CANDID COUNSEL: The protest is all about energy 

The federal government had all the needed premonition on the #EndBadGovernance protests and had all the lead time to prepare to forestall it. Rather than seizing the moment to make a positive mark, it simply bungled all the opportunities. The belated speech, sounding more like a monologue, neither helped. Nor will threats of heavy hand or brute force succeed in silencing or intimidating the populace, especially when the underlying causes of the crises leading to the protests are still being handled with kid gloves.

Energy is at the core of Nigeria’s current protests. Taken from individual to household levels, less and less of Nigerians are now able to consume enough energy-giving foods which constitute the bulk of what the majority of people (rich or poor) daily consume. The effects on individuals’ productivity are better imagined. And the reason is very simple: erosion of people’s purchasing power, particularly those at the lower rungs of the economic ladder, has made it more difficult to fulfil one of the requirements for food security, which is accessibility as a result of the weakness in another basic requirement known as affordability. Many more families now thrive on less than two meals in a day. It is thus wrongheaded for a government that truly cares for its people to attempt at any window dressing here. 

At the macroeconomic – corporate or national – level, energy has become more of a constraint than a catalyst, a hindrance rather than a helper. Electricity supply has failed to meet the growing needs at the enterprise or governmental levels. Travel and logistics have been severely constrained by an unprecedented hike in the price of petrol and other associated fuels since 2023. And these have made commercial activities more difficult, with economic survival of corporate commercial entities more precarious. Well-meaning and serious governments cannot afford to live in denial of these or try to explain them away as inconsequential.

These are challenges that the government must rise up to rather than trying to rationalise issues. Making energy affordable is an imperative. Raising fuel prices by making the removal of subsidy on fuel the first step taken by the president was a major tactical blunder under the current administration. The multiplier effects are already out there for all to see, in the form of hyperinflation, closure of many real sector operations, particularly manufacturing outfits (small, medium or large), high prices of raw materials, finished products, foods, and equipment. 

With fuel energy costs becoming prohibitive, locally produced goods can no longer compete favourably with imported goods. Locally produced agricultural commodities became costlier because of higher costs of inputs, labour and higher transportation costs. In addition to concerns over insecurity, the cost factors became major disincentives, discouraging people from farming while more farmers have abandoned the farms. These factors reinforce the food crisis which is mostly in the form of energy food deficit on a national scale.

The brash decision to raise fuel prices through wholesale removal of subsidy came without provisions for sectoral diversification and without due cognisance of how structural shifts in economies and in energy use are shifting the way that the world meets rising demand for energy. The International Energy Agency (IEA) is emphatic about energy security as an important factor, particularly in fuel-importing countries. Energy security is considered of great essence in industrial strategies, a major issue for Nigeria’s industrial development. With a strong evidence base to guide the choices that face energy decision makers, Nigeria would have been in a better position to first focus on the pursuit of transitions that are rapid, secure, affordable and inclusive, not to first destabilise the sector before thinking about how to fix it as recently done in Nigeria. 

In the Nigerian setting, global climate goals are yet to be articulated vis-a-vis the consumption of fossil fuels, especially petroleum products. Nigeria needs to watch the global trends as they affect its oil export dependency. A major shift that is occurring globally should not be ignored. The share of coal, oil and natural gas in global energy supply – stuck for decades around 80 percent – has started to edge downwards and might reach 73 percent by 2030. Policies supporting clean energy are yet to be articulated for implementation in Nigeria for its implications on the country’s economy. The US was a major importer of petroleum products from Nigeria sometimes ago. Now, the US is both looking inwards as well as changing its strategic focus on origins of fuel imported. Part of the inward-looking strategies is the Inflation Reduction Act under which it is now projected that 50 percent of new US car registrations will be electric in 2030. With China, a major oil importer, going on the electric vehicle fast lane, the prospect of drastic reduction in their oil importation looms large.

Although demand for fossil fuels (particularly petroleum products) has been strong in recent years, there are signs of a change in direction based on the national strategies of the various countries that hitherto depended heavily on internal combustion engine automobiles. Emphasis on deployment of low-emissions alternatives is now tilting the balance against petroleum product exports as the rate at which new assets that use fossil fuels being added to the energy system has slowed. In particular, sales of cars and two/three-wheel vehicles with internal combustion engines are now well below where they were before the COVID-19 pandemic. In the electricity sector, worldwide additions of coal- and natural gas-fired power plants have halved, at least, from earlier peaks. Just as the momentum behind China’s economic growth continues to ebb, there will be a greater downside potential for fossil fuel demand if it slows further. Although the end of the growth era for fossil fuels (particularly petroleum products) does not mean an end to fossil fuel investment, it nonetheless undercuts the rationale for any increase in spending. 

From 2025, an unprecedented surge in new LNG projects is set to tip the balance of markets and concerns about natural gas supply. Where is this on Nigeria’s policy priority scale? An economy that is not diversified but rests on energy commodities pedestal, particularly the crude oil export, is bound to run into economic headwinds if the commodity prices are handled with frivolities by the authorities as done in Nigeria in 2023. Without diversification, the discontent expressed by Nigerians during the August 2024 protests in response to the hardships that have followed the arbitrary increase in fuel prices will continue. The only way to calm down the agitated populace will be to reduce the price of fuel so that the transmission impacts on all aspects of the economy can result in reduction of costs of operations and the slowing down of attendant inflation. Without this, any reduction in agitation now will be short lived. Energy is the issue at stake. It is the ability to do work. It is the commodity that facilitates productivity. It is the engine that keeps the economy going. Its price cannot afford to remain so high, otherwise all productivity indices will continue to experience stagnation or a downward trend 

These are challenges that the Nigerian government must rise up to.

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