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Toward a post petroleum economy for Nigeria

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Toward a post petroleum economy for Nigeria

Minister of Petroleum, Timipre Sylva

The initiative conceptualises a post-petroleum economy for Nigeria that is related to an energy transition from fossil fuels to renewable energy sources in Nigeria.

The groundbreaking research toward a post-petroleum economy was commissioned by the Environmental Rights Action/Friends of the Earth Nigeria (ERA/FoEN) to provide some cost-benefit analysis of oil and gas and the prospects of renewable energy for Nigeria. It is to help policymakers to take the bold step toward a post-petroleum economy for Nigeria while depending less on oil and gas revenues. The research which builds on decades of a campaign to “leave the oil in the soil,” focuses on the benefits of oil and gas in relation to the renewable energy sector.

The methodology deployed both qualitative and quantitative data for a comparative study of both sectors including focus group discussions, interviews, and validation workshops held in Port Harcourt between 2019/2020. The research developed environmental and socio-economic indicators to measure relevance, functionality, reduction of carbon footprints in line with the nationally determined commitments to address climate change. The methodology is based on a cost-benefit analysis of oil and gas on one hand and renewable energy on the other which shows that the latter has far more potential and actual benefits than the former. This research supported by Milieudefensie/Friends of the Earth Netherlands also has far-reaching implications for both developed and developing countries to increase support to national governments on energy transition from fossils to renewable energy.

This initiative builds on the policy discourse of the wider global energy transition from fossil fuels to renewable sources that aim to decarbonise the economy in line with the Paris Agreement of 2016. Since then, countries such as Norway, Germany, China, South Africa, Kenya, and India are playing leading roles in expanding renewable energy sources and commitment to curb greenhouse gas emissions from fossil fuels such as oil, gas, coal, and other unconventional energy sources to renewable energy sources.

In 2019, President Muhammadu Buhari declared that the electricity production chain should be decentralized in Nigeria.  This declaratory policy shift suggests an important role to state and non-state actors in the energy sector, particularly in the renewable energy sector. States like Borno and Sokoto are already setting up solar manufacturing plants to serve the needs of citizens.

Nigeria’s enormous oil wealth has been the main source of revenue and foreign exchange for the country for decades.  The wealth has come with a price. Many see oil money as blood money due to the violent conflicts and death of tens of thousands allegedly linked to pollution of water, soil, and mangrove since the 1960s.   

The country recorded its first shipment of the product abroad in 1958. Since then, successive administrations have pursued oil-driven economic change and made the commodity deep-rooted in the country’s development narratives, where policymakers and politicians prepare annual government budgets at the three levels of government; local, state, and federal, based mainly on money expected from the sale of the commodity. 

Data from Statista on global oil demand decline show that Nigeria had an estimated total income of USD 488,513, 326.14 billion (the equivalent of NGN92,817,519,806.60) trillion from the sale of crude oil between 2010 and 2015 alone.  This wealth is significant in meeting capital and recurrent expenditures of government for the welfare of citizens. This data is indicative and suffice for this purpose since revenue from oil since 1958 is approximate depending on the source of data in a sector that is shrouded in secrecy. The oil industry also lacks transparency and accountability making data and monetary transactions hard to track, not available to the public, or when they are available are often unreliable. That said, some statistics show that by 2019 revenue from oil surpassed US$600 billion to the Nigerian state.  

In the last two decades, amidst fluctuating oil prices at the international market and increasing demand for gas, Nigeria is giving substantial attention to gas production and utilisation as well as agriculture. Global gas consumption is expected to reach 163 Trillion SCF by 2030 with most of it coming from non-OECD countries.[1]  With 198.71 trillion cubic feet, proven gas reserves, Nigeria at the moment occupies the 8th position among countries in the world with huge gas reserve deposits with the potential to play a key role in meeting global gas demands.[2]  Nigeria is fast developing its gas production potentials, as seen in its growing Liquified Natural Gas projects, which currently ranks 5th in the world.[3]

This points to the enormous financial benefits that the country has either already gotten from oil and gas or waiting to get depending on the pace of global transition to alternative energy. So far oil revenues alone have helped the Nigerian government undertake diverse projects, ranging from road construction, flyovers, health centres/hospitals, and so on. Even states that provide free education, and several other social services and infrastructure as well as payment of salaries depend mainly on oil money.  The federal capital territory Abuja was built with oil money. This dependence on oil for economic growth and the provision of services, which though has been detrimental to other sectors of the economy, such as agriculture and manufacturing, and negligent of the environmental and social cost of the industry, is responsible for the fear that the country’s continuous survival depends on the oil. This thinking is very much strengthened by the emerging profile of Nigeria as one of the world’s potential major gas exporting countries.

The United Nations Sustainable Development Goal Seven promotes access to clean energy for all by 2030.  The country has an estimated population of 200,000,000 million people, out of which only 40% has access to electricity. Nigeria is making efforts to change this story by increasing the population of people with access to electricity to 90% by 2030 by improving on its power generation, transmission, and distribution. 

The government acknowledges the role renewable energy can play in addressing climate change and transforming the electricity sector from its present 3,500 megawatts to something far higher to meet the electricity needs of the vast majority of Nigerians who currently go without electricity. Nigeria’s nationally determined commitment to reduce its carbon footprints by 20 percent unconditionally and 40 percent conditionally by 2030 is laudable but requires far reaching political and economic commitments to realize these goals. The initial recognition of the role renewable energy can play was in 2005 with the preparation of a draft Renewable Master Plan.  This was revised in 2012 and eventually approved by 2015, as Nigerian Energy and Energy Efficiency Policy (NREEEP).  This policy is expected to boost power generation, transmission, and distribution through a combination of renewable energy sources such as hydropower, solar, wind, biomass, geothermal, and wave. These energy sources are expected to generate at least 68,000 megawatts of electricity. [4]  Other policies such as the Renewable Electricity Action Programme 2006 and the National Biofuel and Incentive 2007 come along as proof of the acknowledgment of renewable energy solutions in Nigeria.

To be continued.
Ojo is executive director, Environmental Rights Action/Friends of the Earth Nigeria.

ORIGINALLY SOURCED FROM GUARDIAN.NG

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