Several Gas Supply Agreements signed in Nigeria have remained unimplemented because the parties have not met the condition precedent to the execution of the contracts.
An indigenous oil and gas firm, Oando Plc, made this known during a panel session: “Solving Africa’s Gas Development and Utilization Challenges Through Domestication of Innovation,” at the African Gas Investment Summit 2024 in Abuja on Friday, June 14.
The Executive Director, Dr. Ainojie Alex Ilune, who was represented by the Head, Commercial Operations, Mr. Solomon Agba, urged the stakeholders to address the challenge of securitization of the agreement.
We have to first of all fix securitization issue,” said Ilune.
He lamented that off-takers are unable to secure finance for gas projects.
His words: “Our off-taker is not able to get the finance. That is very key.
There are several gas supply agreements that we have that are just there.
There is no implementation because the condition precedent have not been met. So, we have to deal with securitization.”
He urged the experts to have a holistic examination of the entire gas value chain to have return on investment.
Ilune noted that unless the sector takes the aforementioned steps, it will end up subsidizing other sectors.
He said even as the gas sector is not clamouring for subsidy, it requires incentives to thrive.
He noted that the shortness of the country’s approach is one of the banes of the gas sector, stressing there should be long term approaches for the sake of sustainability of investments.
Insisting there must be return on investment to drive sustainability, he said
“We need the central arrangement where each sector has to pay for itself. It is not economics, then you will not find investment.
“Everybody wants a return on investment, looking on value chain, it does not pay for itself, there will be no investment and that is one of the key problems that we have in this sector.”
The Executive Director, who described data as the new oil, sought the democratization of data in the country.
Speaking virtually, African Energy Chamber (AEC) Executive Chairman, Mr. NJ Ayuk, said aside pricing, demand for gas is a major factor, which can determine the future of investment in the sector.
He said Nigeria is a huge player in the African gas industry.
According to him, since there has been gas everywhere in Africa most of it would be exported.
He sought a complete implementation of gas agreements.
He urged the stakeholders to ponder on how to finance the production of gas in the continent.
He said most of the off-takers are not able to embark on large scale projects.
“We need to drive how we fix our utilities infrastructure,” he challenged the experts.
He said the continent needs infrastructure to drive gas around Africa
He sought the removal of bureaucratic bottlenecks from gas projects implementation.