By Thompson ABISOLA
Managing Director, Frontier Energy Limited, Mr Dada Thomas, has urged stakeholders in the gas industry to support and enable the willing-seller-willing-buyer gas pricing model to ensure the viability of the sector.
Thomas gave the advice in Lagos on the backdrop of attracting investors into the country’s gas industry.
Thomas, who was immediate past president of the Nigerian Gas Association (NGA), also called for the privatisation of the gas value chain as part of measures to untangle the bottlenecks in the industry.
He said that opportunities for investments into the Nigerian gas sector were enormous, adding that it included transitioning from an oil-based economy to a more integrated oil and gas economy.
According to him, such exploits are bound to end routine gas flaring in the country.
He described the development of the gas sector as critical, saying several key enablers had been identified to unlock gas resources in the country.
Thomas said there was the need to establish Production Sharing Contracts gas terms that would be clearly defined and globally competitive, with sufficient returns to attract the required investments.
He also said that government must implement the underlisted variables to ensure major development inroad into the industry.
“Growth of new industries made possible from the abundant resources and competitively priced gas supply.
“Reform the domestic gas market by moving to a balanced ‘willing-buyer-willing-seller’ model that stimulates development and ensures all segments of the gas value chain are economically viable.
“Extend credit support to gas buyers to provide assurance in the gas supply arrangements.
“Increased domestic utilisation of gas, the development of a robust petrochemical industry with export of finished products, improvement in generation and transmission of electricity and introduction of renewable energy,’’ he said.
Thomas added that bringing solar power into the energy mix would have a multiplier effect on all industries and eventually the economy.
He said that the current gas pricing, lack of certainty of contracts and infrastructural deficit we’re among problems facing the country’s gas sector.
“The gas pricing is not right, and that is why when we run the margin with the current price of $2.50 benchmark to the power sector one, cannot make enough profit.
“The real deal is that, we should allow the free market to come into play. Let willing buyer and willing seller negotiate the terms, rather than current government pegged pricing’’, he said.
The expert said the Domestic Supply Obligation (DSO) on gas producers should be predicated on willing buyer-willing seller basis.
“We strongly support a move towards deregulated pricing on a willing-buyer-willing-seller basis while retaining the existing regulatory approvals by the Nigeria Electricity Regulatory Commission (NERC) of prices for gas to power transactions,’’ Thomas said.
