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The federal government has issued 10 new gas distribution licenses to six companies, covering a capacity of approximately 1.5 billion standard cubic feet per day.
The licences awarded in Abuja on Tuesday by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), aims to enhance Nigeria’s gas distribution infrastructure and address frequent power grid failures.
The beneficiary firms are NNPC Gas Marketing Limited, Shell Nigeria Gas Ltd, AXXELA, NIPCO PLC, Central Horizon Gas Company and Falcon Corporation Limited.
Minister of state for Petroleum Resources (Gas), Ekperikpe Ekpo, in an address at the event, said the move reaffirms the government’s commitment to sustainable development of Nigeria’s vast gas resources.
Ekpo said in section 148 of the PIA 2021, mandates the NMDPRA to issue Gas Distribution Licenses to qualified individuals and organizations.
He said this provides an exclusive right to establish, construct, and operate gas distribution systems and ensures the non-discriminatory distribution and sale of natural gas within designated local distribution zones.
He said the event is a testament to the government’s commitment to implementing the PIA in full alignment with the Gas Distribution Regulations of 2023.
The minister said “the issuance of the Gas Distribution License comes at a pivotal moment as we intensify efforts to harness the potential of gas as a critical resource for Nigeria’s energy transition and economic transformation.
Chief executive of NMDPRA, Farouk Ahmed, emphasised the importance of these licences in supporting the development of a robust gas distribution network, which includes over 1,200 kilometers of pipeline and services for more than 500 customers.
The licences are part of a broader strategy to stabilise the national energy supply and facilitate economic growth.
Speaking at the Gas Distribution Licence (GDL) Award ceremony in Abuja, Ahmed said the organisation received 30 applications for licences from which it approved 10.
He said the licences cover about 1.5billion standard cubic feet/day with over 1,200kilometer of gas distribution pipeline network. He added that the issued licenses cover over 500 customers.
Ahmed said, “Ten licences are being issued today as part of Phase-1 of the Gas Distribution Licensing regime to operators who have invested significantly in developing gas distribution infrastructures in the designated Gas Distribution Zones and have met the prescribed minimum requirements.
“A cumulative gas distribution capacity of approximately 1.5 bscf/d with over 1,200km of gas distribution pipeline network as well as over 500 customer stations are covered by the licences being issued today.”
He said the Gas Distribution Licence (GDL) as provided in Sections 148 -152 of the PIA 2021 is a licence that gives exclusive right to establish, construct and operate a gas distribution system in a designated local Gas Distribution Zone (GDZ) issued to qualified applicants to distribute gas at the ‘last mile’.
Ahmed said due diligence was conducted on the 30 applications in line with defined prerequisites.
He noted that the licences being issued yesterday would support the ‘last mile’ expansion, crucial in completing an efficient and interconnected gas network across the country.
He explained that the GDL regime holds a significant opportunity of supporting the development of the nation’s domestic gas market through the supply of gas to the energy-intensive industries, industrial parks, special
economic zones, embedded/captive power generation, mobility CNG schemes and any other downstream gas utilisation programme.
The licence regime, according to him, shall not only support the accelerated development of Nigeria ‘s domestic gas market but that it shall create opportunities for profitable investments for various classes of stakeholders, improve the socio-economic impact of gas resources across Nigeria and support our national energy transition plans.
He vowed that the NMDPRA would continue working assiduously in providing regulatory support to industry stakeholders and ensure that critical gas infrastructures are completed and commissioned.
Ahmed said they include the OB3 river crossing, the AKK, and the gas processing facilities across the gas producing provinces of the country.
He said meanwhile, NMDPRA would conduct the second revision of the Gas Transportation Network Code, to build on the successes of the first revision and enhance the performance of the Network regarding pressure stability, metering at both entry and exit points, quality of supply and overall operational efficiency. He added that the Authority would enable the automatic determination of the shrinkage factor segment by segment.
Ahmed said the GDZs would be complemented in the interim, by virtual networks that convey LNG and CNG via trucks to the areas that are yet to be accessed by gas pipelines.
According to him, the virtual pipelines are expected to be integrated with the Distribution Networks in the future.
He further revealed that the NMDPRA shall also periodically revise the gas pricing and tariffing frameworks to ensure that the cost of gas remains fair and competitive, in line with the provisions of the PIA.
Earlier, the Distribution Systems, Storage and Retailing Infrastructure, Ogbugo Ukoha, recalled that in 2024, NMDPRA issued 15,000 licenses to operators.
According to him, in 15 years time, there would be no use of gas cylinders and trucks in the country.
It was an indication that Nigeria would in 15 years time convey gas through pipelines to the end-users.
He said with the exit of trucking of gas, the industry would avert the present recurring accidents and gas explosion which are currently.
His words: “In 2024, the authority issued more than 15,000 licenses. The Gas Distribution Licence is a major game changer within the value chain.
“With the provisions of the PIA, the GDL promises to take the natural gas to the last line. That means in 15 years time, from now you do not need cylinders for your gas.
“The filling stations that we are experiencing now with the trucks and the accidents that are happening will go away because in each mother and daughter station, will be piped and you can turn on your light and it will be powered by gas.”
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