By Adewale Sanyaolu
The impediments stunting the growth of the entire gas value chain may soon be a thing of the past as stakeholders in the sector have hailed the decision of the Central Bank of Nigeria to unlock the gas sector potential.
The experts in separate interviews said the CBN N250 billion interventions in the gas sector would help create value addition for the 206 trillion standard cubic feet(SCF) of gas reserves through fresh investments and create about 12,000 jobs by harnessing existing gas resources to spur other critical sectors of the economy, especially industrial activities.
The CBN intervention which is in partnership with the Ministry of Petroleum Resources will further drive the National Gas Expansion Programme (NGEP) policy of the Federal Government.
The objectives of the scheme according to the bank include improved access to finance for private sector investments in the domestic gas value chain and stimulate investments in the development of infrastructure to optimize the domestic gas resources for economic development.
The CBN had said gas-based industries, most especially the petrochemical (fertilizer, methanol, among others) must be enabled to support large industries, such as agriculture, industrial applications, textile and others noting that “as part of efforts at stimulating finance to critical sectors of the economy, CBN introduced the N250 billion intervention facility to help stimulate investment in the gas value chain.
The apex bank noted that large-scale projects under the intervention would be financed under the Power and Airlines Intervention Fund (PAIF), in line with existing guidelines regulating the PAIF, while small-scale operators and retail distributors will be financed by the NIRSAL Microfinance Bank (NMFB) and / or any other Participating Financial Institution (PFI) under the Agribusiness/Small and Medium and Medium Enterprises Investment Scheme (AgSMEIS).
The Minister of State for Petroleum Resources, Timipre Sylvia, had said that funding initiative would push job creation from NGEP to the NGEP will create over 12 million direct and indirect jobs with approximately 2million jobs annually and human capacity development nationwide.
An energy expert with PWC, Habeeb Jaiyeola, said the CBN intervention remains a positive tool for the development of the domestic gas sector, adding that across the world, “Government interventions are used to catalyse economic development.”
Jaiyeola, who noted that government interventions are quite critical in controlling cost of borrowing in developing sectors said payback must be enforced to ensure the fund remains available for further critical interventions.
“To achieve sustainable growth, interventions alone cannot be the solution. Appropriate pricing system needs to be instituted to enable the forces of demand and supply determine the price and enable adequate returns on investment,” he said.