NMDPRA Rolls Out Gas Distribution Licenses to Expand Nigeria’s Gas Utilization

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has commenced the rollout of Gas Distribution Licenses (GDLs) to qualified gas operators, a move set to revolutionize Nigeria’s gas sector. The initiative aims to expand gas utilization across various subsectors of the economy, supporting industrial growth, power generation, and economic diversification.

A Game-Changer for Nigeria’s Economy

The award of gas licenses is expected to deepen gas penetration, extend access to gas supply, and expand the national grid system. Key sectors such as power generation, Liquefied Petroleum Gas (LPG), and Compressed Natural Gas (CNG) will benefit significantly from this initiative.

According to George Eni-Ita, Director of Public Affairs at NMDPRA, the implementation aligns with the Petroleum Industry Act (PIA) 2021 and the Gas Distribution Regulations 2023. The initiative will unlock extensive gas opportunities for energy-intensive industries, power generation, mobility CNG, energy parks, and special economic zones.

“This will support Nigeria’s socio-economic development through employment generation, increased government revenue, sustainable gas resource utilization, and enhanced gas infrastructure development,” he added.

Gas Distribution License (GDL) Implementation Roadmap

The implementation of the GDL rollout follows a structured roadmap:

• Q1 – Q2 2024: Due diligence on gas distribution operations and processing of GDLs for existing operations.
• Q1 2025: Award phase of GDLs to selected companies.
• Q2 – Q4 2025: Expansion of the gas distribution network through additional licenses.

With an installed natural gas distribution capacity of approximately 1.5 billion standard cubic feet per day (bscf/d) and over 1,281 km of installed pipeline infrastructure, the GDL framework is expected to drive long-term investments in Nigeria’s gas sector.

Major Beneficiaries of the Gas Distribution Licenses

The Federal Government has issued 10 Gas Distribution Licenses to key players in the gas sector, including:

• NNPC Gas Marketing Limited
• Shell Nigeria Gas Ltd
• AXXELA
• NIPCO PLC
• Central Horizon Gas Company
• Falcon Corporation Limited

These companies will play a pivotal role in expanding gas infrastructure and supply across Nigeria.

Economic and Environmental Benefits

Economic Impact

• Increased Gas Supply: Supports industries, power generation, and CNG expansion.
• Job Creation: Infrastructure development will create thousands of direct and indirect jobs.
• Revenue Generation: Government to earn from licensing fees, taxes, and royalties.

Energy Security

• Reduced Import Dependence: Enhances domestic gas production, reducing reliance on imports.
• Improved Power Generation: Increased gas availability will stabilize electricity supply.
• Diversified Energy Mix: Supports Nigeria’s shift from oil to a more balanced energy sector.

Industrial Growth

• Manufacturing & Petrochemicals: Gas availability will stimulate industrial growth.
• New Business Opportunities: Encourages new industries and foreign investment.
• Competitive Market: Strengthens Nigeria’s position in global energy trade.

Environmental Sustainability

• Reduced Gas Flaring: Promotes responsible gas utilization and environmental protection.
• Cleaner Energy Transition: Enhances clean cooking and mobility through CNG adoption.

Challenges and Opportunities

While the initiative is a step forward, key challenges remain, including:

• Infrastructure Development: Significant investment required for pipeline expansion.
• Security & Community Engagement: Protection of gas assets and inclusion of host communities.
• Regulatory Oversight: Ensuring transparency, accountability, and competition in gas distribution.

Minister’s Remarks on the GDL Rollout

The Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, emphasized the significance of this initiative in Nigeria’s energy transition. He highlighted that over 600,000 women and children die annually in Africa due to a lack of access to clean cooking fuels, stressing the importance of gas utilization in addressing this issue.

“President Bola Ahmed Tinubu’s leadership has given gas its unique identity, expanding business opportunities in the sector. This rollout is a testament to our commitment to implementing the Petroleum Industry Act (PIA) 2021 and fostering a competitive, transparent, and sustainable gas industry,” he stated.

Conclusion

The Gas Distribution License (GDL) rollout is a landmark development in Nigeria’s energy sector, aligning with the Decade of Gas Initiative and President Tinubu’s Renewed Hope Agenda. As the government deepens gas utilization, stakeholders must ensure effective regulation, infrastructure development, and community engagement to maximize the benefits of this initiative.

With a strong regulatory framework and strategic investments, Nigeria is well-positioned to become a leading gas hub in Africa, driving economic transformation and sustainable development.