Nigeria is way behind in preparations for a new energy age. There is a palpable fear about the deleterious impact of climate, as it could undermine our sovereignty and wash off coastal communities from our map. Sadly, Nigeria unlike Saudi Arabia doesn’t have the wealth and technical expertise to drive an urgently needed energy transition, say less of emerging as a regional and global leader. Although, it has plans for renewable power but we are yet to see any plan in place to manage emissions and also to develop a circular carbon economy. In short, we aren’t developing these efforts and reducing emissions as quickly as possible.
In Center for Strategic & International Studies report on energy transition, the report expects National Oil Companies (NOCs) to play a critical role in ensuring global energy security. The challenge is how opportunistically can Nigeria grow as the oil majors shrink. We have seen oil majors’ movement deeper into the seas of the Niger Delta. Also, Oil major’s rapid divestment is feared to set off an energy crisis and experts argued that it will do little to cut emissions.
Activists and experts are worried that forced asset sales could leave more production in the hands of privately held companies like Dangote Oil Refinery & Petrochemicals, Waltersmith Refining & Petrochemical Company Limited, OPAC Refineries, Niger Delta Petroleum Resources, BUA Refinery & Petrochemicals and Edo Refinery and Petrochemical Company Limited and they are doubtful that these firms would adhere to rigorous environmental and safety standards as cries for energy transition ramp up. However, as energy transition get massive global sway, only those with the technical capacity, access to capital, and project management skills could play critical roles in how our clean energy future emerged.
Nigeria in falls into CISS Report as a country with a struggling NOC, i.e NNPC. This CISS report expects NOCs to fill in the gap, to ramp up investment to expand production and capture market share. They argued that these companies may benefit if the global oil and gas industry underinvests in exploration and production in the coming years. Sadly, the energy transition poses serious risks to our competitiveness or even our survival, taking cognizance of the high production cost of making a barrel in Nigeria. It is worrisome that our resource base would become less competitive with the departure of important technical and financial partners.
Presently, we cannot make significant progress without a strategy to manage our energy transition. Privatizing NNPC may help but it looks like we are late. We need to look hard at the present state of things, especially high choking debt levels and how climate change is transforming the north with desertification and the south with massive floods. We need to analyze our energy needs and economic priorities. We need an adaptive strategy, the tools and critical leadership support to pull off our own transition. That is the only way we can drive fast and become more resilient, and not left behind.
It is time to for a major policy shift by the Nigeria Government on oil. We need to start signing an array of sweeping executive orders targeting the environment, including developing a new agency for managing the funds from this last stage of rapid oil transition revenue, localize the Paris climate propositions, tax the fossil fuel industry and use the funds to implement our energy transition before we can start revoking permits for new and old oil fields and converting our government’s fleet of vehicles to electric power. We need an ambitious proposal that will drive net-zero greenhouse gas emissions across Nigeria’s economy by 2035 while not jeopardizing the overall economic health.
As Nigeria moves into an election year, we need competent candidates who can optimize revenues from our oil and gas leases, help us marshalling out strategies for addressing “the near-term impact on exploration and production, as well as royalties to states,”. Millions of jobs will be lost and gained as diverse climate change plans by West & Asia hit home and so will the impact be for us locally; it will hurt oil-dependent economies like us with dire consequences.
It is time to setup ‘The End of Oil Development Corporation (EDC)’. We can collapse NDDC into EDC and the Federal Ministry of Petroleum into the Federal Ministry of Petroleum and New Energy Resources like we have done with the Federal Ministry of Communications and Digital Economy. This corporation should be driven by bold policy moves and men-of-character that will improve opportunities and boost livelihoods across the oil communities who will feel the crude impact of the end of oil and the larger states as we need to lead the world in recovering from this pandemic-like energy transition. This corporation should lead with the mandates to improve living standards, grow the private sector and spread prosperity in heavily impacted oil communities.
Nigeria needs a clearer sense of energy leadership and her transition strategy must enjoy the full backing of its national assembly leadership. We are moving into a future environment where oil demand will peak or plateau, thereby ushering an exacerbated revenue volatility and with the threat of steep, if not terminal, decline in the value of Nigeria’s oil. So what do we do? We have to focus on value-added downstream opportunities in fertilizers, plastics and specialty chemicals etc.
Yet this has to be matched with structural fiscal reform, cut in public wages and efficiently rechanneling of subsidies, accelerating the deployment of EDC funds for people-oriented capital projects and most ambitiously the upgrade of Nigeria’s youthful workforce in tandem with this energy transition. We must incorporate private sector buy-in and exercise the political will to make our diversification efforts and policy reforms a success.
In all, with a zero-net future, we must be mindful of too much regulation that could stifles growth. And be wary of too little regulation which could harm public safety and national security. EDC is a platform that will help us continuously discover sweet spots that can lead us into harnessing the likely massive revenue from a chaotic end of oil process and most importantly lead our local communities into the new energy age.
