A $100 million gas pipeline project designed to bring affordable energy to industries and businesses across Nigeria’s South-west has been brought to a standstill, after the Oyo State Government issued stop-work notices on the 80-kilometre Sagamu-to-Ibadan gas line being constructed by NIPCO Gas Limited in joint venture with NNPC Gas Marketing Limited — setting up a direct confrontation with the Petroleum Industry Act (PIA) 2021 and threatening to undermine President Bola Tinubu’s flagship gas-to-industry reforms.
Work on the pipeline, which was on course for completion by June 2026, has been halted for approximately three months after officers from the Oyo State Ministry of Lands, Housing and Urban Development affixed stop-work notices to line pipes at the construction site. Repeated attempts by NIPCO Gas to resolve the dispute through dialogue — including a formal application for approval submitted to the state Ministry of Energy as directed by state government officials — have been met with silence.
At the heart of the standoff is a conflict between the 25-year Gas Distribution Licence (GDL) awarded to NIPCO Gas by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in September 2024 under the PIA, and a separate 20-year gas distribution agreement signed by Oyo State Governor Seyi Makinde and Shell Nigeria Gas in London in May 2024 — one month before the federal licence was awarded to NIPCO Gas. The PIA’s exclusivity provisions appear to make NIPCO Gas’s federal licence paramount, and industry sources say the NMDPRA had already confirmed it had not issued the required Permit to Survey or Oil Pipeline Licence to any other company for gas pipeline operations in the Ibadan zone.
A Defining Test for PIA Integrity
Industry stakeholders have framed the standoff as a critical stress test for the PIA’s credibility as an investment framework. The pipeline was awarded its licence under the same legislation that promises investors 25-year exclusivity zones to justify the capital commitments needed to build gas distribution infrastructure across Nigeria. Multiple sources claim that NIPCO Gas was informally asked to split its distribution licence with the state government to accommodate Shell Nigeria Gas — a proposal the company rejected, citing the exclusivity protections in the PIA.
The dispute is further complicated by political undertones. Several oil and gas industry operators, speaking anonymously, described the Oyo State action as a continuation of the political cold war between the PDP-controlled state government and the APC-led Federal Government. “No company is above the law. The law should be allowed to take its course. Investors should be given the assurance that their investments are safe and secure,” said one senior industry stakeholder, calling on President Tinubu to intervene personally and urgently.
The project sits within a network of ambitions being driven by NNPC Gas Marketing Limited, which is aggressively implementing plans to supply an additional 1.8 billion cubic feet of gas per day in 2026 to meet rising domestic demand — part of a target to reach 10 billion cubic feet per day by 2027 and 12 billion cubic feet per day by 2030. NIPCO Gas itself operates over 500 kilometres of gas distribution infrastructure across 22 states and the Federal Capital Territory, and has successfully commissioned CNG stations across eight states as part of the Presidential CNG Initiative. The stalling of the Sagamu-Ibadan pipeline risks cascading effects on the industrial base of a region that accounts for a substantial share of Nigeria’s manufacturing output.
Source: thisdaylive.com