Nigeria’s ongoing battle against gas flaring has taken center stage, with the House of Representatives vowing to recover the staggering sum of over $9 billion in gas flaring fines imposed on erring local and foreign companies operating in the oil and gas industry. The House’s Ad-hoc Committee, investigating the rampant practice of gas flaring, has also pledged to probe the $277,258,304.72 disparity in gas flare penalties recorded by the National Oil Spill Detection and Response Agency (NOSDRA) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
In a press briefing after the committee’s inaugural meeting and investigative hearing at the National Assembly Complex in Abuja, Hon. Ahmed Munir, Chairman of the Ad-hoc Committee, emphasised the determination of the 10th Assembly to leave no stone unturned in recovering all unpaid levies and ensuring compliance with existing laws and regulations regarding gas flaring. He revealed that the outstanding penalties amount to approximately $9 billion or thereabouts, indicating the seriousness of the issue.
The committee has three primary objectives: first, to recover the unpaid penalties from gas flaring; second, to explore measures to reduce gas flaring to zero in the future; and third, to implement the newly enacted Petroleum Industry Act (PIA) effectively. The latter provides a framework for more robust regulations to combat gas flaring and promote sustainable practices in the industry.
As part of the investigation, the committee summoned the chief executive officers of 19 oil and gas companies, including prominent players like Total/Mobil JV, Total/Oando JV, Total Energies, Azman Oil & Gas Limited, and A. M Shafa Ltd.
In his presentation to the committee, Patrick Mgbebu, Chairman of the Gas Monitoring Committee of the Revenue Mobilisation, Allocation, and Fiscal Commission (RMAFC), highlighted the gas flaring penalty payment history from 2013 to 2018 (June), which ranged from US$0.30 to $2.00 per unit of gas flared. The total penalties payable during this period amounted to a staggering $3,465,299,226.55, while the potential value of the gas that could have been sold instead of being flared stood at $12,403,000,001.20.
The investigation also revealed a significant disparity between the gas flaring data reported by NOSDRA and NUPRC. The volume of gas flared according to NOSDRA was 838,667,211 Mscf, while NUPRC recorded 700,975,019 Mscf, indicating a variance of 137,692,192 Mscf. This disparity suggests that the Federation Account has been shortchanged by $277,258,304.72.
In light of the extant penalties’ role as a deterrent, NOSDRA director-general, Idris Musa, called for an increase in the penalties on gas flaring to further discourage the harmful practice. Additionally, Olubunmi Olusanya, a director at the Federal Ministry of Environment, emphasized the need for legislative backing to use oil trackers as part of measures to end gas flaring in the country.
However, experts have harped on more regulatory measures, as well as investment incentives to woo the private sector into the solution.
Stakeholders posit that Nigeria can take several steps to effectively stop or significantly reduce gas flaring, which is the burning of natural gas that is released during oil extraction.
An oil sector analyst, Dr. David Ochonma, speaking with NATIONAL ECONOMY, said there is a need to strengthen and enforce existing laws and regulations related to gas flaring. Implement penalties for companies that continue to flare gas and offer incentives for those who invest in gas capture and utilisation projects.
He also said the government should provide financial incentives or tax breaks for companies that invest in technologies to capture and utilise the associated gas rather than flaring it. He said this can make such projects more economically attractive and viable.
Similarly, a financial economist at Auchi Polytechnic, Zakari Mohammed, called for Investment in the development of gas infrastructure to support the transportation and distribution of natural gas. He cited that this includes pipelines and facilities to capture, process, and transport the gas to consumers.
He added, “Foster collaborations between the government, private companies, and international organizations to develop and fund projects that reduce gas flaring. This can help leverage expertise and resources.
“Encourage oil companies to upgrade their equipment and facilities to capture and utilise associated gas instead of flaring it. New technologies can improve efficiency and reduce costs,” he said.
Adding to the argument to halt gas flaring, a seismologist, Dr. Uche Umahi, called on the government to improve data collection and monitoring of gas flaring activities to have a better understanding of the scope of the problem and to measure progress in reducing flaring.
He also called for the involvement of local communities in decision-making processes and projects related to gas flaring. He said this can help build support for initiatives and ensure that the benefits of gas utilisation are shared with the local population.
“Raise awareness about the environmental and economic impacts of gas flaring among the public, policymakers, and industry stakeholders. Educating people about the benefits of gas utilisation can create more demand for these projects,” he said.
On his part, rights activist, Mary Ojake, stated that the government should encourage the adoption and development of alternative and renewable energy sources. “By diversifying the energy mix, there may be reduced reliance on flaring gas for power generation.
“Collaborate with other countries and international organisations to share knowledge, experiences, and best practices for reducing gas flaring. Nigeria can learn from successful efforts in other regions and access funding for relevant projects.
“By implementing these strategies, Nigeria can work towards ending gas flaring, which will have positive impacts on the environment, public health, and the economy. It will also contribute to Nigeria’s commitment to global climate change mitigation efforts,” she added.
NATIONAL ECONOMY notes that the consequences of unending gas flaring in Nigeria are not only economic but also environmental, health, and social concerns. The release of C02, methane, and soot due to gas flaring poses severe health hazards, leading to cancer, lung damage, deformities in children, asthma, pneumonia, neurological and reproductive problems. Furthermore, gas flaring contributes to environmental pollution, climate change, and hampers agricultural productivity and wildlife habitats.
Despite previous promises from some oil companies to embrace environmental sustainability and renewable energy, gas flaring persists in Nigeria, causing tremendous revenue losses. For instance, Nigeria lost about N150 billion between January and April 2023 due to gas flaring, funds that could have been invested in infrastructure, education, and healthcare.
The urgency to end gas flaring cannot be overstated, especially in light of the nation’s current financial challenges, including significant borrowing to fund its budget and high debt servicing costs. The ongoing investigation by the House of Representatives is a step in the right direction, but more stringent regulations, stiffer penalties, and better enforcement are necessary to curb this environmentally damaging practice. By holding oil companies accountable and enforcing a zero-tolerance approach towards gas flaring, Nigeria can protect its environment, preserve public health, and maximise its gas reserves for sustainable development.
