Energy economists in Nigeria have identified opportunities that the country can latch on to a rapidly evolving global energy landscape, but the unconventional becomes the norm, the emerging energy trends are bound to have implications on developing economies like Nigeria that don’t make use of these opportunities, including falling costs of production, innovative and cutting-edge technologies, among others.
In a review of the decisions reached at the 2018 NAEE/IAEE International Conference hosted by the Nigerian and International Association of Energy Economists (NAEE/IAEE), written by Chijioke Nwaozuzu, a professor at the University of Port Harcourt and business a.m. columnist, the energy economists noted that unless Nigeria is poised to jumpstart its energy industry, it would face serious consequences.
The oil and gas industry in Nigeria is regarded as a potential driver of growth in the energy industry and the economy at large, but failure to utilize the enormous energy resources by the various administrations has resulted in an underdeveloped oil and gas sector, and an epileptic power sector.
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To mitigate the consequences, the experts called on Nigeria to manage her oil resources transparently and equitably, while energizing the economy through value creation rather than seeing the resources as a primary source of revenue.
They also stressed the need for investment in refineries to increase the local production of petroleum products rather than continued importation, which is unsustainable, as it is prone to price volatility in the international commodities markets.
Continued importation causes subsidy in the petroleum sector due to its distorting effects on the market, as well as acting as a disincentive for investment in the sector, the energy economists said. They, therefore, advised the government to establish an ‘Energy Bank’, through which the money saved from subsidy payments can be re-invested into renewable energy and gas infrastructure development projects.
Another issue they proffered solution to was the lack of long-term strategic plans as most projects might be abandoned once a change of leadership occurs. They called for a restoration of development plans with macroeconomic indices designed to measure and assess performance, rather than the short-termism practiced today.
The called on the government to hinge all reforms on market- based solutions, as this will improve the business environment as well as boost investors’ confidence.