BEING A PUBLIC LECTURE DELIVERED BY ENGR. OLATUNJI ARIYOMO, FNSE, AS THE GUEST SPEAKER AT THE 2023 DISTINGUISHED PUBLIC LECTURE OF THE NIGERIAN SOCIETY OF ENGINEERS (ONDO STATE CHAPTER) HELD ON 16th SEPTEMBER 2023 AT THE MULTIPURPOSE EVENT HALL OF THE ONDO STATE DEVELOPMENT AND PROPERTY CORPORATION, IJAPO ESTATE, AKURE, ONDO STATE
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Permit me to warmly welcome everyone here today as we gather to discuss a topic of utmost local and national importance: “Energy Self-Sufficiency as a Crucial Key to Nigeria’s Economic Development and Sustainability.” I would like to thank members of the Executive Council of the Akure Branch of the Nigerian Society of Engineers (NSE) under the leadership of Engr. Stephen Bolawole Alada, FNSE for selecting me to deliver this year’s lecture. There is no doubt that this chapter of the NSE is deeply committed to ensuring that the engineering profession is accorded its rightful place in Nigeria as a problem solver. There can’t be stronger evidence of this commitment than the very theme of this year’s engineering week – Energy Self-Sufficiency. From uncertainties over the volume of crude oil daily pumped out in the creeks, shallow offshore and deep offshore oil wells of the Niger-Delta, to the millions of litres of refined products imported daily into Nigeria from the Netherlands, Belgium, Norway, India, the United Kingdom, and South Korea among others at pump prices of petrol hovering around N600 per liter, to the facts of epileptic electricity supplies across the nation, to the persistent gas flaring, it is debatable to advance the notion that the knowledge of science and engineering have been an integral part of the solutions advanced to address this national crisis.
Due to the success we accomplished at the 2021 South West Maiden Engineering lecture which triggered the national effort towards the amendment of our constitution to enable states of the federation to generate, transmit, and distribute electricity in areas within national grid coverage and effectively decentralize our national electricity engagement strategy, I have taken the liberty to approach this topic, not just with focus on the energy sector, but with emphasis on productivity in general as it affect the engineering profession and our country’s numerous challenges. I am hopeful that something said today may trigger similar national action.
Back to energy self-sufficiency, the paradox is both confounding and appalling – that a nation that is so rich in natural resources, including oil and gas, still grapples with chronic energy shortages, daily struggles to meet the needs of its population, and has continued to suffer debilitating energy poverty.
Introduction
Nigeria, despite her potential, stands at a critical juncture in her history where energy self-sufficiency can be a catalyst for growth and progress. In the next few minutes, I will present the case for why this is a pressing issue, show us an example of why we need to rethink our engagement strategy, and offer a roadmap for how Nigeria can achieve energy self-sufficiency.
Last year (2022), Nigeria spent 96.3 percent of its revenue on debt servicing. In 2021, the nation spent 83.2 percent of its revenue on debt servicing (World Bank, 2023). This shows that the fiscal deficit has worsened the country’s public debt stock. This is unsustainable and a threat to Nigeria’s survival. Before the removal of fuel subsidy in May 2023, Nigeria was spending N400 billion per month on fuel subsidies (NNPC, 2023). At the time, this was the equivalent of one billion US dollars ($1.0 billion) per month. The economic complexity of Nigeria has seen her exporting what she has and then spending the proceeds to buy what she exported – after it has been figuratively adorned with cosmetics. In 2021, Nigeria imported $11.3B in refined petroleum, becoming the 18th largest importer of refined petroleum in the world. That same year, as always, refined petroleum was the topmost imported product in Nigeria. According to the 2021 report of the Observatory of Economic Complexity (OEC), the breakdown of Nigeria’s imports of refined petroleum that year was primarily: Netherlands ($3.62B), Belgium ($1.78B), Norway ($1.2B), India ($992M), United Kingdom ($760M), and South Korea ($260M) among others (OEC, 2021). As we speak, the exchange rate is a chronicle of lamentations for entrepreneurs, businesses, industrialists, and sponsors of education as the Naira continues a spiral fall against the US dollar with the latter’s value currently hovering at almost a thousand Naira. Yet, most businesses, especially equipment-intensive businesses, depend on parts and services priced in dollars.
