Nigeria may have just less than six years till its crude oil is no longer a priority in the international market, as a report by Bloomberg’s energy data and analysis firm shows demand for petrol and diesel to fuel cars and trucks will peak in 2027, four years earlier than expected.
Oil-dependent economies like Nigeria with markets in Europe where the adoption of electric cars is on the rise, especially in Spain and France, will see a shrinking market as BloombergNEF, which forecast just a year ago that road fuel would peak in 2031, expects electric vehicles of all types to curb global consumption before 2027.
“Fuel producers with exposure to markets like the US or Europe are poised to see sales of diesel and gasoline decline significantly from current levels over the next decade,” Bloomberg’s energy data and analysis firm said in a report.
Another data from International Energy Agency (IEA) showed about 3 million new electric cars were registered in 2020. “For the first time, Europe led with 1.4 million new registrations.”
Considering Nigeria’s crude oil exposure to Europe’s market, some analysts question Nigeria’s inability to articulate a strategic response to the reality that electric vehicles will be the next disruptive market force.
“The world is turning its back on oil and Nigeria seems docile,” Ademola Henry, former team leader at the Facility for Oil Sector Transformation (FOSTER), said, noting, “We have absolutely nothing to fall back on, yet we act as if we are Norway.”
Norway, with huge oil and gas revenues, aims to become the world’s first country to end the sale of fossil-fuel-powered cars, setting a 2025 deadline. Fully electric vehicles make up about 60 percent of monthly sales in that country.
“Countries that are richer than Nigeria have a strategic plan with deadlines,” Henry said, as “most of the car makers’ EV plans will shrink Nigeria’s share in the global market.”
Although Nigeria continues to dilly dally, the accelerated time frame comes as global automakers shift toward less-polluting vehicles while some of the world’s largest economies look to impose new rules in a bid to reduce greenhouse-gas emissions in a move away from fossil fuels.
Early this month, South Korea’s Hyundai Motor Co announced plans to invest $530 million to launch six electric vehicles in India, the largest buyer of Nigeria’s crude oil by 2028, showing signs it could be one of the largest benefactors of a movement that could boost renewables in the Asian country.
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Hyundai, India’s second-largest carmaker will launch affordable and premium electric models, including sport utility vehicles (SUVs) and sedans, starting with its first electric vehicle (EV) in 2022, said Tarun Garg, director, sales and marketing for Hyundai Motor India.
This development is significant for Africa’s biggest economy because India represents the largest importer of Nigeria’s crude oil, earning the sub-Saharan country about N13.9 trillion since 2015, according to data gathered by BusinessDay.
A new report by Reuters, global automakers are planning to spend more than half a trillion dollars on electric vehicles and batteries through 2030.
Brian Maxim, head of global powertrain forecasting at AutoForecast Solutions, likens the growing investment commitments in vehicle electrification to the Cold War: “Once a few manufacturers announced EV programmes, everyone else had to announce their own or be viewed as being left behind.”
Other surveys have come up with different spending projections. In June, consulting firm AlixPartners said auto industry investments in electric vehicles would reach $330 billion by 2025. In 2020, all global automakers combined spent nearly $225 billion on capital expenditures and research and development, according to AlixPartners.
While there seems to be growing investments in life after crude oil, Africa’s largest economy is tottering on the brinks, and the situation appears not to be getting any better as lack of jobs, failing healthcare, bad roads, insecurity in various parts of the country and an epileptic power supply continue to worsen.
“Relevance of oil is waning and Nigeria seems docile,” Luqman Agboola, head of research at Sofidam Capital, said, saying, “Having oil as a major source of revenue when your major buyers are looking for alternatives will lead to a dead end.”
An unprepared life beyond crude oil could be catastrophic for Nigeria where more than 80 million people already live on less than $1 a day.
“Nigeria is so calm and confident when its oil wealth is facing an existential risk,” Wummi Iledare, Ghana National Petroleum Corporation’s chair of Petroleum Economics at Institute of Oil and Gas Studies, IOGS, in the University of Cape Coast, said in a phone interview.
