Rivers State Government, Shell Nigeria Gas sign MoU on Gas Supply to Industries

The Rivers State Government and Shell Nigeria Gas (SNG) have signed a Memorandum of Understanding (MoU) for the distribution of gas to industries in the Greater Port Harcourt area and its environs. The MoU sets out broad terms and conditions to guide co-operation between the two parties in the development of new gas distribution opportunities in the Greater Port Harcourt area and its environs in addition to its existing gas distribution network in the State.

 

“The agreement is key in the efforts of the government to boost industrialization in Rivers State,” said Richard Hart, Permanent Secretary in the Ministry of Energy and Natural Resources, who signed for the government. “We believe that the agreed terms in the MoU will lead to the signing of the “Build-Operate-Own-and Transfer” (BOOT) agreement early next year so businesses can begin to reap the benefits of a steady source of energy.”


Natural Gas is one of the main natural resource deposits in the Oil rich Niger Delta. Proven reserves estimates that Rivers State has 196trillion cubic feet of natural gas, which makes it the fourth largest deposit of natural gas in the world. Natural gas can be used to power the electricity needs of the Nigerian Economy, and can be make a powerful export for Nigeria, when it stops flaring, rather converting the gas to power industries both at home and abroad. Shell Nigeria Gas (SNG) is applying the principle of a sole gas supply to the domestic market as a means to earn a tax holiday from the federal inland revenue service under the two tier tax system in which Companies that are focused on upstream production sector are taxed for royalties (Production Profit Tax Act) and Corporate Income Tax.

Kelvin Emmanuel

About Kelvin Emmanuel

The Oil producing Angola in the Southern part of Africa faces what Nigeria faced 12months ago; a distortion in its exchange rate with a difference between the official markets and the parallel black markets. One dollar through the official window buys you 166 kwanza, while one dollar through the black market buys you 400 kwanza. Nigeria faced the same challenge 12months ago, when the distortion between the official and black markets was as much as the official markets trading at 306 with the parallel market ranging from 450 through to 510. The Central Bank Governor of Angola, Jose de Massano Junior announced in Luanda “We will stop having a fixed foreign exchange, we will adopt a floating regime of foreign exchange”. Angola faces exactly the same challenges and has been applying the exact same responses to an exchange rate crisis like using its foreign reserves that was sitting at $26bn to defend the currency kwanza, with no success so far, even though the external reserves has dropped to $14bn. Angola relies on Oil receipts for 80% of its government revenue, 90% of its inflow and 50% of its GDP. Angola is a $194bn economy that has been growing at an average of 10% on the back of rising oil prices since 2002 when its 27 year old civil war that started in 1975 ended. The state national oil company Sonangol reports that it produces up to 1.8m barrels of crude oil daily, however the government that until now has being led by the family dynasty Jose Eduardo dos Santos until recently when succession saw power transferred to Joao Lourenco, reports that the oil price rout in 2015/2016 that saw prices drop to as low as $28 per barrel caused ripples across the economic structures of the government, upsetting government revenues, its ability to fund its budget, capital project funding, foreign direct investments into the economy as a result of a currency crisis that was driven by the widening of gap between the official and street window of the kwanza, that until now has been pegged in a fixed exchange rate regime to the US Dollar.