Open AccessCOST – BENEFIT ANALYSIS FOR NIGERIAN NATURAL GAS PIPELINE INVESTMENT
Author(s) -
Gift Nwabueze,
Joel Ogbonna,
Chijioke Nwaozuzu
Publication year - 2020
Publication title -
international journal of engineering technologies and management research
Language(s) - English
Resource type - Journals
ISSN - 2454-1907
DOI - 10.29121/ijetmr.v7.i9.2020.780
Subject(s) - payback period , net present value , natural gas , investment (military) , pipeline transport , pipeline (software) , capital cost , return on investment , revenue , present value , internal rate of return , natural resource economics , economics , business , engineering , finance , production (economics) , waste management , environmental engineering , microeconomics , macroeconomics , mechanical engineering , politics , political science , law
This paper performs cost-benefit analysis of a pipeline infrastructure project based on a given natural gas demand in order to estimate the net present value and payback time for natural gas pipeline investment in Nigeria. The result of the cost-benefit analysis indicates a positive net revenue and net present value (NPV) at the current regulated transport cost and availability factor for gas pipelines in Nigeria. However, with a payback period of 14 years, a natural gas pipeline project in Nigeria is likely to lose-out investment capital to other competing investments within the oil and gas sector. Scenario analysis indicates that by doubling the regulated transport cost with a 50% tax reduction, the pipeline investment results in a much higher NPV and a payback of 4 years, which is more acceptable to investors.