ABUJA (Reuters) - Nigerian President Goodluck Jonathan on Thursday unveiled an ambitious $10 billion plan to harness the country’s vast gas reserves and develop a petrochemical and fertiliser industry, weeks before elections.
Jonathan hopes his “gas revolution” will indirectly create up to 500,000 jobs, many of them in agriculture, and help improve power supply to homes and manufacturers in Africa’s most populous nation and second biggest economy.
“The investments agreed today will result in foreign direct investment of about $10 billion over the next three years,” Jonathan told industry executives, government officials and diplomats at the launch of the plan in Abuja.
“The economic impact of this agenda will be endless in terms of employment and wealth creation,” he said.
Jonathan is the front runner to win the April 9 election but faces a tough challenge from former military ruler Muhammadu Buhari, who has strong grass roots support in the north.
Italian oil and gas firm Agip and local energy firm Oando will build a central gas processing plant under the plans, Oil Minister Deziani Allison-Madueke said, while U.S. energy firm Chevron will supply the gas.
“We’ve agreed to begin with 175 million (cubic feet) of gas per day. We will deliver the gas once the pipelines and infrastructure are in place,” Andrew Fawthrop, Chevron’s managing director in Nigeria, told Reuters.
India’s Nagarjuna Fertilisers said it had committed to building two fertiliser plants, an investment of around $2.5 billion, while Saudi Arabian firm Natpet, a subsidiary of petrochemicals firm Alujain, said it would invest $3.5 billion in a petrochemicals plant.
Africa’s biggest energy producer has signed several memoranda of understanding with investors from China, Russia and the Middle East in recent years, many of them for projects which have yet to see the light of day.
Sceptics questioned the timing of the announcement and said turning agreements in paper into reality would be key to making the announcement more than a campaign pledge.
“The asset is there, the reserves of gas exist, it is whether there is a mechanism to transform that into something you can monetize,” said Antony Goldman, an independent consultant and expert on the West African energy industry.
“Until now there have been quite a few false dawns.”
Nigeria has the world’s seventh largest gas reserves and is Africa’s biggest crude oil exporter, but is hobbled by constant power outages and forced to import most of its domestic fuel needs because of the shambolic state of its refineries.
Successive governments have pledged to resolve the issue but have made little progress.
Jonathan’s administration is already working on a “gas masterplan” to try to improve the supply of gas to the domestic power sector, which he has pledged to privatise under another multi-billion dollar blueprint launched last year.
The “gas revolution” includes plans for two fertiliser plants in Delta state and in Lagos, five fertiliser blending plants, a methanol plant and a distribution network to improve the supply of liquefied petroleum gas (LPG) to the north.
A pipeline from the southeastern city of Calabar to Kano in the north will be revived at a cost of $2 billion.
“We have a commitment to build two fertiliser plants. We will sell fertiliser into local and international markets,” said K.S. Raju, chairman of India’s Nagarjuna Fertilisers.
The Natpet petrochemicals plant would be the biggest in sub-Saharan Africa, Allison-Madueke said.
“(Our investment) will initially be around $3.5 billion. We will sell petrochemical products into the market,” Natpet Managing Director Matouq Jannah told Reuters.
Key to all of the projects will be delivering the gas to them, which has long been a stumbling block in Nigeria.
Billions of dollars of investment in the sector are on hold pending the passage of Petroleum Industry Bill (PIB), a massive piece of legislation which will alter everything from the fiscal terms for new projects to the involvement of local firms.
The bill was first proposed several years ago and has been repeatedly delayed. It looks unlikely to pass before the elections, which could delay Jonathan’s plans.