Development needs delay Nigeria’s energy transition Pt II15 Feb 2022 11:40
Kyari argues that passage of the Petroleum Industry Act — a long-awaited package of reforms that became law last year — will encourage more investment, mainly from midsized companies. “With a competitive fiscal environment and the right regulatory framework, we know for sure investment will come in,” he says.
Many doubt NNPC’s capacity to oversee an increase in production, or to repair its dilapidated, lossmaking refineries. But, in another sign that Nigeria remains committed to oil, Aliko Dangote, Africa’s richest businessman, is building a 650,000-barrels-a-day refinery — one of the biggest in the world — at an ever-spiralling cost now estimated at $19bn. After years of delay, the facility is due to go into production next year.
Even Suleiman — speaking on the top floor of his solar-panel-wrapped building — sees the logic of a last oil hurrah before the financing of new projects dries up. “From an economic perspective, Nigeria should optimise the use of its fossil fuels for the next 20-30 years, even if it is primarily to run your own industries. But I don’t think NNPC should do that.”
Whatever plans there are to increase oil output, Nigeria’s bigger policy goal is to switch to gas as a so-called transition fuel. “We are more of a gas nation than an oil nation,” says Donald Duke, the former governor of Cross Rivers state.
He and others see gas as the obvious way to produce cleaner energy while satisfying pent-up demand for power in a country where nearly half the population has no access to electricity. It is, he argues, “ridiculous” that Nigeria, which has the world’s ninth largest proven gas reserves, has for decades been flaring hundreds of millions of cubic feet of gas daily.
“Common sense will tell you that, if you’re able to pipe all that energy, and distribute it throughout the country and localise the generation of power, we would be an energy-surplus country,” says Duke. “Gas could be our competitive advantage.”
Nigeria’s gas ambitions are, however, likely to rub against the changing priorities of western banks and donors, which are being pressured by shareholders and governments to abandon lending to hydrocarbons projects.
Britain’s CDC Group, a development finance institution about to be renamed British Investment International, did help to fund a gas-to-electricity power station in Edo state. The Azura-Edo power station added 10 per cent to Nigeria’s generating capacity at a stroke. But bankers say CDC and similar agencies would probably not make a similar investment today.
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