Nigerian govt awards gas distribution licences to NNPC, Shell, others

On Tuesday, the Nigerian government awarded 10 gas distribution licences (GDL) to six companies to improve the country’s gas utilisation drive.

The beneficiary companies are NNPC Gas Marketing Limited, Shell Nigeria Gas Limited, Axxela, NIPCO Plc, Central Horizon Gas Company and Falcon Corporation Limited.

The GDL, as provided in Sections 148-152 of the Petroleum Industry Act (PIA), according to the government, 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’.

Speaking during the award ceremony in Abuja on Tuesday, the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, explained that the initiative is designed to facilitate affordable and reliable energy supply to drive industrial growth, competitiveness and support for the generation of cleaner and more efficient energy to enhance power availability across the nation.

He added that this is expected to accelerate the adoption of Compress Natural Gas (CNG) as a sustainable fuel alternative in transportation in Nigeria.

“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. By empowering license holders, this initiative opens extensive opportunities across several key sectors,” Mr Ekpo said.

He said a thriving domestic gas market is crucial to achieving the country’s ambitions under the decade of gas initiative, adding that the gas distribution license framework is a strategic enabler for this vision by expanding the reach of gas infrastructure to underserved areas and deepening gas consumption across residential, commercial, and industrial sectors.

“As we issue the Gas Distribution License to qualified stakeholders today, we reaffirm our commitment to the sustainable development of Nigeria’s vast gas resources and to open up further investments in the gas space.

“This step is not just about meeting regulatory requirements; it is about building a future where gas serves as a foundation for economic growth, industrialisation, and improved quality of life for all Nigerians,” he added.

In his remarks, the NMDPRA Chief Executive, Farouk Ahmed, said the agency received over 30 applications and due diligence was conducted on them in line with defined prerequisites.

“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,” Mr Ahmed said.

He said the licence covers a cumulative gas distribution capacity of approximately 1.5 bscf/d with over 1,200km of gas distribution pipeline network and over 500 customer stations.

He noted that the GDL regime holds a significant opportunity to support the development of the domestic gas market through gas supply to our energy-intensive industries, industrial parks, special economic zones, embedded/captive power generation, mobility CNG schemes and any other downstream gas utilisation programme.

“We envisage that this licence regime shall not only support the accelerated development of our 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.

“The GDLs are expected to lay a solid foundation for long-term growth and prosperity, unlock the full potential of our natural gas reserves, enabling the development of new, untapped markets and creating new sources of revenue and employment. These licenses are expected to catalyse investments.

“The GDLs will play an instrumental role in ensuring that Nigeria’s energy future is not just sustainable, but also equitable and accessible to all Nigerians,” he said.

Mr Ahmed said Piped Natural Gas (PNG) provides continuous supply, is cost-effective and safe, and eliminates storage challenges.

“These advantages will not only increase efficiency in how we use energy but will also be essential in meeting Nigeria’s growing energy demands.”

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He said the authority should collaboratively work with all GDL holders to ensure that the strategic objectives of these licences, which include the efficient and non-discriminatory supply of gas to all wholesale customers in designated local distribution zones, growing the consumption of natural gas under licensed areas, supporting and accelerating the implementation of the CNG initiatives among others are fully actualised.

According to him, to ensure the efficient and transparent operation of the gas distribution network, the authority will monitor tariff setting and safety standards to govern the operation of the GDLs.

“We will encourage public-private partnerships to speed up the development of gas infrastructure with the government playing a vital role in providing support through regulatory oversight and Midstream and Downstream Gas Infrastructure Fund, while private companies will bring in the expertise and investment needed to drive the project forward.

“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,” he said.