What Is Nigeria’s Gas Revenue? -By Emejuiwe victor

Nigeria makes a lot of money from the exploration of gas yet this source of income has remained undisclosed. It is only recently that Nigerians were privileged to the information on the amount of money generated from gas. Thanks to the bailout fund by the federal government to states, it was discovered that the Nigerian Liquefied Natural Gas has made the total of $85 billion in the export of liquefied natural gas to Europe since 1999 and as a result it remitted $1.6 billion as tax to the FG during the inception of the Buhari administration.

Another discovery came out on heels of the federal government threat to shut down gas supply to Ghana as a result of its inability to pay the sum of $180 million debt for gas supply. It is learnt that through the West African Gas Pipeline (WAPG), a project initiated by the federal government, countries like Togo, Benin and Ghana benefit from Nigeria’s gas supply. NNPC GMD, Ibe Kachikwu recently released the NNPC monthly oil and gas report for the period of January to July 2015 and from the report, a grand total of 439,099,683 of crude oil was lifted and utilised and a total amount of $25, 105,265,317 was realised.

Although this report was captured as the NNPC monthly oil and gas report 2015, there were no details about revenue generated from gas exports. It is noteworthy that Nigeria is planning to increase its investments in the gas sector to attract more income and increase the GDP of the country and as a result a lot of funds have been appropriated for the Gas sector.

While we consider investing money into the gas sector, one wonders why no report is given on how much is being generated from the sector. The demand for domestic gas consumption and external demand is at a high rate and Nigeria has proven reserves of about 187 trillion standard cubic feet.

Some of the challenges identified in gas production in Nigeria are, the flaring away of gas and the availability of pipelines to transport gas to viable power plants in the country. Other issues are willful vandalisation of gas pipelines which leads to the reduction of power generation in the country.

Nigeria currently sells its gas to power at $3.30 per mcf and it makes huge profit in the sale of gas to the industrial sector at $7.34 per mcf and $8.75 mcf to the commercial sectors.

Reports have it that Nigeria supplies about 8% of global LNG and it’s the 5th biggest LNG exporter. Countries in South America, Asia and Europe are some of Nigeria’s biggest LNG buyers. If Nigeria has been exporting its LNG and making a lot of money from it all these years, how come no reports is given on the amount of gas sold annually?

It has been a common practice to base the revenue generation projection of the country from crude oil; crude oil has also been used to set the benchmark for excess savings via the excess crude account but nothing is reported on sales of gas.

Pray, does the revenue generation disclosure of crude oil include that of gas? Could the federal government have regarded the price sold for gas as insignificant compared to that sold for crude oil? This however cannot be an excuse for the lack of disclosure in the sources of income from gas or any other commodity in Nigeria.

As Nigeria searches for alternative sources of revenue, there is need to focus attention on the gas sector, by making continuous effort to address the challenges identified in the sector and also maximize the potential benefits of Nigeria’s gas reserves. Revenue can be generated from gas especially through large scale exportation of Nigeria’s LNG and conversion of gas into other agro, industrial and chemical products which serve as both local and international source of revenue.

–Victor is programme officer, Good Governance