Challenges in Nigeria’s Energy Sector
Four problems have become the headline challenges that continue to undermine the nation’s interest in the energy sector. These include Dependency on Oil and Gas, Inadequate Infrastructure, Energy Poverty, and Environmental Concerns.
Dependency on Oil and Gas: Nigeria’s over-reliance on oil and gas exports has left the country vulnerable to volatile global energy markets. Yet, the problem is not the reliance on oil and gas but the fact that to meet the daily oil requirement of the nation, Nigeria relies on the importation of refined oil for that purpose.
Inadequate Infrastructure: The country’s infrastructure is outdated and in need of significant investment and modernization. This applies in equal measure to both the infrastructure required to process Nigeria’s crude oil into last-mile products needed to drive the economic activities and personal needs of Nigerians, the electricity infrastructure needed to power critical economic activities and the individual comfort of the citizens, and the Commonwealth of physical and social infrastructure needed to equitably provide services for the people, namely, transportation, healthcare, etc. Of course, there may be the need to reevaluate some infrastructure. Our gas distribution infrastructure is one of such. By the way, we must commend the recent effort of the Federal Government through the upstream regulator to initiate a gas flare commercialization programme to harness the wealth lost to gas flaring. Nigeria can literally make billions of dollars from a well-thought-out gas plan. Unsolicited, I will advise Nigeria to rebrand and update the ‘Decade of Gas Plan’ to an aggressive 16-Year Gas Action Plan to maximize opportunities during the energy transition (global and domestic opportunities). Nigeria has the 9th largest proven gas reserves globally. The sector is largely underdeveloped as production-to-reserves is approximately 1%, that is, circa eight billion standard cubic feet (bscf) per day of gas. The Train 7 project of the LNG will only ramp up Nigeria’s gas supply to 30mtpa. Qatar is aiming to expand from 77 million tonnes per annum (mtpa) of LNG export to 126 mtpa.
Energy Poverty: A substantial portion of the population lacks access to reliable electricity and fuel, hindering economic growth and social development.
Environmental Concerns: The continued use of fossil fuels contributes to environmental degradation and climate change, necessitating a shift towards cleaner and more sustainable energy sources. The black soot in Porhacourt, the result of incomplete combustion of hydrocarbons, and the brackish waters of the litoral parts of most Niger Delta states are poignant examples of serious environmental degradation. Yet, it is not just the continued use of fossil fuels that is the problem but the continued irresponsible use or exploitation that shows no regard for the environment.
Yet, put together, successive administrations continue to misunderstand and misdiagnose the Nigerian energy debacle. For instance, since many of us here today were youngsters till this moment, the overarching solution thrown at the nation’s fuel conundrum has been a litany of marketing and price adjustment institutions that focused on importation, price arbitrage, and equalization. Agencies such as the defunct Petroleum Products Pricing Regulatory Agency (PPPRA), Petroleum Equalization Fund (PEF), and the Midstream and Downstream Divisions of the defunct Department of Petroleum Resources (DPR), appeared more inclined or structured to regularize and enhance fuel importation and ease of the import business.
An Example of Misdiagnosis
Flying is one of those possibilities that have excited man since the beginning of time. As a child, I was fascinated by the ability of birds to fly. It is safe to assume that we all probably had similar experiences. For centuries, philosophers, artists, scientists, and engineers sought to put heavier-than-air objects in flight. The dream of human flight must have begun with the observation of birds soaring through the sky. Observation is very key to engineering. In fact, it is a necessary step in scientific research. For millennia, however, progress with flying was retarded by attempts to design aircraft that emulated the flapping of a bird’s wings as observed by man. To achieve flight, this was a sensible step – observing and imitating the bird. Pioneers like Leonardo da Vinci, Galileo Galilei, etc all based their attempts upon the behavior of birds. Even George Cayley who could be described as the first person to bridge the gap between physical theory, engineering research, and the age-old dream of flight primarily modeled his gliders upon his observations of birds (Ackroyd, 2002).
