How Nigeria can attain energy self-sufficiency

A policy and regulations development specialist, Tunji Ariyomo, has advised the government to seek homegrown solutions to the energy crisis in Nigeria.

Mr Ariyomo said the country will achieve rapid economic development if it attains energy sufficiency.

Mr Ariyomo, an infrastructure development and finance expert, said this at a public lecture organised by the Nigerian Society of Engineers in Akure.

Nigeria’s energy crisis has worsened with the removal of fuel subsidy by the Federal Government in May, leading to increases in the pump price of petrol.

Before the step, the national energy outfit, NNPCL, said it spent N400 billion monthly on fuel subsidy (about $ 1 billion per month at the time).

Mr Ariyomo highlighted four major problems undermining Nigeria’s energy sector.

These are dependency on oil and gas, inadequate infrastructure, energy poverty, and environmental concerns.

He said to end the importation of petroleum products, which he said was draining forex and creating job losses, Nigeria needed to build its own refineries based on the technological capacity of Nigerians.

He said the country has not been able to maintain sophisticated refineries due to lack of capacity.

According to him, the refineries break down always and “our people” are simply unable to repair them.

Mr Ariyomo observed that the USA, China, South Korea, and the UK have functional refineries because they build and operate them with local “knowledge and technical know-how – organic ownership of the technology associated with and incidental to petroleum refineries.”

To build their own refineries, he said Nigerians must acquire the technical know-how, noting that “our forefathers had commanding control of the technologies with which they refined their palm oil.”

“Hence, Nigerians can only fix crude oil refining by acquiring the technical know-how and organic capability to locally fabricate, locally assemble, and locally install all components of refineries leveraging indigenous capability.

“Indeed, once Nigeria and Nigerians own and control the required knowledge, possession of crude oil as a natural gift within its geographical boundary will no longer be an obligatory requirement in the nation’s quest to fix its energy needs and export the surplus. This is what is described as self-sufficiency.

“In simple words, Nigeria must stop seeing imports, or the race to build the biggest refinery procured with technologies controlled by its rivals as the compelling theme of its observations.

“Also, we must stop seeing crude oil itself as the issue here. We must only see it as a means to an end. Knowledge of the sciences behind the processes, competitive and practical application of that knowledge, and the strategic wherewithal to offer the services required to produce the goods and materials needed to drive our economies should be our focus.

“We must deliberately pivot away from a ‘cash and carry’ mindset that has plunged us into a country that is rudderless and unthinking in its approach to solving critical problems.”

Mr Ariyomo also said states should be allowed to generate and distribute power.

“If a country is building a power transmission infrastructure for you, you are its market, especially if you are also doing it with its loan,” he said.

“You simply provide needed revenue assurance for its future, with interest! That country would never wish you to learn how to build good refineries, good roads, good power lines, good railways, etc. That country would never want you to become self-reliant and begin to build your own refinery, power lines, roads, railways, etc.

“In fact, the country building your road, your refinery, your railway line, or your power infrastructure is actually your strategic enemy. Write that down somewhere. Never forget.”

“If we have commanding control of the technical wherewithal to locally fabricate, install, and manage our refining processes, we would automatically have expanded the economic value chain inherent in the entire petroleum product management process.

‘We would be able to ensure that the entire West Africa and beyond now represent our market thus ending the half-a-century-long experience with regional smuggling of Nigerian subsidized petroleum products. Bar crude oil prices, all other indices such as capital and operational cost (parts and labour) that determine the final product prices would be solely subject to local metrics as is the case in China thereby substantially shielding our macro and micro economies from the vagaries of international price fluctuations.”

Mr Ariyomo also advised diversifying energy sources by investing in renewable energy sources to locally produce critical components associated with solar, wind, and hydroelectric power.

“These will not only be more sustainable but will also create jobs and boost local economies,” he added.

He further emphasised the need to modernise energy infrastructure, upgrade transmission and distribution networks, and improve grid reliability to reduce energy losses.

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The NNPCL had said local refining of petroleum will not significantly lower the cost of fuel.

“There is a notion that if the product is processed locally, prices will reduce. Let me make it clear that it is not going to change anything. If you produce locally, the refineries will also input the cost of production and other things and it will be sold at the current price,” NNPCL’s Group Chief Executive Officer, Mele Kyari, had stated at a forum.

The same view is held by the Major Oil Marketers Association of Nigeria (MOMAN).

But the Independent Oil Marketers Association of Nigeria(IPMAN), disagreed.

“If the refineries are working, it would cut freight and ship-to-ship transfer cost,” IPMAN’s National Controller of Operations, Mike Osatuyi, was quoted as saying

“Not less than N60/70 per litre will be off if the refineries start working. Cost of insurance will reduce.”