The ongoing disruption of construction work on the 80-kilometre gas pipeline project linking Sagamu in Ogun State to Ibadan in Oyo State has triggered serious concerns among both local and international investors in Nigeria’s oil and gas sector. The project, being executed by NIPCO Gas Limited in partnership with NNPC Gas Marketing Limited (NGML), has now become the subject of regulatory and political controversy, prompting calls for urgent intervention by the Presidency in line with the provisions of the Petroleum Industry Act (PIA).
🔷 Setback to Federal Government’s Economic Agenda
The halt in construction represents a significant setback to the economic vision of President Bola Ahmed Tinubu, whose administration has prioritized the use of Nigeria’s vast gas resources to power industries, reduce reliance on diesel, and stimulate economic growth—particularly in the South-west region.
The Sagamu–Ibadan pipeline project is a key component of this strategy, designed to supply gas to manufacturers and businesses, thereby enabling them to generate their own electricity more efficiently.
🔷 Background: NIPCO’s Strategic Role in Gas Distribution
In September 2024, as part of the implementation of the Petroleum Industry Act (PIA), the Nigerian government granted NIPCO Gas Limited four Gas Distribution Licences (GDLs) with a 25-year exclusivity period. These licences cover major industrial corridors, including:
- Ibadan Axis (Ogere–Ibadan–Oluyole–Asejire–Ajoda)
- Lekki Free Trade Zone
- Kara–Sagamu–Abeokuta–Ibadan corridor
- Benin City
The objective of these licences is to:
- Encourage investment in gas infrastructure
- Prevent duplication of facilities
- Promote efficiency and optimal resource utilization
NIPCO Gas Limited, recognized as Nigeria’s largest indigenous gas distribution company, currently operates an extensive network spanning 22 states and the Federal Capital Territory (FCT). Its joint venture with NGML has been instrumental in expanding gas supply, especially across the Lagos–Ibadan industrial corridor.
🔷 Growing Investment and Expansion Plans
NGML, which operates over 500 kilometres of gas pipeline infrastructure, is actively working to increase domestic gas supply. The company aims to deliver an additional 1.8 billion cubic feet of gas per day (bcf/d) by 2026, contributing to Nigeria’s broader target of:
- 10 bcf/d by 2027
- 12 bcf/d by 2030
These efforts are expected to unlock over $60 billion in investments across the oil and gas value chain.
Meanwhile, NIPCO has continued to expand its footprint by:
- Establishing Compressed Natural Gas (CNG) stations nationwide
- Partnering with the Presidential CNG Initiative (PCNGI)
- Supporting industries with reliable gas supply
🔷 Pipeline Project Disruption and Regulatory Dispute
Despite these advancements, the Sagamu–Ibadan pipeline project, valued at over $100 million, has been stalled for approximately three months following stop-work notices issued by the Oyo State Ministry of Lands, Housing, and Urban Development.
This development has raised serious concerns among stakeholders, as the project was originally scheduled for completion by June 2026.
According to reports, NIPCO Gas Limited has made multiple attempts to resolve the issue, including submitting applications for approval to the state government. However, these efforts have reportedly been unsuccessful.
🔷 Allegations and Speculations
The prolonged silence from the Oyo State Government has fueled speculation that the disruption may be linked to competing business interests. Some industry insiders allege that entities connected to the state government may have affiliations with an international oil company interested in the Ibadan gas distribution market.
Although these claims remain unverified, they have intensified concerns about possible interference in regulatory processes.
🔷 Legal Framework and PIA Provisions
Under the Petroleum Industry Act (PIA) 2021, the Gas Distribution Licence granted to NIPCO provides exclusive rights to operate within the designated zone for 25 years. This exclusivity is intended to:
- Protect investors
- Ensure project viability
- Provide long-term investment security
Industry sources maintain that no other company is legally permitted to undertake gas pipeline projects within the same licensed area, as this would constitute a violation of the PIA.
It is also noted that the licence issued to NIPCO supersedes any prior agreements, including a 20-year gas distribution deal reportedly signed between the Oyo State Government and Shell Nigeria Gas in 2024.
🔷 Regulatory Silence and Rising Concerns
The apparent silence of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA)—the body responsible for issuing the licence—has further complicated the situation.
Stakeholders argue that this lack of response may suggest undue political influence in regulatory matters, undermining the integrity of the PIA and investor confidence in Nigeria’s energy sector.
🔷 Impact on Energy Supply and Industrial Growth
The disruption of the pipeline project poses a serious threat to Nigeria’s industrial development, particularly in the South-west, which remains the country’s manufacturing hub.
Natural gas is widely regarded as a critical transition fuel capable of:
- Stabilizing electricity supply
- Reducing energy costs
- Supporting industrial productivity
Halting such a strategic project, stakeholders warn, could slow economic growth and weaken Nigeria’s competitiveness.
🔷 Calls for Urgent Presidential Intervention
Industry players have described the situation as a critical test of the Tinubu administration’s commitment to energy reforms and investor protection.
Many have called on President Tinubu to:
- Intervene directly in the dispute
- Ensure compliance with the PIA
- Restore investor confidence
- Prevent political interference in commercial projects
🔷 Conclusion
The ongoing dispute over the Sagamu–Ibadan gas pipeline highlights the delicate balance between regulatory authority, political interests, and economic development in Nigeria’s oil and gas sector.
As the situation unfolds, the need for transparency, adherence to the law, and decisive leadership remains critical to safeguarding investments and ensuring the successful execution of strategic energy projects.