Today, humans have not only achieved flight. Humans have outclassed birds in speed and vertical height attainable. The Peregrine falcon is the fastest bird. It can attain a maximum speed of 390 km/h. The Griffon vulture is the highest-flying bird in the bird kingdom. It can reach 37,000 feet above the sky. But the human-made NASA/USAF X-15 can reach a record top speed of 7,274 km/h and a maximum altitude of 354,200 feet. Humans have even gone further. The all-American crew of the famous Apollo 13 shuttle was 400,171 kilometers (248,655 miles) away from Earth on April 14, 1970 (Wall, 2019). We must of course note that a Space Shuttle can outdo this as it can accelerate to 29,000 km/h (Smithsonian Institution, 2014). Basically, humans have extremely and supremely outperformed the birds they were observing.
Yet, none of these incredible feats achieved by man with flight is the result of flapping wings to generate lift and propulsion. The generations of experimenters and dreamers who focused their attention on ornithopters—machines in which flapping wings generated both lift and propulsion—contributed nothing substantial to the final solution of the problems blocking the route to mechanical flight. Ultimately, human success with flight benefitted more from observing a stone pebble flipped or thrown carelessly! When the force of lift is greater than the force of gravity, an object, such as a feather, a wood, a stone, or an airplane, can fly. Because of thrust, the airplane can continue to move forward in flight. At that stage, the principle espoused in Isaac Newton’s 3rd law of motion takes charge as the action of the wings moving through the air creates lift to counter the opposing weight of the aircraft. Thus when the force of lift is greater than the force of gravity, the airplane flies, and because of thrust generated by the jet engine (or propeller or rocket), the airplane moves forward in flight. In essence, when humans stopped looking at the mesmerizing flapping of birds but focused on the motion of an object through the sky, they achieved success.
What can we learn from this? Or better still, how can our knowledge of the success we achieved after pivoting away from the enthralling actions of birds in flight while embracing the core science behind flying be applied to fix energy poverty in Nigeria?
Two significant solutions have been applied to mitigate fuel shortage in Nigeria since the 70s, namely: the massive importation of refined petroleum products and the construction of refineries with advanced technologies and parts imported from Germany, the United States, Russia, etc. Some of the refineries broke down and our men were simply unable to repair them. At a point, we wholly depended on imports for 100 percent of our domestic fuel needs. This has had three principal implications: (1) Local prices of refined petroleum products are defined by international indices whilst wages and earnings are controlled by local metrics leading to economic imbalance, and high cost of living. (2) The cost and prices of all fuel-impacted activities such as electricity, transportation, communication, production of goods, etc skyrocketed. (3) Capital flight. The government attempted to mitigate the impact by offsetting part of the disparate cost of fuel through the introduction of subsidies. Unfortunately, the same inefficiency that undermined the running of the refineries and the knowledge gap that ensured we were incapable of fixing, repairing, or maintaining the refineries straddled by multi-dimensional corruption ensured we were unable to manage the subsidy regimes. Rather than subsidy mitigating the pain of the people, it aggravated it to the extent that at its peak, the country was committing a billion dollars per month to subsidy.
Don’t get me wrong on the matter of observation. I am not saying observation is futile. No. I am only saying that our angle of observation may reveal perspectives that do not answer our questions. Observations are crucial to science and engineering. Mankind observed birds and saw the flapping of wings as being responsible for the ability to fly. But that is a bird. Humans are not birds! Or are the objects we intend to put to flight birds? It means we need to understand the peculiarity and the characteristics of what is being observed in order to see clearly and be able to appropriately apply that observation in arriving at a fitting solution.
