Nigeria Needs $20 Billion Annually for Gas Infrastructure – NEITI

Nigeria requires an annual investment of $20 billion over the next decade to develop its gas infrastructure, a critical step towards unlocking the country’s vast but largely untapped natural gas reserves.

This revelation was made by Dr. Ogbonnaya Orji, Executive Secretary and Chief Executive Officer of the Nigeria Extractive Industry Transparency Initiative (NEITI), during his presentation of NEITI’s latest oil and gas industry report to the Senate Committee on Public Accounts.

Despite being home to Africa’s largest gas reserves and ranking among the top 10 globally, Nigeria has failed to develop the necessary infrastructure to fully harness this resource. According to Orji, the absence of sustained investment threatens to leave the country’s vast gas wealth stranded.

“We need to invest in gas infrastructure to evacuate our gas. Our study shows that Nigeria needs an initial investment of $20 billion annually for 10 years to be able to generate the kind of gas infrastructure required,” Orji told lawmakers.

However, given Nigeria’s precarious fiscal situation, the question remains: where will the money come from?

Nigeria Bleeds Money While Infrastructure Suffers

The irony is that while Nigeria struggles to raise funds for critical infrastructure, the country continues to run one of the most expensive governments in the world. Although a developing nation with widespread poverty, Nigeria spends an exorbitant amount on governance—lavish allowances for politicians, an oversized bureaucracy, redundant government agencies, and a culture of wasteful expenditure that drains public resources.

From excessive foreign trips for government officials to extravagant official residences, convoys of luxury vehicles, and bloated salaries and benefits for lawmakers, Nigeria’s political elite live in opulence while infrastructure crumbles. Worse still, massive corruption continues to siphon public funds that could otherwise be channeled into national development.

For decades, the country has witnessed countless corruption scandals, with billions of dollars looted from state coffers. Despite periodic anti-corruption campaigns, the prosecution of high-profile cases remains rare, and stolen funds are rarely recovered.

Economic analysts and good governance advocates have noted that Nigeria could easily raise the required capital for infrastructure if the government is committed to cutting wasteful spending and tackling corruption. The call for a drastic reduction in the cost of governance has grown louder in recent years, with many urging the government to take decisive action.

Many note that if Nigeria were to cut the cost of governance by just 30%, it could free up billions of dollars annually for infrastructure development, including gas projects.

Several policy recommendations have been proposed to address this issue, including:

1. Merging or eliminating redundant government agencies to reduce administrative costs.
2. Reducing the number of political appointees and special advisers who add little value but receive huge salaries.
3. Scrapping extravagant government perks, including multiple official residences, fleets of luxury cars, and unnecessary international trips.
4. Strengthening anti-corruption institutions to prevent the looting of public funds.

However, these measures have faced stiff resistance from Nigeria’s political elite, who benefit from the status quo.

Declining Oil Revenue Raises the Stakes

The urgency of cutting wasteful spending has increased due to declining oil revenues. According to the NEITI report, Nigeria earned $831.41 billion from the oil and gas sector between 1999 and 2023. However, revenue from the sector declined by 13.7% in 2023, adding further strain to government finances.

With dwindling oil earnings and rising economic challenges, experts warn that failure to curb wasteful expenditure will continue to hinder Nigeria’s ability to invest in critical infrastructure.

Solid Minerals Sector Also Underperforms

Beyond oil and gas, the NEITI report also highlights the poor performance of Nigeria’s solid minerals sector, which contributes less than 1% to the country’s Gross Domestic Product (GDP).

Senate Public Accounts Committee Chairman, Sen. Aliyu Wadada, expressed outrage over the sector’s weak contribution, calling for an urgent overhaul.

“This is quite ridiculous and unacceptable. It cannot continue. Nigeria needs a profitable solid minerals sector. There must be a complete overhaul as less than 1% is contributed to the GDP on a yearly basis,” Wadada stated.

Dr. Orji responded by recommending a review of the Solid Minerals Act of 2007 and the possible creation of a national company to spearhead investment in the sector.

Progress in the Fight Against Oil Theft

While Nigeria faces challenges in raising funds for gas infrastructure, there has been some progress in tackling oil theft. The NEITI report revealed that crude oil losses dropped by 78% in 2023, from 36.6 million barrels in 2022 to 7.68 million.

“This progress reflects improved efforts to combat oil theft by strong government interventions,” Orji noted.

Nigeria has long suffered from oil theft and vandalism, which have cost the country billions in lost revenue. While the recent decline in crude losses is a positive development, analysts warn that the government must remain vigilant to sustain this progress.

The government has made some efforts to expand gas infrastructure, including launching the construction of five gas plants in Ajaokuta, Kogi State, and investing in compressed natural gas (CNG) for vehicles. However, experts say these initiatives are insufficient to bridge the country’s massive infrastructure deficit.