Nigeria: Energy policy gaps and lost opportunities
It is disheartening how Nigeria derives little or no value in many areas of comparative advantage; a condition that arises from decades of poor policies and government support frameworks. Nigeria’s natural resource endowments have received their fair share of rhetoric; but very intangible actions. Well-articulated pronouncements, incentives and sectorial intervention that have the capacity to unlock massive jobs and economic opportunities for Nigeria have been repeatedly shunned, especially in the energy sector. Huge investment appetite continues to be dampened by the absence of encouraging initiatives.
Painfully, the needed policy push are often simple ideas, programs and initiatives that will cost the nation little or nothing. Other nations with less economic and developmental challenges continue to push the frontiers of what is naturally Nigeria’s constituency and thereby derives benefits that Nigeria only continue to dream of. Among hundreds of energy sector opportunities that require unique policies and government intervention (to unleash proven growth), there are some pathetic areas of serious national negligence; where minor pronouncements can create a job making machine for Nigeria;
Poor road fuel policy
Even in non-oil producing countries, road fuel policies and usage spectrum (for automobile) are wide and robust. In Nigerian, automobiles are primarily driven by PMS or AGO (petrol or diesel); as though it is so stipulated by the Quran or the Bible. This is a pathetic road fuel option or spectrum for Africa’s largest producer of oil and the holder of the 8th largest gas reserves in the world. The over 40 decades of failed attempts at attainting self-sufficiency in refined petroleum product and the political undertone of chronic fuel scarcity (which Nigerians –sadly and wrongly – uses as a measure of the effectiveness of a government) will naturally have inspired a thinking nation to expand its road fuel options through targeted interventions. Nigerians may be surprised to know that elsewhere in the world, an automobile can be easily driven with LPG Auto gas, LNG and CNG in addition to other fuel sources; these are all road fuels which Nigeria has an abundant capacity to produce.
Liquefied Petroleum Gas (or Cooking Gas)
This is perhaps the saddest area of Nigeria’s national energy policy negligence. With a population of 180 million people and huge gas reserves; Nigeria uses only 0.17 million tons of LPG per annum. Compare this to 7.96 for Indonesia and 4.24 for Egypt. Majority of Nigerian homes still uses traditional forms of energy for cooking; such as dung, agricultural waste, saw dust and firewood with their age-long proven negative health effects and the capacity to stifle household economic growth. LPG usage frees up time for women and young children to engage in more meaningful economic activities such as trading and education as opposed to the use of traditional sources that takes time to procure and requires longer cooking cycles. Nigeria spends millions of dollars preventing and treating malaria while death from the hazardous impacts of traditional energy sources is reported by the UN to be much higher than malaria-related deaths.
Mini Gas-to-Liquid (GTL) and Onsite Gas-to-Power
There have been tons of executive pronouncements on the ending of gas flaring in Nigeria’s Niger Delta. Countless targets have been set before that failed. The latest being the zero flare by 2030 pact. Projects that can end flaring (such as mini GTL and Onsite Gas-to-Power) and also create numerous small and medium-sized gas businesses/jobs remain unexplored in Nigeria. Most of the flare sites in Nigeria have been proven by research, to yield gas volumes that can generate power onsite. A robust “feed-in” framework and tariff system will see these assets being monetized by the operators or third parties. Thereby contributing to the plummeting generated power and lowering the reliance on unprotected gas pipeline infrastructure for IPPs & NIPPS. GTL projects will in-turn close certain aspects of the huge gap in petrochemical supply in Nigeria.
Mini-Grids and Off Grid Renewable Solutions
Nigeria is lost in the dark alley of gas-fired power plants being stifled by limited gas supply. And that is a consequence of poor and absent gas infrastructure as well as poor gas pricing. Nigeria has a difficult geo terrain; which makes it difficult to secure a reasonable length of pipeline system. Nigeria’s stage of socio- economic development means that gas pipeline vandalism cannot be wished away and is expectedly going to be a recurrent factor for decades. In view of this, it is a strategic anomaly to continue to site gas-fired turbine plants long distances from the source of gas.
If this has worked well in other countries, Nigeria’s challenging terrain suggests it will be a tough task. More worrisome is that over 17 years of failed efforts at main grid solutions has not inspired this country to aggressively explore exigent mini grids, off grids and small scale renewable projects such as solar and wind solutions. Options that are now both viable and cost effective and has since been massively adopted by nations with less severe energy crises.
Many models of national renewable energy initiative exist that will easily promote the investment and adoption of small scale renewables. These solutions can provide millions of Nigerian households and small businesses with many hours of electricity, even as Nigeria continues multibillion dollar projects that will drive big manufacturing 4.0.
These are energy opportunities that are traditionally promoted by small and medium sized organization; who are proven to be the major drivers of employment growth in emerging economies. The investment appetite is huge too within the private sector. Many local and international investors are looking to explore them but deterred by the absence of the right policies and initiatives. But for negligence; the jobs Nigeria long to create and the economic growth she wants to witness are here with her!
CHIJIOKE MAMA