Nasir El-Rufai, former governor of Kaduna State, has been appointed to lead the new Ministry of Energy with a focus on implementing the Electricity Act 2023 to improve energy access for Nigerians. The move signifies the government’s shift away from oil and its intention to combine gas and power to foster industrialization and promote petrochemicals. El-Rufai has assembled a team of experts, both local and international, to formulate a strategy for the new ministry.
The establishment of the new energy and power ministry aims to address the long-standing issue of insufficient gas supply for running plants and seeks to separate control of gas supply and pricing, a demand from industry operators. By creating a complementary and interconnected framework for electricity and natural gas, the ministry will give the Nigerian Electricity Regulatory Commission (NERC) jurisdiction over the entire energy sector, not just electricity.
Despite the privatization of the power sector in 2013, which aimed to attract private capital and improve operations, challenges arose, leading to erratic power supply, grid collapses, and reduced investments. The new ministry will focus on utilizing gas resources more effectively for power generation, industries, and petrochemicals. Experts, including consultants from Boston Consulting and McKinsey, are working on proposals, such as a gas Domestic Supply Obligation (DSO) overseen by various stakeholders.
To address the poor coordination of government interests in gas projects, the ministry will tackle sequencing issues and work on the OB-OB3 pipeline project to enhance gas supply to Western Nigeria. There is a call for renegotiating gas prices to incentivize the development of new gas supply and processing facilities. Bolaji Osunsanya, CEO of Axxela Limited, advocates for a growth-oriented approach, encouraging the use of gas locally and expanding LNG production to fully utilize Nigeria’s abundant gas resources.
