Friday, July 05, 2019    /  10:30AM  /Press Release/  NGFCP / Header Image Credit: NGFCP

Following the retirement of several principal officers of the Nigerian National Petroleum Corporation (NNPC), the Federal Government has reconstituted the Ministerial Steering Committee (STEERCO) of the Nigerian Gas Flare Commercialization Programme (NGFCP). In a statement signed by a statement signed yesterday, July 4, 2019 by Mr. Justice O. Derefaka, the Project Manager, on behalf of the Dr. Folasade Yemi-Esan; Permanent Secretary, Ministry of Petroleum Resources (MPR), The NGFP announced the following measures and appointments:

Measures

1.       The reconstitution of the ministerial steering committee (SteerCo) of the Nigerian Gas Flare Commercialization Programme (NGFCP) in the Ministry of Petroleum Resources (MPR). The SteerCo has now been expanded to accommodate other agencies of Government sa well as MPR as the NGFCP moves into the implementation phase. The new agencies are - The Ministry of Finance, Ministry of Environment and the Petroleum Technology Development Fund (PTDF).  Premised on that, the committee has now changed from Ministerial to Inter-Ministerial Steering Committee, and

2.      To provide an update to the general public on those interested parties that submitted their Statement of Qualification (SOQ) in response to the Request for Qualification (RfQ) package of the NGFCP. 

Appointments

The Permanent Secretary, Ministry of Petroleum Resources (MPR) - Dr. Folasade Yemi-Esan, is taking up the role of Chairman Inter-Ministerial Steering Committee (SteerCo) of the NGFCP. This is as a result of the retirement of the Chairman Ministerial Steering Committee of the NGFCP - Engr. Rabiu I. Suleiman (FNSChE; FISPoN) as Group Executive Director (GED), NNPC, who until now has also doubled as the Senior Technical Adviser – Refineries, Gas, Power and Downstream Infrastructure to the former Honourable Minister of State for Petroleum Resources.

The Permanent Secretary also appointed Mr. Andrew Ogu Agi as the alternate chairman of the Inter-Ministerial Steering Committee (SteerCo). Mr Andrew is Director, Special duties in the MPR. His role as alternate chairman is to preside over SteerCo in instances of absence of the Permanent Secretary due to exigencies of her role as Permanent Secretary and sitting in for Honourable Minister of State for Petroleum Resources pending appointment of a new Minister.

The new members of the NGFCP Inter-Ministerial committee are: Mr. Mkpa A. Bassey (Deputy Director – Oil and Gas), representing the Ministry of Finance; Mr. Abbas Suleiman (Deputy Director – Environmental Assessment Department), representing the Ministry of Environment and Mr. Usman S. Pindar, (Manager Nigeria Content & Industry Collaboration Department), representing the executive secretary of the Petroleum Technology Development Fund (PTDF). Others are – Mr. Olusanya Bajomo – Deputy Director, Gas Monitoring and Regulations, Department of Petroleum Resources (DPR) and Mrs. Esther Ifejika, Director Gas, Ministry of Petroleum Resources (MPR).

The new Inter-ministerial Steering Committee was inaugurated by the out-going Chairman - Engr. Rabiu I. Suleiman on behalf of the Permanent Secretary.

Another high spot of the NGFCP extended leadership meeting was the submission of the evaluation report by the NGFCP Proposal Evaluation Committee (PEC) of the Statement of Qualification (SOQ) exercise in response to the Request for Qualification (RfQ) package of the NGFCP as well as submission of a report by the Independent Observers Group (IOG). The IOG remit was to “Comment on the integrity, transparency, rigour of the SOQ evaluation process” in an independent report to SteerCo. Secondarily, IOG took the opportunity to “highlight lessons to be learned that can/may be brought to bear in the Request for Proposal (RfP) phase of the NGFCP”. The IOG was drawn from NEITI, USAID and OPTS.

Evaluation Process

In their submission, the NGFCP Proposal Evaluation Committee (PEC) stated that all applications were evaluated on three major criteria i.e. Mandatory – Each Applicant is required to complete and submit relevant information described in the RfQ. The failure of any applicant to meet these criteria led to an unsuccessful application; Technical – Applications were evaluated on the basis of technical competence of the applicant i.e. technical experience in the design, construction, operation and maintenance of projects of a nature and size similar or larger than US$5 million; and Financial – an Applicant’s net-worth (total assets minus total liabilities) of at least US$5 million and audited financial statements. The PEC was drawn from the MPR, NNPC and the DPR.

The Independent Observers Group (IOG) concluded that the PEC conducted the SOQ evaluation process with integrity, transparency and sufficient rigour such that there were no “red flags” identified and therefore the evaluation has been a job well done. The IOG also highlighted many lessons to be learned, the resolution of which is essential for the RfP phase as it is competitive and it is a contractual phase. Furthermore, bidders for flare gas will spend much more money, time and resources in making their Proposals and they need to know that the auction process will be scrupulously fair to all. NGFCP and donor agencies need to know that it will be fair also

On their part, the PEC recommended that the NGFCP Inter-Ministerial Steering Committee considers the report of the Proposal Evaluation Committee, for onward transmission to the Permanent Secretary/Honourable Minister of State, Petroleum Resources for approval and the announcement of Qualified Applicants as soon as possible

Recall that the NGFCP Programme Management Office (PMO) in the MPR announced that about 240 SOQs were received. As you are aware, a Proposal Evaluation Committee (PEC) and an Independent Observers Group (IOG) were appointed and inaugurated on the 11th April, 2019 by the former Honourable Minister of State for Petroleum Resources – Dr. Emmanuel Ibe Kachikwu.

