Introduction
On 2nd November 2021, President Muhammadu Buhari took to the podium at the UN Climate Change Conference Glasgow 2021 tagged COP26 (26th meeting of the Conference of Parties). In what I consider to be President Buhari’s best speech ever, he said:
“Without extra and stable power, we cannot build the factories that will transform Africa from a low-job, extractives-led economy to a high employment middle-income continent. Children cannot learn for longer and better by battery light any more than by candlelight. No more than the Africa of today, the Africa of tomorrow cannot advance using energy production that intermittently delivers”
President Buhari further added that, to provide that extra and stable power to Africa’s 1.3 billion people (projected to be 2.5 billion by 2050), there are certain things that can and must be done by transitioning to cleaner energy production through fossil fuel power generation that can be re-tooled greener through carbon capture, the conversion of coal and heavy fuel oil power stations to biomass, installation of new technologies such as mini-hydro power plants and adoption of nuclear energy.
Most significantly, President Buhari announced that Nigeria has pledged to eliminate illegal gas flaring (which he said was Nigeria’s single greatest contribution to greenhouse emissions) by 2030—a by-product of Nigeria’s oil industry—and harness it for electricity production.
Electricity the Lifeblood of Modern Society
It is noteworthy that President Buhari recognises that without stable power Nigeria cannot transform from a poverty-stricken to a prosperous nation. Yet he, like all the Nigerian leaders before him have largely given lip service to the power conundrums in Nigeria. No Nigerian leader has elevated power to the status of a critical requirement for nation building and economic growth. It may interest President Buhari to note that in the United Kingdom (UK) where he presented his speech, the economy is supplied with 730GW of electricity daily for a population of 65 million on a landmass 25% the size of Nigeria. If the President takes a moment to reflect that Nigeria with a population of over 200 million (3 times more than the UK) and a landmass 4 times the geographic size of the UK is being supplied with 3GW of electricity, it will jolt him to reality! Even if Nigeria was getting 30GW of electricity daily, the journey out of poverty will have started! At 3GW the use of high emission sources of energy such as firewood is in ascendency which damages the President’s commitment of Nigeria attaining a carbon-neutral status.
President Buhari recognised that COVID-19 was a huge threat to Nigeria and her teeming population, and he quickly reacted by setting in motion emergency measures such as the constitution of a presidential taskforce headed by the Secretary to the Government of the Federation (SGF) that meets every weekday and provides regular feedback to the President. President Buhari obviously has not elevated electricity deficit to the status of COVID-19 given his lukewarm attitude to the power question. But unknown to President Buhari, power cuts have killed, are killing and will take far more Nigerian lives and businesses than COVID-19 has and will ever do!
President Buhari must therefore without delay give emergency status and attention the power situation in Nigeria and elevate it to a crisis situation with two low hanging fruits dangling before him to pluck:
1. Privatisation – the power sector in Nigeria is privatised at the generation and distribution phases. Transmission is still in control of the government who budgets less than $1 billion to the minister of power therefore incapacitated to expand the grid. President Buhari must order immediate steps to be taken to release transmission to the private sector who have the capacity, capital and expertise to significantly expand on the transmission network to at least 40GW within 5 years! President Buhari has taken his eyes off the Siemens deal which is now embroiled in power struggles by departments under his government as Senator Gabriel Suswam (Chair of Senate committee on power) recently exposed in a media interview. Further, the President must in the national interest exercise courage to revoke the DISCOs licences which were hijacked by politically exposed persons with no pedigree in the power business and who so far have not invested any significant funds to expand the network but rather keep increasing the tariffs (another round of increase is set for the beginning of 2022) to provide darkness to consumers! The President must then re-award the DISCOs licences to established global power companies.
2. Gas to power – Nigeria is blessed with huge gas resources estimated at 600 trillion cubic feet. The President must give effect to his commitment at COP26 by creating the enabling environment for the utilisation of the huge gas resources to generate power. The President must review downwards the 9-year target for flares-out to at most 5 years to quicken the conversion of flared gas to power! The President must also in a transparent manner create the enabling environment for investments in the gas sector by taking care of basic housekeeping jobs such as enforcement of the rule of law, tackling insecurity and ensuring a fair, speedy and transparent dispensation of justice in Nigeria.
