The implementation of stiffer monetary penalty against perpetrators of gas flare will substantially reduce the menace in Nigeria, a former Deputy Director of the defunct Department of Petroleum Resources, (DPR), Engineer Sunday Adebayo Babalola, has said. He reiterated that the high penalty would be a deterrent to companies involved in gas flare as they will find it more expensive to pay the penalty than to establish mechanisms that will make them either reduce or stop flaring gas.
He spoke in an interview with New Telegraph over the weekend. Recall that the Speaker of the House of Representatives, Tajudeen Abbas, Abbas, had while inaugurating the Ad hoc Committee to investigate Nigeria’s national revenue loss and other impacts of gas flaring in the country, said Nigeria was losing about $2.5 billion annually to gas flaring. He described gas flaring as one of the most harmful practices in the oil and gas industry in Nigeria, adding that the practice had for years been a significant environmental, economic, health and social concern in the country.
He added that gas flaring was a major contributor to climate change and environmental degradation, a tremendous waste of valuable resources, and has negative impacts on soil, water, and wildlife. He noted that the flared gas was a resource that could have been put to veritable use in electricity generation, heating and industrial processes. Abbas said: “The task before this ad hoc committee is a very critical one that lies at the heart of the health of our people and economic well-being of our nation.
You have been charged with the responsibility of investigating, perhaps, one of the most harmful practices in the oil and gas industry in Nigeria. “Gas flaring and venting have been a significant environmental, economic, health and social concern in our country for many years. The flared gas represents lost revenue that could have been generated through its sale or utilisation. Official records indicate that we lose about $2.5 billion annually to gas flaring.” Babalola with over 35 years of professional experience in power, oil and gas businesses, said though gas flare is still a major issue in Nigeria, concerted efforts were being made to address it.
He noted that the Federal Government had put a number of policies on ground, which, hopefully, would help reduce it. He identified one as domestic gas obligation, while expressing optimism that very soon, the gas flare would be substantially addressed. He said: “High penalty is a deterrent to companies involved in gas flare. I was an advocate of it. When I was in DPR, I wrote to all the companies that they would be paying $350 per 1,000 scf but there was no political will to implement my letter.
“But this government, starting with Muhammadu Buhari’s government has started a gradual enforcement of penalty increments. I think they started with $2. For some people it is going to $350. And they are not happy about that. So many of them will start looking for ways, instead of burning or flaring gas and paying this huge amount, they will look for a way to make sure that they do not pay that. It is a huge deterrent.
“History shows it is a deterrent. When it was N5k for 1,000,000 btu, people were flaring gas anyhow, then it came to N10, of course, people started thinking. When you imagine the exchange rate, then N10k was like 10 cent but when it came to N50, a lot of them started thinking of what to do about this flaring because N50 was almost equivalent to 50 cent that time. “So flares were coming down based on that.
Now that it is $350 or about that, companies have been forced to start thinking on how to invest in a gas gathering system that will ensure that I am not flaring any gas because the economies of flaring the gas is not as good as gathering it and monetizing it.” He added: “People are paying highly for the gas they are flaring now and they do not like. So everybody is struggling to make sure that they do not flare and pay bigger. When it was cheap to flare gas. People preferred to flare it than engage in a gathering system. But now, it is no longer cheap to flare so everybody is doing their best to avoid gas flare.
“There are many other policies they are putting in place to discourage gas flare. They are moving in the right direction. Very shortly, you will see that Nigeria will be close to zero in gas flare. “For example, my company, Green Energy, has its own gas plant that we are getting to the point of zero gas flare. We are not happy about the heavy penalty they imposed on us. I think it is about $350 per 1,000 scf or 1,000,000 btu. People do not like that. So people are doing their best.”
Babalola said that Nigeria has suffered a lot in terms of economic losses and environmental degradation because of gas flare. He lamented that the nation had lost a humongous amount of money to the gas flare, adding that such financial losses can not be regained. He claimed that green energy was almost achieving zero gas flare. He said: “Honestly, Nigeria lost a lot of money by gas flare. it is just like taking your hard earned currency and setting it on fire. Basically that’s what we were doing.
At that time, the military thought that they needed the oil money so they were very placid in relation to implementing all the policies that were enunciated by the then DPR. “They did not want to stop the flow of oil and money, so we were gaining in the oil flow but we were losing in gas flare because the gas you lost, you can not gain it back. The then DPR came with the beautiful idea that you must re-inject the gas into reservoirs that can accept it.
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