The decision by the present administration to remove the subsidy on petroleum products supply, especially premium motor spirit (PMS), popularly called petrol, was challenging, President Bola Tinubu said on Tuesday.
The President who spoke in a speech he sent to the opening of the 7th Nigeria International Energy Summit (NIES) 2024, on Tuesday in Abuja, said regardless, the decision was a necessary one, to secure the country’s energy future and foster her economic growth.
Represented by the Minister of Information and National Orientation, Mohammed Idris, Tinubu said there was need to re-evaluate its energy policies to ensure a sustainable and secure future.
Fuel subsidy, he pointed out, has, over the years, strained the country’s economic resources, leading to inefficiencies and hindering the ability to invest in critical areas of energy security.
By removing the subsidy, he said the government was able to create a more transparent and accountable energy sector, as funds previously allocated to subsidizing petroleum products supply are now redirected towards developing and upgrading the country’s energy and other social infrastructure.
Also, he said the removal of the subsidy encouraged further private sector participation in the energy industry with potential of attracting more local and international investors, fostering innovation and competition to drive down costs and improve the overall efficiency of the country’s energy policy.
Incidentally, as the President was speaking, organized labour, under the umbrella of the Nigeria Labour Congress (NLC) and its affiliates, including the Trade Union Congress (TUC) were holding protests across the country against the rising cost of living as a result of the subsidy removal policy.
On energy transition, Tinubu described it as not only an environmental necessity, but also an economic opportunity the country must explore to ensure a smooth and just exercise that would leave no one behind.
Underlining the importance of finance, Tinubu said this has always played a pivotal role in driving the energy agenda, adding that adequate funding was crucial to support the development and deployment of cutting-edge technologies, infrastructure, and projects that would shape the country’s energy future.
“As a nation, we must explore innovative financing models, engage with the private sector, and attract investments that will propel us towards a more resilient and diversified energy sector,” he said.
He urged participants in the summit to contribute ideas that would shape policies and strategies that would define the country’s energy future, stressing the paramount importance of energy security as a national concern and global imperative.
NNPC clarifies role in IOCs divestment
The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC Ltd), Mele Kyari, who spoke on the gale of divestment by the international oil companies (IOCs) from the country’s onshore and shallow water assets clarified that the company’s role was to serve as a facilitator to the process, rather than constitute an obstacle.
As the largest indigenous oil and gas company and the biggest partner with all the IOCs in the industry, Kyari said the NNPC Ltd has no interest in attempting to prevent multi-national oil companies from exiting the industry.
However, he said the interest of the company was to ensure such exits are done in a manner that would be mutually beneficial to all parties.
“It’s our role to facilitate growth and development in this industry through appropriate arrangements that would be mutually beneficial to both the exiting partner, the in-coming partner and the NNPC Limited, which is owned by over 200 million Nigerians. We will facilitate the sale of any asset in this country. We have no interest whatsoever to prevent any partner from exiting. We are not hindering the exit of anyone. But every arrangement must have mutual value and benefit.
“Every arrangement must guarantee incremental production from those assets and the terms must be on the table.
He expressed satisfaction with the cooperation so far by its partners, saying the NNPC was working to ensure that partners exiting the country’s assets end up with creation of more resources and capacities by the country indigenous operators to fit into the ongoing global energy transition.
Noting the connection between energy security and national security, Kyari said every company around the world today has some root in the global energy security.
The NNPC, he pointed out, has a role to ensure energy sufficiency for Nigeria, by exploiting the country’s vast oil and gas resources to provide sustainable supply of electricity.
The ongoing extensive development of the domestic gas infrastructure, he said, has been part of the government’s effort to ultimately achieve the gas revolution.
The GCEO disclosed that the construction of the Obiafu-Obrikom-Oben Pipeline was nearing completion as the tunnelling across the River Niger was currently ongoing.
Stressing apart from the establishment of the right fiscal environment and stability in policies, what is required realize the gas revolution was huge finances, which is a global challenge.
He said the need to raise finances for the development of the critical infrastructure to grow the industry necessitated NNPC Ltd’s equity investment interest in the proposed Africa Energy Bank to provide access to capital, not only to NNPC, but also other indigenous companies.
APPO gives update on proposed African Energy Bank
The Secretary-General, African Petroleum Producers Organisation (APPO), Omar Farouk Ibrahim, highlighted the challenges facing the oil and gas industry in Africa as a result of the global energy transition to include funding, technology, and access to markets.
He said although these challenges were not completely new, the global shift away from fossil fuel has worsened them.
Although the global environmental concerns of climate change have been given as reason for the quest for energy transition, he said the driving ideology was energy security for the developed countries, which relied on fossil fuel for over 120 years to industrialize their economy and make the lives of their people better.
‘For over the period, they (advanced economies) put into the atmosphere over 2500 billion tons of emissions which are the root cause of the climate crisis the world is facing today.
“But instead of addressing the root cause of the crisis, they are focusing on the issues of energy transition away from fossil fuel. Africa cannot afford to abandon hundreds of billions of barrels of proven crude oil reserves and hundreds of trillions of standard cubic feet of gas in the name of righting the wrong committed by others, while they (advanced economies) are still benefitting from the wrong actions they took at the expense of others.
They have the capacity to right those wrongs without denying others the opportunity to also use the same form of energy to better the lives of their people,” the APPO Secretary-General said.
He said it was imperative for African academics, intellectuals and political leaders to think about the impact of the paradigm shift in the face of pollution and climate challenges.
On its part, he said APPO was looking at a new model for sustaining the growth of the African energy industry, with the proposed African Energy Bank.
He announced that by the end of the third quarter of this year, latest March 31, 2024, a decision would be taken on which country between Algeria, Egypt, Nigeria, Ghana, South African, Benin Republic and Cote Ivoire would host the African Energy Bank.
“We are directed to ensure that the bank kicks off not later than the end of the first half of this year, that is on or before June 30, 2024,” Ibrahim said.
Lokpobiri dispels insinuations on IOCs divestment
Minister of State for Petroleum Resources (Oil), Heineken Lopkobiri, said to achieve real economic prosperity would require bringing out the oil and gas resources in the ground to the surface.
This, he explained, would require giving permits to those companies with the requisite financial and technical capacity to explore and produce the oil and gas for the benefit of Nigerians.
“What we are doing is to work with those we know have these capacities to exploit these resources for the benefit of Nigerians. We align with the position of APPO and OPEC not to stop producing oil and gas in the name of energy transition. We need to continue to produce oil and gas. What we need is the money to be able to transit to renewable energy.,” he said.
He commended the idea of the African Energy Bank, saying Nigeria needs huge funding for the industry to enable it ramp up its oil and gas production to guarantee energy security for the country.
On divestment by IOCs, Lokpobiri clarified that contrary to speculations that the affected companies were leaving the country, they were only relocating their operations to deep offshore, where more technical experience and capital the indigenous operators cannot afford.
He described the development as a win-win for Nigeria as further investments by the IOCs in the deep offshore would create room for indigenous companies to develop capacity within the onshore and shallow waters acreages.
“It is imperative to note that we are strategically managing the divestment processes. Our commitment to enhancing our crude oil reserves and production is unwavering, and we are actively exploring innovative solutions to attract investment, optimize operations, and foster sustainable growth. We are open for business and ready to welcome your investments,” he said.
The theme of the Summit is “Navigating the New Energy World Order: Security, Transition and Finance.”