This is why the two significant solutions of importation and procurement and installation of sophisticated refinery technologies, which are the apparent solutions observable, appear not to have achieved the objective desired by the Nigerian public. I concede that both options provide immediate relief – at least in the short run. For obvious reasons, I do not doubt that everyone in the audience agrees that fuel importation is anti-growth – creating jobs in other lands and ferrying loads of desperately needed foreign exchange earnings to other countries. However, please pay attention to this: at face value, each time you visit a country like the United Kingdom, China, South Korea, or the United States, you immediately observe that they have functional refineries. You could also easily see that the crude oil that the U.S. imports is processed by U.S. refineries into petroleum products—such as gasoline, heating oil, diesel fuel, and jet fuel—that the U.S. later exports. Indeed, the USA could afford to keep its shale oil locked in the ground and attempt 100 percent import of crude oil for its domestic consumption and export! The USA has done this before. Therefore, the genuine aspiration to build what is often referred to as local refineries in Nigeria is well-founded. However, the refineries we see operational in the USA represent just the proverbial ‘flapping of wings by birds’. Imitating that obvious solution is unlikely to ensure that Nigeria fixes its energy problems. This is because the refineries we see in about 30 states in the USA, with three states dominating such as Texas (47 operating refineries), Louisiana (19), and California (18) are mere mesmeric flapping of wings. The real secret of refined products in the USA is knowledge, technical know-how – organic ownership of the technology associated with and incidental to petroleum refineries. This is what the United States is selling, This is the secret elsewhere – South Korea, China, the United Kingdom, etc. What those refineries are to US technicians, technologists, scientists, and engineers are what the palm oil refineries of old were to our ancestors. 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. Well-intended workaround solutions such as subsidies, etc have not worked because our neighbours in collusion with some among us simply undermined them. Our leaders at the time were either complicit or unaware. If we were thinking right, rather than the sub-region (West Africa) becoming a threat that manifested as smuggling, we would have converted their legitimate need for fuel into an opportunity granting us a strategic national advantage to expand our market by evolving a fuel production plan that factored in every nation-state in West Africa as our legitimate destination for the sales of Nigerian fuels – at parity. We would have been the real giant, not just in name but in action. We can however only do well at this if we control the aforementioned means of production and we are not at the mercy of our rivals. Our neighbors are ahead of us in this regard. When the Republic of Benin realized that Nigeria’s punitive auto import policy was a boon to its domestic ‘Tokunbo’ import business following heightened vehicle smuggling ‘booms’, the country turned it into a structured industry, with serious ministerial oversight. This is why even though Nigeria used to be ahead – our neighbors are playing good catch-up and overtaking. In 1970 for instance, Ghana’s GDP growth rate was 9.7%, the Niger Republic was -5.5% but Nigeria’s growth rate was 25%. By 2021, Ghana’s growth rate was 5.4%, the Niger Republic was 1.4% whilst Nigeria’s growth rate was 3.6% and 3.3% in 2022 (World Bank, 2022). Something is wrong.
Every nation on earth is a rival to us. We must get this clear. No nation is or should be expected to be our friend without benefits. We are competitors. No country on earth wishes you as a nation to succeed except if it serves that other country’s strategic goals. If a country is building a refinery for you, you are its market, especially if you are also doing it with its loan. If a country is building a road for you, you are its market, especially if you are also doing it with its loan. 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. 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.
Yet, you must still get loans from other countries. You must still learn, buy, and even steal technical know-how or technologies from them as a deliberate tactical path to your strategic national goals. Nonetheless, what would make the difference is your ability to know when and how to never lose sight of your primary objective in that relationship – to secure a superior advantage for your country.
{Please allow me to show us a video in a PowerPoint slide – SK}.
Implications
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.
Essentially, energy self-sufficiency will result in specific benefits which will include:
Enlarged export base (for products) thus ensuring that the entire West Africa and beyond become Nigeria’s energy market from where Nigeria could earn foreign exchange (forex).
The jobs presently created in distant foreign lands would be generated locally to provide gainful employment for our teeming youth population.
Creation of new generations of fuel-refining entrepreneurs.
Possibility of lowered cost of living once fuel-triggered forex demand is reduced.
Increased growth rate.
More importantly, rather than contributing to capital flight, refinery businesses would then be net enablers of foreign exchange earnings. To put this in perspective, let us imagine that just half of the USD 20 billion Dangote refinery (Salaudeen & Princewill, 2022) was sunk into local goods and services (parts and highly technical labour) during the construction of the refinery!
