On 28th September, 2020, the Presidency submitted the Petroleum Industry Bill 2020 ("the Bill") to the National Assembly for consideration. This is the latest version of the Bill after several previous efforts, dating back to almost two decades, to enact a new body of laws for the petroleum industry failed in the past. The Bill retains most of the functions and powers of the gas aggregator, a role currently being performed by Gas Aggregation Company of Nigeria (GACN) in the Nigerian gas sector. There are, however, certain changes introduced by the Bill that could affect the structure and operations of GACN.

What is the existing policy and legal framework for the Domestic Gas Aggregator?

The National Domestic Gas Supply and Pricing Policy 2008 and the National Domestic Gas Supply and Pricing Regulations 2008 ("the Regulations"), together, constitute the legal and policy framework for all current activities of the GACN. The role of a strategic gas aggregator was first mooted in the National Domestic Gas Supply and Pricing Policy 2008. According to the policy statement, the Strategic Aggregator will manage the implementation of the domestic reserves and production obligation; ensure a balanced growth of the domestic gas portfolio to achieve minimum aggregate price and act as a one stop intermediary between suppliers and diverse demand sectors. The GACN also manages the payment system between the buyers and suppliers through escrow accounts.

How did GACN become established as the Strategic Aggregator?

The Regulations1 stipulated that a Domestic Gas Aggregator shall be established by the Department of Gas in consultation with suppliers of gas. GACN was incorporated as a private limited liability company on 5th January 2010 with the NNPC (30% shareholding interest) and some private gas producing companies (70% shareholding interest) as shareholders. The establishment of GACN was a result of the consultations between the Department of Gas and suppliers of gas as contemplated by the Regulations and pursuant to an approval by the Minister for Petroleum Resources dated 29th June 2009. GACN acts as the strategic aggregator in the domestic gas sector and exercises the powers and functions conferred by the Regulations as outlined below. By its nature of operations, GACN is a non-profit making entity and relies mainly on annual operating contributions from its members.

Is the Gas aggregation process in Nigeria influenced by buyers, suppliers or government?

In the context of a more competitive and developed gas market like the American gas market, the American Municipal Power Incorporated (AMP) describes natural gas aggregation as a process that allows a group of gas consumers to combine their natural gas usage to form a buying group. The buying group, with its greater bargaining power, may be able to secure lower or more stable natural gas prices in the market.2 The focus is on securing the best possible price for a particular group of buyers. This is also true in the Nigerian context, to the extent that there are different price aggregation mechanisms applied by the GACN for buyers three major groups – companies using gas-fired plants to generate electric power for the national grid (Gencos), Gas Based Industries (GBIs) using gas as feedstock for their production such petrochemicals and fertilizer companies and Local Distribution Companies (LDCs) that offtake gas from GACN's pool of suppliers at wholesale rate and sell at retail rates to other consumers. The Nigerian aggregation process, unlike the largely buyer-influenced process described by AMP, is, however, led by a government and gas supplier-controlled GACN rather than the three buyer groups. The predominant involvement of government and gas suppliers in gas aggregation in the Nigerian context is understandable given the relatively young undeveloped gas market without standardized transaction agreements, low off-take capacity, inadequate gas transportation infrastructure and inability of buyers to immediately pay competitive gas pricing. The GACN, after ten years of fairly independent operations, has now recommended that 30% of its ownership structure should be allotted to 6 major gas off-takers across the three buyer groups in recognition of the need to have more buyer involvement in the aggregation process.3

What is GACN's impact as sole strategic gas aggregator?

