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Energy professionals, stakeholders brainstorm in Abuja •Proffer solutions to challenges militating against the Nigerian energy sector

By Chijioke Nwaozuzu and Isreal Onyije on 04/06/2018

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•IAEE President David Knapp and Prof Akin Iwayemi flanked by Dr. David Knapp and Dave at Williams
•IAEE President David Knapp and Prof Akin Iwayemi flanked by Dr. David Knapp and Dave at Williams

The emerging global energy landscape has implications on emerging energy economies because of changes in technology, economics and public policy. These changes have turned major energy importers to exporters (e.g. the US); unconventional energy sources becoming conventional and made renewable energy components of the global energy supply mix, significant.

These changes portend great consequences, and perhaps, opportunities for emerging economies like Nigeria, in its transit to its energy and economic growth potential. It is, however, still worrisome that Nigeria is yet to achieve a quantum energy leap required to achieve sustainable economic development despite several decades of significant petroleum revenue that comes with huge hydrocarbon production.

Against this backdrop, the 11th Nigerian Association of Energy Economists (NAEE)/International Association of Energy Economists (NAEE/IAEE) International Conference, held in Abuja on April 22-24, 2018, provided a platform for energy professionals and stakeholders in the energy industry, academia and Government Agencies/Institutions to crossbreed ideas and information on the  “Dawn of a New Era in the Global Energy Landscape: Implications for an Emerging Economy”.  Over 60 technical papers were presented with three plenary sessions on issues relating to the conference theme, and strategies for achieving Nigeria’s economic growth and development, in the face of changing global energy landscape.

Prominent amongst the issues raised at the various plenary sessions were concerns about the Petroleum and Energy Industry Regulatory and Fiscal/Management bills; failures of the electricity sector as well as the potentials for utilizing Nigeria’s various energy resources in a sustainable manner. The oil and gas industry was recognized still, as potentially the major driver of Nigeria’s quest for achieving increased economic growth in the new energy era.

Regarding the Oil Sector

Nigerian economy still exhibits some resource course syndrome, such as stagnant industrialization, very low contribution of the sector to national economy in terms of GDP (currently 10% of GDP). In spite of its low contribution to GDP, the nation has relied heavily on revenue from petroleum for budget allocations, constituting 90% of foreign exchange earnings; 80% of government revenue; and 60% of government tax receipts. This situation culminates in an unbalanced economy.

It was widely acknowledged by stakeholders at the NAEE conference that this situation resulted from poor institutional and energy sector governance framework, inadequate technical skills to manage the sector, and lack of transparency and accountability in the sector. These issues, in addition to uncertainty in the fiscal framework for the industry, have jeopardized investors’ confidence in the sector.

Against this background, the new Petroleum Industry Governance Bill (PIGB) is viewed, despite perhaps its imperfections, to provide a shift in paradigm from oil revenue dependence to reliance on hydrocarbon as an input for powering Nigeria’s economy. Some of the underpinnings of the new bill, which is awaiting the assent of the President of the Federal Republic of Nigeria to become an Act include:

Regarding the Natural Gas Sector

Globally, natural gas production and consumption have been rising, especially for power generation. This improvement is in accordance with its relatively cleaner and low carbon emission characteristics. Hence, it’s increasing deployment as a transition fuel.

Nigeria’s demand for natural gas for domestic and export purposes is also rising. Unfortunately, the lack of requisite fiscal policies and infrastructure to maximally exploit its huge natural gas resources remain a great hindrance.

Some of the highlighted challenges limiting gas sector development for economic expansion include:

In spite of these challenges, with governments’ renewed interest and focus at developing the natural gas sector through designing separate fiscal policy for natural gas development and the 7-Big wins, the prospect for natural gas development is bright as reviewed at the NAEE/IAEE conference. The 2017 gas sector policy is integrated in its approach and aimed at incentivizing natural gas development and utilization. The policy resolves a number of pertinent gas development issues, as follows:

In addition, the policy provides stringent measures against gas flaring as well as a criterion that those bidding for petroleum projects in the country must have a comprehensive solution to the natural gas flare problem. These measures will dis-incentivize operators from natural gas value destruction and the consequent environmental damages.

Regarding the Power Sector

There is a consensus among stakeholders at the conference in respect to the strong nexus between energy consumption and economic growth. In spite of the abundant energy resources in Nigeria, GDP is negatively impacted by inadequate electricity supply. For decades, Nigeria’s power generation and distribution have barely grown beyond 4.5GW (Giga watts). This is abysmal, for a nation with about 36 billion barrels of proved crude oil reserve, over 180TCF (trillion cubic feet) of natural gas reserves and a population of nearly 180 million people.

Although the government made efforts to reform the sector, a larger population of the inhabitants still suffers from electricity insecurity. The main causes of failure to implement the electricity sector reforms hinge on the political economy and legal framework and not technology; which in part, arose from the benefits and costs to the vendors of imported generators, and disco owners’ desires to protect and defend their advantages; the degree of ineffectiveness and inefficiency of the regulatory agencies in dealing with the challenges resulting from unbundling the sector and the competition issues there from; as well as poor mix of technologies.

Regarding Renewable Energy

Globally, renewable energy adoption and utilization in electricity generation have received increasing attention. This results from increasing interest in environmental sustainability and carbon emissions reduction from energy consumption. Interestingly, Nigeria has huge renewable energy resources. However, they are underdeveloped and underemployed in the electricity sector, partly because of overdependence on petroleum, and inadequate policy and institutional frameworks for adoption and integration of renewables in the energy mix. However, with government’s renewed interest in diversifying the energy supply mix, renewables (especially hydro power) are expected to become a major source of electricity generation, especially for off-grid utilization.

2018 NAEE Stakeholders’ Recommendations

The conference x-rayed some of the challenges militating against the Nigerian energy sector, and the prospects for the country, especially in the face of changing global energy landscape. The following are recommendations to guide Nigeria’s path in the new energy era:

Prof. Chijioke Nwaozuzu and Isreal Onyije, who wrote this Conference Review, are of Emerald Energy Institute (for Petroleum & Energy Economics, Policy and Strategic Studies), University of Port Harcourt, Port Harcourt, Nigeria.

Source News Express

Posted 04/06/2018 3:55:05 PM

 

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