The debate is ongoing on whether refining locally would substantially lower the cost of fuel. The NNPCL stated that it would not. The NNPCL’s Group Chief Executive Officer, Mele Kyari, says “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 (Folorunsho et al, 2023). The NNPCL is supported by highly respected Price Waterhouse Coopers (PwC) arguing that “in-country crude oil refining may not significantly reduce petrol prices because the costs of haulage, insurance and associated cost of importation do not constitute the most significant component of cost across the value chain” (Addeh, 2023). The Major Oil Marketers Association of Nigeria (MOMAN) holds the same view (Akintayo, Local refining can’t reduce petrol to N200/litre, says MOMAN, 2023). Citizens mostly disagreed with the NNPC. Others who disagree include the Independent Petroleum Marketers Association of Nigeria (IPMAN). The National Controller of Operations of IMPAN, Mike Osatuyi, and the Rivers State Chapter’s Chairman of the organization, Joseph Obele, were separately quoted to have respectively said “If the refineries are working, it would cut freight and ship-to-ship transfer costs. Not less than N60/N70 per litre will be off if the refineries start working…Cost of insurance would reduce” and “Until our nation-owned refineries are functional, fuel prices will keep increasing due to international variables. But when our refineries are functional, Nigerians will buy fuel less than N200 per litre” (Akintayo, 2023).
These two divergent views are correct under different circumstances. The NNPCL and PWC are right that local refining will have only a marginal impact on the final sale prices of products. This is because 85% of the operating cost of a refinery is allocated to the procurement of raw feed (Robinson, 2007). The remaining 15% is shared over other cost components such as fuel oil and fuel gas, electricity, maintenance, operations, catalysts, and chemicals (see the figure below). So, if we refine locally, we would have savings on aspects of this cost that address operations, as well as insurance, transportation, and haulage which will be less than 15% of the total production cost per liter of product plus the freight. Compare the Economics of Oil Refining (Favennec, 2022). The position advanced by IPMAN is likely premised on the realization that local refining would shave off transport and haulage (freight and ship-to-ship transfer costs), and domicile wages in Naira.
Table 1 Typical breakdown of refinery operating costs. Credit Robinson (2007).
Item
Percent of Total
Crude oil blend stocks
85
Other operating costs:
Fuel oil, fuel gas
6.1
Electrical power
0.8
Maintenance
3.5
Operations
2.7
Catalysts and chemicals
1.9
Total
100
The Debate and the Matter of National Social Responsibility
On the other hand, if Nigeria intends to shield its citizens from the default 85% refinery operation cost imposed by the price of crude, the nation would need to reexamine the principle of national social responsibility and obligation. Countries like Saudi Arabia, Kuwait, and the United Arab Emirates generously make social allowances for each citizen for equitable access to sovereign wealth. Ditto countries like the United States, the United Kingdom, etc. through their social welfare programmes. This was the principle behind the national policy approved by the Olusegun Obasanjo administration that provided a sovereign daily allocation of 445,000 barrels of crude oil per day for local consumption to shield the people of Nigeria from the unpredictability of international price fluctuation. If the 445,000 bpd is a boon to the republic, this would zero the cost of feed. It is only under such a circumstance that product prices can crash to the level advanced by IPMAN in its argument as that would theoretically push the price down to N90 per litre if it is N600 internationally. As desirable as this is, it is dicey because the nation has a notorious history of vicariously undermining well-intentioned programmes aimed at ameliorating the suffering of the people. Without proper safeguards, the 445,000 bpd could either end up oiling the pockets of a few or be available on the streets of neighbouring countries.
