Nigeria’s Energy Transition Plan (1)

Sunny Nwachukwu (Loyal Sigmite), PhD, a pure and applied chemist with an MBA in management, is an Onitsha based industrialist, a fellow of ICCON, and vice president, finance, Onitsha Chamber of Commerce. He can be reached on  +234 803 318 2105 (text only) or schubltd@yahoo.com

Energy business is a serious global business because energy is fuel for consumption to sustain life and it drives prosperity. Without energy, no work can practically be done (energy is the ability to do work). Moving from point “A” to point “B” demands strength/energy to actualize such. Energy powers every activity in life (right from conception, including breathing and eating). Primarily, without strength one can’t inhale air/oxygen, or take food that supplies the energy, which is the fuel consumed that gives strength to do the work.

The above analogy is a classical and fundamental proof that “energy is life”. On a wider scope too, social, economic, commercial, industrial, political and even spiritual activities demand energy; and are all powered/driven by energy. It is also a statement of fact that, in any system, if the energy needed to accomplish a task is insufficient, that system will suffer redundant growth, may remain stagnant (static without movement) without making visible progress, or in a worst case scenario, collapse economically. This condition is equally observed globally, amongst economies that are impoverished and are not productive because they suffer from energy-poverty that otherwise ought to have driven their socioeconomic activities into economic prosperity and national growth. Energy-poverty in a country therefore, shouldn’t be allowed to exist; and must be aggressively eradicated. Any economy that experiences stagnancy by entertaining energy-poverty would be characterized by abject poverty. Such economies are populated with hungry and angry citizens, where all forms of atrocities, social vices and criminal tendencies thrive in the society; which ultimately poses a threat to national security.

Energy Transition Plan (as presently being embarked upon by the Federal Government of Nigeria) is not just a project that should be fashioned to shift from fossil fuels, sourced from coal, crude oil and natural gas; to the trendy renewable energy sources of wind, water and sun. Such a plan should include a process whereby energy-poverty challenges and situations are completely eradicated, by a total shift and transition to sustainably sufficient energy availability, for adequate provisions and supplies that meet future demands in the economy. This is the template expected of the “Nigeria’s Energy Transition Plan”, as presently being sought by Vice President Yemi Osinbajo during his trip to the United States of America (where he sought global partnership, support for the mapped out energy plan). It must shift from a state of insufficient availability of both renewable and cleaner energy sources, combined with the fossil fuel sources, that the total energy mix presently is not in adequate supply. Both kinds are expected to meet the United Nations’ 2030 Sustainable Development Goals, SDG 7, (energy solutions) policy and target. It would also not significantly deviate from the recently drawn COP26 Climate Change action and multilateral agreement of not exceeding +1.5℃ Carbon emissions (although Nigeria’s proposed timeline to exit/terminate from fossils is 2060).

This transition plan is expected to provide energy solutions by critically viewing with all seriousness, the three aspects of energy sustainability (the sustainable development pillars towards the preservation of the planet earth/the green environment), vis-a-viz the social equity (in equitable distribution of energy void of class discrimination), economic viability (in energy pricing) and the environmental protection (in energy sourcing while retaining the place bearable); while maintaining a steady advancement in living standards and economic growth. The present insufficient amount of energy being generated to power the daily electricity needs for all the commercial and private consumptions (characterized by incessant power outages, which have adversely affected productivity) should have been adequately addressed under a robust plan of the current energy transition.

No matter how this current efforts on energy transition plan is viewed from the government perspective, the truth has to be said, that the positive impact of the foreign exchange contributions made from oil and gas explorations, productions and exports (in the financial history of the Nigeria’s economy, not minding the source, as fossil energy) cannot just be dismissed by wave of hand, bearing in mind its immense and significant contributions to the earnings in the economy. The impact of the poorly developed infrastructure in the downstream sub-sector of the nation’s oil industry, has dealt a huge blow against the GDP growth rate of the entire economy. This has thrown the economy into an embarrassing mounting deficit position. This situation is currently evidenced by the latest records by the National Bureau of Statistics; where the economy shrank by N63 billion in Q2 of 2022, while 28 sectors now struggle to survive. The entire scenario centers on poor management of Nigeria’s energy business. Currently (according to NBS), the price of DPK/Kerosene has increased by 99 percent (causing lots of Nigerian families to go through untold hardship in providing energy for domestic use). The impact also leaves a toll on the proposed 2023 national budget of N19.76 trillion (with a speculated deficit of N12.41 trillion). Worse still, the financially notorious and monstrous petrol subsidy policy in 17 months has again gulped N2.8 trillion (of which its H1 of 2022 is equal in amount spent in 2021). Imagine the significant proportion of money this economy is throwing away in the name of subsidy; when you compare the N2.8 trillion as against the yet to be wished away deficit of N12.41 trillion in the subsequent year’s national budget (without any capital investment/development)?