Reviving the energy sector as remedy for Nigeria’s economic challenges
The revival of Nigeria’s interest in energy transition, power, climate change and green economic solutions has raised high expectations within the extractive industries.
The recent constitution of a Presidential Committee on Climate Action and Green Economic Solutions and the appointment of focal persons was a fundamental step to redefining the country’s necessary next steps going forward.
Before this development, hopes on the way forward after the country’s participation at the Dubai Summit remained unclear to many.
The new development was therefore viewed by industry analysts as a major reinvestment of political and social capital into the global debate by President Ahmed Bola Tinubu.
It is noteworthy that the Presidential Committee and the appointed focal persons were handed specific mandates and responsibilities of coordinating and overseeing all policies and programmes on climate action and green economic solutions required to revive, redefine and reposition the country’s interests.
With the United Nations’ projection that Nigeria’s population will rise to about 400 million people in the next 20 years, an unprecedented increase in energy demand and the obvious pressure that will bring to bear on energy financing in developing countries, including Nigeria, the work of the Committee is both important and urgent.
The utmost importance is the urgency to review existing plans, especially in the context of understanding content, context and the comprehensive nature of the issues involved, the associated risks and the potential opportunities.
By its work and nature of operations, NEITI is equipped to support the country’s engagement in the areas of provision of access to credible information and data. This will be required to drive forward-looking analysis, underpin dialogue on policy responses as well as promote evidence-led public debate.
In addition, credible information and data are also essential in policy formulation, analysis of the legal and fiscal framework governing the extractive industries, climate change and greenhouse emissions.
Data is equally important in addressing climate change-induced environmental problems, public education and enlightenment that supports public understanding of government policies related to the energy transition agenda.
For instance, NEITI’s recent report on the oil and gas industry disclosed a total unremitted revenue of gas royalty payments of $559.8 million and another unremitted sum of $828.8 million from unpaid gas flare penalties.
A close look at these figures revealed that more gas resources were flared during the period than utilised, thereby posing serious dangers to the global zero emissions agenda and Nigeria’s commitment to the net zero emissions by 2060.
Apart from gas flaring, other major sources of dangerous emissions, massive environmental pollution and damage to the ecosystems include oil theft, illegal bunkering and refineries, pipeline vandalisation. Data from NEITI Reports between 2009 and 2021 disclosed that Nigeria lost 619.7million barrels of crude oil, valued at $46.16billion, or the equivalent of N16.25 trillion between 2009 and 2020.
In addition, Nigeria lost about 4.2 billion litres of petroleum products from refineries, valued at $1.84 billion at the rate of 140,000 barrels per day, from 2009 to 2018.
During the Ongoing Energy Week, the Minister of State for Petroleum Resources, Lokpobiri Heineken has disclosed that the economic downturn confronting the country can be addressed by the oil and gas sector.
According to him, the oil and gas sector has been a significant contributor to Nigeria’s economy and relying solely on this sector to solve economic challenges in terms of expanding the sector to include petrochemicals, refining, and manufacturing can create new revenue streams and reduce dependence on crude oil exports.
While investing in new technologies and infrastructure can boost oil and gas production, leading to increased revenue thereby improving the economy.
He encouraged local content and value addition in the sector creating millions of jobs and stimulating economic growth. Effective management of oil and gas revenues, such as investing in sovereign wealth funds, can provide a cushion against economic shocks. Encouraging local procurement, services, and manufacturing in the sector can create economic linkages and stimulate growth.Fostering a business-friendly environment to attract investment and drive growth.
The Minister added that adopting a comprehensive approach that includes both the oil and gas sector and other sectors, Nigeria can more effectively address its economic challenges.
In the power sector, the Minister of power, Adebao Adelabu emphasised on the need to “achieve our 30 percent Renewable Energy target. I urge you to consider the significant benefits of investing in renewable energy projects in Nigeria. Our country boasts abundant resources, particularly solar, wind, and hydro energy, providing a remarkable opportunity for sustainable growth. The renewable energy market has grown tremendously in the last decade, with over $1 billion leveraged by Multilateral Development Banks.”
“By channelling investments into these renewable sources, we can effectively meet our carbon emission targets while playing a crucial role in combating climate change.
“As demonstrated by our recently completed $550 million Nigeria Electrification Project, investing in renewable energy helps reduce carbon emissions, enhance energy security, and support economic development. Additionally, to complement the NEP, the $750 million DARES project would provide electricity to 2.5 million people in Nigeria by deploying solar home systems and mini-grids.”
These investments will propel Nigeria toward achieving its desired energy mix and transition targets as he reaffirmed unwavering commitment to achieving net zero emissions by 2060.
It is critical that decisions and programmes at ongoing energy week will usher in a new dimension that will assist in shifting from the crude oil dominated energy to gas focused economy.