Nonetheless, I must disabuse our minds from seeing the case being made for local refining as a case premised entirely on the critical need to produce for local consumption. Not at all. One of the precarious situations the nation is currently experiencing is the high cost of living. Whilst the negotiation of labour leaders often appears to centre around increasing income, the problem with Nigeria is actually the high cost of practically all essential commodities. Had we properly observed the highlights of the 2022 Multidimensional Poverty Index survey of the National Bureau of Statistics (NBS), it would have revealed that: 63% of persons living in Nigeria, or 133 million people, are classified as multidimensionally poor (NBS, 2022) because their incomes are unable to meet the increasing high cost of living. To avoid confusion, let me share the vicious circle with us:
The rice farmer in Igbemo (Ekiti State) and his counterpart in Zamfara could afford to lower their sales prices but they dare not because they buy fertilizers and hire tractors, combine harvesters, seed drills, rotavators, and threshers at exorbitant costs. What they then do as a workaround is to pass the cost to the buyer, hence their rice becomes expensive. Kilimanjaro Restaurant, Chicken Republic, and the like would buy this expensive rice and pass the cost to the customers. The consultant who eats at Kilimanjaro has experienced the high cost of food and would pass the cost to his client. This scenario applies with variations to every producer of goods in Nigeria. The cumulative result is a vicious cycle of rotating high cost of living. Now, if we go back to the original producer, you would realize that most of the inputs to his production were items beyond his control – items that are priced in dollars – that are affected by international trade – because we don’t produce them locally. In essence, the goal of our self-sufficiency in energy and other spheres must be to be able to marginally ring-fence our economy from this uncontrollable global high cost denominated in dollars by ensuring that we can do most things, and produce most things under metrics that are defined by local variables.
If this is not clear yet, let me cite a global example that the elite can relate to: the cost of Toyota Corolla today is about $23,800. That is about N20 million in Nigeria. To avoid having to ferry loads of its Rupees to other countries, India decided to promote national cars. One example is the Tata brand. As of today, you can get the basic Tata (Tiago) at Rs. 5.60 Lakh, which is $6,700 (US dollars). By ensuring that it can produce most of what its citizens require, India is striving to ring-fence its national economy from becoming the market of its rivals. Distinguished engineers, gentlemen, and ladies, in the comity of nations, especially during bilateral or multilateral engagements, some countries are pawns while others are the players. If you do not know the pawns, then it is likely your country is one of them. India does not want to be one of those countries, hence the reason for doing all it can to ring-fence the consumption needs of its huge population from global fleecing.
If you are looking for an example of such a ring-fenced commodity economy in Nigeria – remember Ibadan. The Ibadan of the 80s and 90s where food sellers actively accepted coins even when it was practically no longer legal tender in most parts of the South West. The secret of Ibadan at the time was its high level of organic productivity. I do not know its status today but I do hope it is holding strong.
So, despite our per capita income, everything the average Nigerian intends to purchase for sustenance today is simply priced beyond his reach because those things are not made in Nigeria. That way, the man earning N50,000 per month remains a poor man. His two sons in the university are expected to pay a minimum of N200,000 each as school fees aside from other incidental living expenses (that’s if they attend cheap public schools). The National MPI is 0.257, indicating that poor people in Nigeria experience deprivations. What many may have missed is that the high cost is not unconnected to the weakening value of Naira. Here we are saying that the weakening value of Naira is intrinsically connected to and traceable to the absence of organic productivity culture – we don’t make what we consume! We have previously stated that West Africa and beyond should rightly be our market. We have also extensively dealt with the need to observe rightly. Thus, the case being made for local refining is to promote economic self-sufficiency in order to ensure that our nation can secure greater benefits from its crude oil endowment by expanding the value chain to tactically nationalize associated benefits such as new job creations, new revenues from refined product sales to other countries, reduction in capital flight and greater chances of attracting foreign exchange to strengthen the Naira.
Again we must reflect and hypotectically imagine the reciprocal impacts that a refinery such as the one built in Lagos by Dangote would have on the nation’s economy had the technical know-how for its construction and installation been sourced locally. Even in its present form, we expect it to make an appreciable growth footprint in Nigeria. These benefits would have been stratospheric had the science and engineering behind its success been organic to Nigeria.
The Path to Energy Self-Sufficiency
Diversification of Energy Sources:
The textbook response is to advocate that Nigeria embraces an energy mix. This is good and desirable, particularly hydroelectric power. Whatever Nigeria does however must be what confers greater national advantage upon Nigeria. Those very close to me know that my family house for instance can be totally off-the-grid because I have spent an extensive amount of time on deploying hybrid solar systems. You are also aware that while I was a member of the Ondo State Executive Council, I was an ardent promoter of solar hybrid and my team deployed far more solar-powered independent mini-grid power plants for small towns such as Ala Elefosan, Odonla, Gbagira, Ugbonla, etc across the state more than any other agency of government did, whether federal or state, in other states of the federation. Yet, I approach recommendations for energy mix with caution to avoid the same blunder we made with fossil fuel. For instance, if I preach that Nigerians should embrace solar and wind energy, would the panels be developed locally by Nigerians? Would the windmills be manufactured locally by Nigerians? If they are not, would I not be recommending a new layer of negative opportunity for capital flight? So, Nigeria must diversify its energy mix by investing in renewable energy sources with a view to locally producing 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.
