Nigeria Needs $20bn Annual Gas Investment to Fix Infrastructure Gap

(Oil and Gas. Photo by TheCable)

The Executive Director of the Nigerian Midstream and Downstream Gas Infrastructure Fund (MDGIF) has stated that Nigeria requires $20bn worth of investment annually to close the infrastructure gap in the gas sector.

Speaking at the Nigerian Oil and Gas (NOG) Conference in Abuja, the Executive Director of MDGIF, Oluwole Adama, said the country would need a total of $400bn over the next 10 years to improve infrastructure that would support the domestic market in delivering cheaper and cleaner energy to Nigerians.

He disclosed that the fund is exploring ways to bring banks into projects in order to unlock the required funding and attract significant capital into the sector.

Speaking as a panelist on economic growth and development, Adama said economic growth and economic development are complementary and mutually reinforcing, adding that the real challenge lies in ensuring that growth is inclusive, sustainable, and translates into tangible improvements in the lives of Nigerians.

He explained that while economic growth focuses on increasing output, investment, and GDP, economic development goes further by creating jobs, reducing energy poverty, improving industrial productivity, strengthening local value chains, and enhancing quality of life.

He noted that Nigeria's domestic gas market offers a unique opportunity to achieve both goals simultaneously, stressing that investment in gas infrastructure does not only increase gas production or consumption but also enables industries to operate more competitively.

He pointed out that there is a mistaken perception that financing is the biggest challenge in the sector, when in reality it is often the last hurdle to overcome.

According to him, projects only reach Financial Close after they have become bankable, which requires addressing several risks upfront.

He identified the typical causes of delay as falling under four key areas: project preparation, demand certainty, infrastructure constraints, and financing and risk allocation.

He explained that domestic gas projects require substantial upfront capital with long payback periods, adding that investors seek assurance that regulatory, commercial, foreign exchange, and political risks have been properly allocated and mitigated.