The Power Sector Gas Issues And The Presidential Executive Order 40 Of 2024

• Published date: 04 April 2024
• Law Firm: Bloomfield Law
• Author: Mr Ayodele Oni

Nigerian Gas Historical Background

The demand and consumption rate of electricity in Nigeria is approximately between 180,000mw-200,000mw, exceeding the country's current generating capacity of around 13,000mw-22,000 (the generated electricity is mostly stranded and or unavailable). The country's transmission capacity stands at 7,500mw-9,000mw¹ whilst its current grid contracted capacity is around 3,800mw-4,000mw.

However, recently, power generation had dropped substantially from the approximated 4,000mw transmission grid levels, for reasons attributable to a number of challenges with gas, being the prime challenge. Thus, it appears that issues surrounding the unavailability of natural gas, have, thus, yet again, taken center stage in the inadequacy of electricity supply in Nigeria.

Historically, Nigeria, despite its huge gas reserves, had struggled with producing, processing and distributing natural gas to where it is needed. Two (2) historical reasons have been responsible for this. One of these reasons is the poor commercial arrangement which had existed for a very long time, in relation to gas.

For so long, natural gas, despite its abundance, in Nigeria, was neglected in terms of its production and general commercial exploitation. That neglect extended to its commercial arrangements such that the former government-owned Behemoth power company was vested with the power to buy gas at commercially unsustainable prices from gas producers. Being the major consumer of gas at the point discouraged gas producers from investing in domestic gas production, processing and transportation.

Gas Infrastructural and Commercial Challenges

Sequel to the above and, apart from the fact that there was no usable gas (processed gas), the infrastructure for...