per cent of the continent’s total oil and gas investments in 2016.

To reverse this trend and create a conducive business climate, President Tinubu issued directives to streamline and clarify the scope of regulators in the petroleum sector. Additionally, enhanced security measures in the Niger Delta were coordinated to address pipeline vandalism and ensure the uninterrupted flow of oil and gas.

The policy directives also included fiscal incentives to deepen the penetration of Compressed Natural Gas (CNG) and Liquified Petroleum Gas (LPG), aimed at reducing transportation costs and stabilizing the price of cooking gas in the market. Verheijen highlighted the positive impact of these incentives, including increased availability and transport of liquids and the stabilization of cooking gas prices.

In response to the urgency to accelerate investments and stabilize the economy, President Tinubu executed policy directives to signal the administration’s policy direction to the market and regulators. These directives focused on fiscal incentives for Non-Associated Gas (NAG), Midstream, and deepwater oil and gas developments.

The introduction of fiscal incentives is expected to attract much-needed investments to enhance energy security, catalyze economic activity, attract foreign exchange, and promote job creation. Additionally, the streamlining of contracting processes and timelines aims to expedite the delivery of oil and gas products to the market and enhance overall value for the country.

Verheijen emphasized that these initiatives were developed following extensive engagements, analysis, and benchmarking with industry operators and regulators. President Tinubu’s decisive actions reflect the government’s commitment to addressing foundational issues identified in the course of these engagements and accelerating investments in the oil and gas sector.

Overall, the Federal Government’s efforts signal a proactive approach to addressing Nigeria’s energy crisis and boosting investments in the oil and gas sector. By implementing targeted policies and incentives, the government aims to unlock the country’s vast energy potential, stimulate economic growth, and create opportunities for sustainable development.