The GACN, in its ten years of operation, has helped to develop the Nigerian domestic gas market. The GACN introduced a standardized template Gas Sales Aggregation Agreement (GSAA) into the market. this template undergoes periodic review by stakeholders to reflect market realities. 85% of the current total domestic gas supply portfolio is now under GACN's management. GACN has made disbursement of over N136billion gas payment dispute-free through the price aggregation management software. GACN ensured adequate supply to GBIs such as Indorama fertilizer plant and Dangote fertilizer plants. GACN is currently facilitating development of 3 mini Liquefied Natural Gas (LNG) projects for domestic consumption. GACN is also supporting direct gas supply to embedded and captive Independent Power Plants (IPPs) based on 100% payment performance. The GACN is also working with stakeholders to develop alternative securitization instrument to support gas offtake outside the World Bank partial risk guarantee. There is also a finalized framework for gas trading platform modelled after the henry-hub model to develop the domestic sector and trading has since commenced. GACN has processed over 200 gas purchase requests from buyers and 71 of such buyers have been issued GSAA as at 2020. The volume of operationalized GSAAs as at 2020 stands at 858MMscfd. These are just a few key achievements amongst many listed by the GACN in its public presentation to the federal legislative house on the hearing of the PIB 2020.4

What notable changes in the PIB 2020 affect the GACN?

The provisions of the Bill retain the functions and powers of the gas aggregator as contemplated in the existing Regulations. There are however several notable changes in the Bill, particularly in sections 153, 154, 155 and 156 of the Bill. These provisions could materially affect the current structure and operations of GACN. The major changes in the Bill are highlighted below:

  • Multiple Aggregators. The Bill removes GACN's monopoly as the sole gas aggregator. Although, other sections of the Bill make reference to 'the domestic gas aggregator', sections 153(1) and section 155(2) of the Bill were drafted in a manner that leaves possible interpretation that there could be multiple licensed gas aggregators in the gas sector. Apart from price aggregation, the GACN was structured to also play a strategic role in implementing the National Gas Policy. It remains to be seen how the gas policy will be implemented with multiple gas aggregators in a relatively small but growing gas market. The potential upside to having multiple aggregators is the expectation that competition could lead to lower prices. Such expectations may not be real considering that the current international market price for gas is still higher than the domestic price. Competing gas aggregating bodies may not necessarily lead to lower gas prices.
  • Introduction of Domestic Gas Aggregation Licence.5 The Bill introduces a two-year renewable paid licensing requirement for GACN and any other gas aggregator in the gas sector. The licence may be renewed every two years until attainment of liquidity in the domestic gas market. The Bill is not clear on the parameters for determining the 'attainment of liquidity in the domestic gas market'. it is also not likely that the GACN or indeed, any other licensed gas aggregator will be incentivized to embark on long term plans with a two-year licence.
  • Exclusion of gas suppliers from aggregation bodies. The Bill6, requires that the GACN and entities applying for gas aggregation licence cannot be controlled by or affiliated to any upstream gas producer. However, GACN or any gas aggregator may be owned by a combination of licencees and lessees of gas transportation pipelines and gas transportation networks and any other interested parties. This provision seems to emanate from the possible misconception that a supplier and government controlled GACN may not manage the gas supply and pricing process with the best interests of the gas producers in mind. We have highlighted some of the achievements of the GACN in the last ten years, which show that on the contrary, GACN has played a vital role in developing the gas market despite its ownership structure. The GACN has also recommended that 30% interest in its ownership structure should be ceded to a group of gas buyers across the three key customer groups. Completely excluding the gas suppliers from the aggregation process could undo the gains already achieved in the industry.


If the Bill is enacted as is, the GACN could be forced to reorganize its structure and operations. The industry is also likely to witness new entrants into the gas aggregation space, which may have mixed outcomes for the domestic gas market. What is paramount is that the security of gas supply is improved and maintained. We are of the view that with or without the PIB 2020, the GACN will consolidate on its market position and continue to remain very relevant in the gas aggregation process.


1. Paragraph 3 of the National Domestic Gas Supply and Pricing Regulations 2008.

2. American Municipal Power Inc. last accessed 21st January 2021.

3. last accessed 21st January 2021.

4. Memorandum submitted to House of Representatives Ad-Hoc Committee on Petroleum Industry Bill (HB.1061) dated 20th January, 2021.

5. Section 153 of PIB 2020.

6. Section 155(2) of PIB 2020.

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