De-risking Nigeria’s midstream for private investment

Oghenekevwe Ovbije

Houston, TX — Nigeria has significant natural gas reserves and a growing domestic demand base. The country has long aspired to become a regional gas hub for West Africa and a key LNG exporter. However, progress has been slow. Processing hubs remain undersized, key pipelines face years of delay, and stranded gas continues to be flared across the Niger Delta not due to a lack of ambition, but due to a systemic underinvestment in midstream infrastructure. The reality is that gas cannot power Nigeria if it cannot be moved efficiently from the source to the market. This midstream gap is the single largest constraint on the country’s gas-led industrial future, and private capital, which should be financing most of the buildout, has stayed away.

The reasons for this capital hesitancy are not geological; they are structural. Nigeria’s midstream gas projects are entangled in a web of risks, from regulatory inconsistencies and uncertain tariffs to opaque permitting processes and land acquisition challenges. Investors also face weak contract enforcement and shifting policy frameworks that introduce unacceptable levels of uncertainty in the investment environment. These are not just minor frictions. These are symptoms of a design problem: a system that is not yet structured to attract and retain long-term infrastructure investment. For global and domestic capital to engage meaningfully in gas infrastructure, Nigeria must address this risk asymmetry. Investors want clarity, bankability, and confidence that their capital will earn fair returns.

Regulatory Reform and Investor Confidence
Regulatory confidence lies at the foundation of a credible investment environment. Nigeria must urgently create a coherent midstream investment framework that outlines the rules of engagement for developers, financiers, and operators. This includes issuing model concession agreements with enforceable clauses, establishing clear guidelines for third-party pipeline access, and defining tariffs that are economically viable and transparent. Equally important is regulatory harmony across agencies. Investors must not face contradictory mandates from different bodies. A consistent and well-communicated regulatory system is a precondition for private participation. The more predictable the environment, the more investable the projects become.

Rebalancing Risk to Unlock Private Capital
Private investors do not avoid infrastructure because of its complexity; they avoid it when the risk-adjusted returns do not add up. Nigeria can change this calculus by designing financial instruments that de-risk investments without distorting the market. One approach is to offer tax-based incentives to encourage EV adoption. Infrastructure tax credits allow investors to deduct a portion of capital spent on eligible gas infrastructure against future tax liabilities, which can lower upfront project risk. Additionally, the government, in partnership with development finance institutions, can offer partial risk guarantees that backstop critical contracts, such as gas supply or offtake agreements. These instruments facilitate projects in reaching financial closure by mitigating commercial risks. Finally, viability gap funding can be introduced for projects that are socially or strategically valuable but financially marginally. This allows limited public capital to bridge the funding shortfall, making projects attractive to private players without assuming full ownership. These are not giveaways. They are smart tools designed to crowd in capital while ensuring project viability and long-term return.

Smarter Partnerships for Midstream Success
Public-private partnerships (PPPs) in the gas sector have underperformed in Nigeria due to poor alignment of responsibilities, unclear risk allocation, and inadequate bankability. A better path forward is to adopt hybrid PPP models tailored to the midstream realities. In these hybrid structures, the government can contribute land, right-of-way access, and critical permits, while private partners bring in financing, engineering, and operational expertise. This approach reduces the complexity and delays often associated with wholly public or fully private models. Hybrid PPPs have already been successful in sectors such as telecommunications, renewable energy, and logistics. They are particularly well-suited for modular, small-to-mid-scale gas processing and pipeline infrastructure that can serve industrial corridors and urban centers beyond the reach of existing national trunk lines. Credible execution builds investor trust faster than policy reform. Flagship infrastructure projects, such as the AKK and OB3 pipelines, must be seen through to completion, not just for their direct benefit, but as a confidence-building measure for the investor community. Each completed project reduces the perceived risk of the subsequent project. Investors watch precedents more than plans. If Nigeria can deliver even a few well-executed midstream assets under credible frameworks, momentum will shift rapidly in favor of private participation.

Streamlining Engagement and Empowering States
To manage this transition and facilitate investor engagement, Nigeria should establish a dedicated Midstream Investment Facilitation Desk under the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). This desk would serve as a one-stop platform for private developers to handle investor onboarding, coordinate permits, resolve regulatory issues, and serve as a central repository of project data. Today’s fragmented landscape sends investors from one agency to another with little coordination between them. A single-window interface can drastically reduce friction and signal professionalism in how the government handles critical gas infrastructure investments. Subnational governments must also be empowered to lead states that can anchor regional gas buildouts if provided with the right policy tools, fiscal incentives, and autonomy to partner with the developers. A decentralized model allows for faster implementation and a more relevant project design.

Design for Capital, Don’t Chase It
Nigeria’s ambition to become a gas-powered economy will remain elusive unless the midstream gap is closed. Unlocking private investment is not about appealing to sentiment; it is about designing a system that earns investor trust through credible rules, smart de-risking tools, and visible delivery. Private capital does not seek promises. It is looking for platforms, and Nigeria still has time to build them.