{Please allow me to show us a second video in a PowerPoint slide – EV}.
Investment in Infrastructure: Modernizing the energy infrastructure is crucial. This includes gas distribution infrastructure, upgrading transmission and distribution networks, improving grid reliability, and reducing energy losses.
Energy Efficiency: Promoting energy efficiency practices in industries, transportation, and households can reduce overall energy demand and improve sustainability.
Access to Electricity: Expanding access to reliable electricity in rural and underserved areas can spur economic development and reduce poverty.
Policy and Regulatory Reforms: Implementing clear and stable energy policies, as well as regulatory reforms, can attract investments and create an enabling environment for the energy sector to thrive. The regulators must be able to help us understand the potential implication of targeting licensing regimes at artisanal refineries in the creeks of the Niger Delta with clear provisions for waste management, disposal, and containment, or the implications of sharing sketches of the design of micro, mini and major refineries to all welders across Nigeria under the supervision of experienced engineers, scientists, and technologists. We are likely to be shocked at the capacity of the average welder to fabricate distillation units, catalytic conversion units, and storage tanks! As engineers, we should remember that a refinery at its crudest form is basically a drum, a temperature filter or separator, and a fire or heat source. There is none of these that cannot be fabricated by welders in Nigeria. I admit that the ready-made technologies of today confound us and are very attractive. We must be ready to begin to refine our crude oil locally like the US did when Edwin Drake first found oil near Titusville, Pennsylvania in 1859. Or like the UK did with small-scale refining in 1914. The US in 1859 simply boiled its crude and collected the components that emerged at different temperatures in a unit called fractional distillation column. We are not asking that Nigeria go that primitive. We are only emphasizing the simplicity of this seemly herculean task. This is the same point we can glimpse from Odumegwu Ojukwu’s last broadcast as Head of State of the defunct Republic of Biafra: “During those three years,… [w]e built bombs, rockets, and we designed and built our own refinery …without hope of import, we maintained all our vehicles. The state extracted and refined petrol, individuals‘ refined petrol in their back gardens… We spoke to the world through a telecommunications system engineered by local ingenuity” (Okocha, 2010).
{Please allow me to show us a third slide on how simple this difficult venture is – ABB}.
Energy is the lifeblood of any modern economy. It powers industries, fuels transportation, supports healthcare, and drives innovation. Without a stable and sufficient supply of energy, a nation’s economic development can be severely hindered. Regulatory institutions in the energy sector must thence focus instrument of the state to achieve:
Production or performance efficiency.
Strategically improved revenue as an economic advantage.
Safety of life and the environment.
Consistency, stability, and sustainability.
The goal is to encourage export (especially of knowledge – what we have produced with our minds) and once export is boosted; you have an inflow of forex. With this, the balance of payment would increase in Nigeria’s favour, which would help to shore up the performance value of our local currency. Nigeria for example can decide to identify 4 million viable small-scale businesses today along its strategic national needs and support these with entrepreneurship loans – targeting local consumption and exports. This will yield 24 million new jobs if each of those businesses can employ a minimum of just 5 people. This is a pattern that India has employed to accelerate growth in sharp contrast to the preference of communist China for large state corporations that employ tens of thousands of people. As a capitalist democracy, Nigeria can leverage both. Nigeria can leverage the former while at the same time supporting big enterprises as it did with the Dangote refinery to secure a fast-tracked win-win.
In conclusion, Nigeria’s pursuit of energy self-sufficiency is not just a matter of economic growth; it is a vital step towards ensuring the nation’s long-term sustainability and resilience. With the right strategies, investments, and a collective commitment from government, industry, and civil society, Nigeria can unlock its full potential and provide a better future for its citizens.
Thank you for your attention, and I look forward to engaging in a fruitful discussion on this critical topic.
D