Abstract
The paper present an economic model and framework for the development of natural gas pipeline for sustainable economic development in Nigeria. The study reviewed the economics of natural gas pipeline development in Nigeria. The research formulated an economic model for a case study of Calabar to Ajaokuta 417km gas pipeline project and a discounted cash flow for an economic life of 40 years. The project economics indicates a Net Present Value (NPV) of 12.5 billion USD with a discounted payback period of 7 years and 9 nine months, Profitability Index (PI) of 7.30, Internal Rate of Return of 23.05% and Growth Rate of Return 26.97% and these project economic indicator shows that the gas pipeline investment is viable. This study provides an economic model that would guarantee security of gas supply, provide access to clean energy and provides an economic framework to support long term natural gas pipeline development in Nigeria
Highlights
There is no economic model for the long term development of natural gas transmission gas pipeline for socio-economic development in Nigeria and this has resulted to having few natural gas pipelines spread across the various regions or geopolitical zones (DPR, 2017)
The aim of this paper is to present an economic framework and model required for the development of natural gas pipelines in Nigeria
The economic analysis in this research paper provides an approach to model natural gas pipeline infrastructures for policy analysis in Nigeria and investors can use this approach to determine the short term, medium term and long term profitability of their investment
Summary
There is no economic model for the long term development of natural gas transmission gas pipeline for socio-economic development in Nigeria and this has resulted to having few natural gas pipelines spread across the various regions or geopolitical zones (DPR, 2017). There is currently about 1,500 to 2,000km of natural gas pipelines spread across Nigeria with the majority of pipeline within the eastern and western Nigeria (NGC, 2017). The inadequacy of these natural gas pipeline has resulted to poor domestic gas supply obligation to support economic activities in Nigeria (DPR, 2017). There is insignificant contribution of the natural gas sector to economic development in Nigeria due to insufficient pipeline infrastructures for effective gas transmission and distribution
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