COST – BENEFIT ANALYSIS FOR NIGERIAN NATURAL GAS PIPELINE INVESTMENT
Journal: INTERNATIONAL JOURNAL OF ENGINEERING TECHNOLOGIES AND MANAGEMENT RESEARCH (Vol.7, No. 9)Publication Date: 2020-09-08
Authors : Gift Nwabuezel; Joel Ogbonna; Chijioke Nwaozuzu;
Page : 52-65
Keywords : Gas Pipeline; Cost-Benefit Analysis; Investment Net Present Value; Payback; Nigeria;
Abstract
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.
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