Sneak Peek: How Nigeria spent years burning money – Charles Osezua excerpt from The Rise of Gas: From Gaslink to the Decade of Gas by Charles Osezua

The Rise of Gas (From Gaslink to the Decade of Gas) by Engr. Charles Osezua will be formally presented to the public on April 9, 2024.


It was a balmy Wednesday afternoon in May 1989, when news came over the radio that the Armed Forces Ruling Council (AFRC),  Nigeria’s  highest  decision-making  body  had  approved the Gas Pricing Policy my team and I had worked on for nearly three years.

With  hugs,  high  fives  and  jubilation  in  the  room,  we congratulated each other and basked in the euphoria for the rest of the day. To many, the news would have been no more than another news bulletin highlighting some government action, but to us and many industry players and watchers, the announcement signalled something monumental and in many ways, the key to unlocking the development of Nigeria’s abundant natural gas resources had been given legal imprimatur.

I was excited and felt very proud to be a Nigerian and I could  envision,  immediately,  the  economic  development  and transformation of my country facilitated by gas which would fuel power and petrochemical plants, as well as fertiliser companies with other multiplier effects. It was an opportunity for Nigeria to industrialise, stamp her authority as the leading economy in Africa, and perhaps dictate the pace of, or become the go-to-nation for Gas Policy and Pricing dynamics.

The  making  of  the  Gas  Pricing  Policy  was  a  massive undertaking spanning over 18 months spent gathering data and meeting requirements by professionals from the Nigerian National Petroleum Corporation (NNPC) and Shell Petroleum Development Company (SPDC), with support from their home offices in London and The Hague. We had spent several months in London at Shell Centre, relentlessly working and carefully reviewing the output from a computer model called The Pathfinder.

Given the diversity of interests and attempts to fairly satisfy varying parties in the country, the model had to go through a lot of re-works, which eventually gave birth to an agreed blueprint with timelines across the gas value chain for the various actions and activities from gas production through transportation all the way to utilisation.

Days and weeks were spent inside the chilly offices and corridors  of  the  corporate  planning  department  of  the  defunct National  Electric  Power  Authority  (NEPA),  and  the  Ministry of Industries, Power and Steel, to meticulously gather data on existing and planned power projects, fertiliser plants, steel plants, and rolling mills, in order to provide base load estimates for the proposed National Gas Supply Master Plan.

This was followed by months of technical and commercial presentations  to  oil  and  gas  industry  stakeholders,  top  NNPC management, key decision makers of international oil companies, owners and producers of gas, NEPA, industrialists, and relevant government ministries, to ensure their buy-in.

Finally,  Nigeria  had  the  approval  of  the  Armed  Forces Ruling  Council  for  a  Gas  Pricing  Policy  that  would  drive  the development of gas infrastructure for the first time in the forty years since the production of oil and gas began in the country. At that point, the general feeling was that the country had ultimately set its sights on transforming the lives of its people by directly and  indirectly  creating  employment  for  thousands  and  even millions, using gas as energy for economic growth and sustainable development.

Given the assumptions that went into the economic model for the gas pricing policy, we envisaged mass investments across the  gas  value  chain  propelled  by  growth  in  power  generation, petrochemical industries, as well as re-energised and expanded industrial estates.

Our joy was, however, short-lived as our celebration was abruptly shattered.

Two weeks after the passage of the Gas Pricing Policy into law, there was an unprecedented development. The new law to be documented in the Federal Government Gazette was suspended! This was unexpected and had never happened before.

I  was  shocked  and  had  to  ask,  “Is  this  real?  Have  we surrendered  to  mediocrity?  Have  we  suspended  our  future  as a  nation  that  was  set  to  dictate  the  pace  for  other  emerging economies in Africa?” We were all perplexed and our faces were grim, as if the world had crashed around us. Indeed, we were grossly disappointed, and couldn’t fathom what had happened.

“What happened?” was the question.

We  soon  had  an  answer.  An  Air  Force  chief  with responsibility  for  Power,  Steel  and  Industry  who  was  absent from the council meeting when the approval was granted, raised objections. He was said to have declared that “my ministry cannot pay the approved tariff”.

Shockingly, the Commander in-Chief had vacillated and the council decided to review the policy. Hitherto, as I was informed, nobody could reverse the decision of the Commander in-Chief in a military government, let alone a decision backed by the Armed Forces Ruling Council chaired by the Commander in-Chief. It was unbelievable!

Over three decades later, I watch in disbelief as we struggle. Recently, after several attempts at fixing the crippled gas pricing policy, Nigeria celebrated the contract signing for the construction of the Ajaokuta, Kaduna, and Kano (AKK) gas pipeline under a contractor  financed,  build  and  transfer  arrangement,  whose commercial construct, may still require a sovereign guarantee.

The gas development and pricing policy had defined the AKK pipeline as one of the major gas infrastructural “backbone” projects  scheduled  to  have  been  completed  by  1992  to  deliver natural gas to the industrial centres of Kaduna and Kano, and ensure  the  functioning  of  new  power  plants,  fertiliser  and petrochemical plants.

We missed the deadline by almost three decades.

Several events have taken place since the late 1980s when the  desire  to  promote  gas  development  in  Nigeria  was  gravely undermined. This book is therefore, in many ways, part of my chronicles of our early efforts at developing gas policies in Nigeria, the impact of politics on the realisation of the promised economic value across the value chain, the losses suffered by the country on account of  the politicisation of the decision-making process  and lessons to guide the future.

As we proceed, let us consider a quick question; why has Nigeria found it difficult to commercialise gas the way it has with oil which has earned the country revenue in excess of $400 billion in exports in 60 years especially with Nigeria as the fifth largest producer in the world?

This question is important and critical to understanding the missing link in Nigeria’s gas story.

For answers to the question, pick up a copy of The Rise of Gas (From Gaslink to the Decade of Gas) by Engr. Charles Osezua, Radi8 Publishers, 2023.

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