The Fallacy of Gas Economics
The World Bank projected in 2017 that almost 8 billion cubic meters of gas was flared annually in Nigeria according to satellite data. Nigeria’s oil Minister Chief Timipre Sylva is reported to more recently to have said about 3 billion cubic meters of natural gas was lost to gas flaring in the first five months of 2020. The loss was valued at $230 million.
One of the biggest fallacies of all times is the notion by International Oil Companies (IOCs) operating in Nigeria that it is cheaper to flare Nigeria’s gas than to harness it for domestic use for electricity generation and cooking gas (LPG). This fallacy has unfortunately and tragically too been bought hook, line and sinker by Nigerian staff of these IOCs and policy makers and analysts in Nigeria and elsewhere. This fallacy if not slaughtered poses a definite risk to President Buhari’s commitment at COP26 to end gas flares by year 2030! There are three main reasons why this claim by the IOCs falls flat on the altar of empirical evidence:
1. Gas Imports – While the IOCs operating in Nigeria claim that it does not make good economics to harness Nigeria’s flared gas for the domestic market, other operators in as far away as the United States (US) see positive economics of supplying gas to the Nigerian market and are shipping cargoes from 6,000 miles away, landing them at our ports and going through the local hazards (which the IOCs in Nigeria claim are impediments in the domestic market) and selling their gas at a profit. President Buhari must therefore challenge the IOCs in Nigeria to show cause why they prefer to flare Nigeria’s gas but US operators are supplying the same domestic market (they claim is unviable) at a profit. The skyrocketing prices of cooking gas is resultant from the fall in the value of the Naira meaning imports are now more expensive plus the additional cost burden of VAT now levied on gas imports!
2. Tariffs – Shell bills me about £10 and £30 for gas and electricity respectively in the UK for 24/7/365 supply. Nigerian consumers are paying far more than this for epileptic supply! It is astonishing that Shell will come to Bonny in Nigeria and buy gas, ship it to the UK, generate electricity with it and supply both electricity and gas to consumers at cheaper rates than what Nigerians are being forced to pay. And yet the same Shell as other IOCs are saying the Nigerian market does not make good economics when consumers are getting a raw deal!
3. Environment Damage – In strict financial investment terms, the cost of flaring gas which is the installation of a flare stack is far lower than the cost of harnessing the gas which requires building gas plants and distribution networks. But when the cost of environmental damage from the pollution resultant from the flares and the loss of revenue and jobs is injected into the equation, it becomes myopic, foolhardy and sabotaging for any person to say it is cheaper to flare than to harness. The other by-product of oil production is water, but the IOCs do not say it is cheaper to dispose of produced water into our waterways than to treat/clean before disposal. Instead, the IOCs spent significant sums to install water treatment plants to treat produced water before disposal to save the environment. Why then are the IOCs disposing of produced gas by flaring it and polluting of the environment? President Buhari must force the IOCs and local operators’ hands to do to gas what they are doing to produced water because both are polluting our environment if not responsibly managed. The big advantage with the treatment of gas is that unlike water which is disposed of for free, the IOCs will actually make money once they harness, treat and dispose of the gas into the domestic market!
Conclusion
President Buhari had a powerful and beautiful outing at COP26, but his speech will only make meaning if concrete steps are taken to give effect to his words. Urgent steps to end gas flares must be taken, an enabling environment to attract investment in gas as an energy transition fuel must be created and the power sector privatisation must be revisited. It is the only way Nigeria can hope to improve power generation from the current miserly 3GW and also make gas cheaply available as a domestic fuel to all Nigerians.
References:
https://www.newsweek.com/climate-crisis-will-not-fixed-causing-energy-crisis-africa-opinion-1644227
https://www.nationalgrideso.com/who-we-are/what-we-do
https://www.worldbank.org/en/news/feature/2017/03/10/nigerias-flaring-reduction-target-2020
https://guardian.ng/business-services/fg-begins-gas-flare-reduction-with-award-of-45-licences-in-june/
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