Request for Qualification

The PEC has now evaluated the SOQs submitted by the Applicants to determine Qualified Applicant (QA) status in line with the design criteria of the Request for Qualification (RfQ), and later on in the Programme, the PEC will evaluate the Proposals that would be submitted by QA to determine those Bidders that achieve Preferred Bidder (PB) and reserved bidders status in line with the criteria of the Request for Proposal (RfP) package.

The NGFCP Inter-Ministerial Steering Committee will now review the SOQ report submitted by the PEC and the report submitted by the Independent Observers Group and submit their recommendation to the Permanent Secretary/Honourable Minister of State, Petroleum Resources for approval. And the general public and all applicants will be advised as soon as possible thereafter how many of the 240 applicants have been successful. Those that will have been successful in the evaluation, will be invited to submit their proposals for flare gas utilisation through the Request for Proposals (RfP) phase of the NGFCP.         

7 Big Wins

As you may recall, as part of the Federal Government of Nigeria’s (FGN) strategy to reposition the oil and gas industry, the Ministry of Petroleum Resources commenced the implementation of carefully conceived initiatives to foster efficiency and attract investments within the broad spectrum of the oil and gas value chain as embedded in the “7 Big Wins - Short and Medium Term priorities to grow Nigeria’s Oil and Gas industry” which was launched in October, 2016 by His Excellency, President Muhammad Buhari.

A critical aspect of Big Win No3 (Gas Revolution) is the intention to drastically reduce gas flaring by harnessing otherwise flared gases to stimulate economic growth, drive investments and provide jobs in the Niger Delta through the utilisation of widely available innovative technologies. The policy on gas flaring is also encapsulated in the National Gas Policy approved by the Federal Executive Council in June 2017.

In the National Gas Policy, the FGN made it clear that a) it will take measures to ensure that flare capture and utilization projects are developed, and will work collaboratively with industry, development partners, providers of flare-capture technologies and third party investors; b) Open an industry consultation mechanism, as an important measure in ensuring flaring targets are feasible and regulations are realistic; c) Maximize utilization of associated gas to be treated for supply to power generation or industry, and d) Increase the gas flaring payment to an appropriate level sufficient to de-incentivize the practice of gas flaring whilst introducing other measures to encourage efficient gas utilization.

The National Gas Policy commits to ending gas flaring, creating an enabling environment for investors, seeking value addition for gas, and improving governance in the sector. The FGN will work to grant open access to all pipelines and other essential midstream infrastructure. With respect to pricing of gas for the domestic market, which is largely controlled by the FGN under a transitional pricing framework, the current framework will be retained for a limited period until a sufficient gas market is established. The policy objective is to move to market-led wholesale gas pricing without gas price regulation, except where there are natural monopolies.

Reducing Green Gas Emission

The FGN included gas flare reduction as a key national greenhouse gas emissions mitigation in its Nationally Determined Contributions (NDC) under the United Nations Framework Convention on Climate Change (UNFCCC).

Premised on the foregoing, the policy position of His Excellency, President Muhammad Buhari is that gas flaring is totally unacceptable. In this regard, the FGN initiated a number of actions to reaffirm its commitment to ending the practice of gas flaring in our oil fields. Specifically, His Excellency, President Muhammad Buhari ratified the Paris Climate Change Agreement, and the FGN is a signatory to the Global Gas Flaring Partnership (GGFR) principles for global flare-out by 2030 whilst committing to a national flare-out target by year 2020.

Furthermore, in recognition that flared gas could be harnessed to stimulate economic growth, drive investments and provide jobs in oil producing communities and indeed for Nigerians through the utilisation of widely available innovative technologies, the Federal Executive Council in June 2016, approved the Nigerian Gas Flare Commercialization Programme (NGFCP). The programme was launched by the former Honourable minister of state on December 13, 2016.

Changing the Gas Flaring Game

The design of the NGFCP according to our development partners is an innovative, robust and scalable approach to gas flare reduction – a “game changer” (first of a kind) consistent with the climate change action plans anticipated in the Paris Climate Change Accords which could be replicable in many other gas flaring countries around the World with Nigeria setting the pace.

Overall, the NGFCP has the potential of generating approximately US$3.5 billion of inward investment. The potential GDP impact is estimated at plus US$1 billion per annum. It could potentially unlock 2 - 3 LNG trains, or around 3000 MW electricity generation as well as generate circa 600,000 MT of LPG per year giving 6 Million households access to clean energy through LPG. The programme could also bring inflow of new infrastructure players to enable gas uptake and usage in previously unreachable regions and business development from gas companies to unlock new domestic markets for gas.

Assuming project sizes in the range of US$10-40 million, the NGFCP has a potential of triggering around 70 to 90 projects. And over a 1.5 – 2 year period, the NGFCP could generate approximately 26,000 direct jobs (assuming an average direct labor force of 300 people per project) and approximately 300,000 direct and indirect jobs. Once operational, projects launched under the NCFCP would reduce Nigeria’s emissions by ~13 million tons of CO2 per year, consistent with the President's commitments to the reduction of Greenhouse Gases under the Paris Climate Change Agreement, which could also be monetized under an emission credits / carbon sale programme at a value range of US$400 – 500million. The NGFCP is clearly a High - Impact Programme.

“The journey towards accomplishing the FGN target of gas flare out has begun in earnest and on course and it is imperative that as a nation we keep up the tempo and not relent but endeavour to look at the big picture of bringing to reality the commitment of His Excellency, President Muhammad Buhari at COP21 in Paris in 2015 of cutting down routine flaring in the short term as well as eliminating it completely in the long term” Engr. Rabiu I. Suleiman (FNSChE; FISPoN), Ex-Chairman Ministerial Steering Committee (SteerCo) of the NGFCP. 

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