Bridport Energy talks to the Africa report

News - Nov 21 2022

Surging diesel prices in Nigeria mean the time is right for industrial and transportation energy users to switch to gas, Bridport Energy CEO Jamal Akinade tells The Africa Report. Privately held Bridport plans to start supplying liquefied natural gas (LNG) in December, targeting industrial, transportation and haulage users nationwide. The move is a partnership with Nigeria LNG, which last year signed sales and purchase agreements with Bridport, Gas Plus LNG Resources and Asiko Energy. Bridport is developing regasification infrastructure in Lagos to receive and distribute LNG from Nigeria LNG’s terminal on Bonny Island. The company is starting with a storage capacity of 37,000 cubic meters which it hopes to commission at the end of 2022. Akinade says he aims to “demystify” LNG and “proliferate” its use across the country. Nigeria is a major LNG exporter, with a 6% share of the global export market in 2021. But LNG has yet to make a domestic breakthrough. Bridport estimates that 20 to 25 GW of power is consumed off-grid, generated from imported diesel and premium motor spirit (PMS). That costs about four to five times as much as on-grid gas-fired electricity, the company says. Over 80m Nigerians out of 200m lack access to electricity, according to the International Energy Agency. Many of those with access rely on intermittent grid power or polluting diesel generators. While petrol in Nigeria is subsidized, diesel prices are unregulated. Diesel prices of N260 per litre late last year are reported to have climbed to over N850 in some parts of the country. Transportation accounts for 80% of fossil fuel consumption in the country. Nigerian industrial users and the transport sector have “tremendous” potential for gas, Akinade says. He predicts a period of “slow growth,” followed at some point by a “quantum leap”. In the next six to 12 months, he sees “a very radical shift in the market.” That shift depends in part on an increase in the number of suppliers, he says: more competitors in the market will reduce the risk of relying on a single outlet. PRICE SENSITIVE Distribution is a major hurdle that LNG in Nigeria needs to overcome. The trillions of naira which the country spends each year on importing and subsidizing fuel means there is less money to be spent on electricity and transportation infrastructure, according to a book by Zainab Usman, Economic Diversification in Nigeria The Politics of Building a Post-Oil Economy, published this year. In 2019, Usman writes, Nigeria spent 2.5tr naira importing processed fuels, or 15% of total imports. Nigeria tends to import more fuels than it consumes because of its “byzantine” distribution system, Usman writes. Policymakers attribute this to the illicit re-export of fuels to higher-paying regional markets via Benin. Imported equipment is needed for the switch from diesel to gas, but foreign currency is scarce, says Mickael Vogel, head of research at Hawilti in Lagos. “Industries don’t necessarily have the capex” capacity to invest in the change, he says. Higher energy prices, while providing an incentive to switch, also reduce the money available to do so.