Energy Ministry: Lessons from other lands

Going by the magnitude of challenges facing Nigeria’s oil, gas and power sectors, perhaps it is time for the country to look at operating models in other climes with the aim of bringing these strategic sectors under one roof as the energy ministry.

While we agree that one size fits all models do not typically work in Nigeria, there is an obvious need for integration between the oil, gas and power sectors and there are lessons that should be learnt from other lands.

In Russia, the Ministry of Energy was created in May 2008 as the federal ministry responsible for energy policy whose objectives include maximizing the ef­fective use of natural energy resources and the potential of the energy sector to sustain economic growth, improve the quality of life of the population and promote strengthening of foreign economic positions of the country.

Part of the work done by the energy ministry of Russia include development of the energy market infrastructure (market mecha­nisms, institutions for open trade in energy carriers, energy transport infrastructure); the programme for increasing gas prices and the mechanisms to minimize the socio-economic impact of the overall growth of energy prices; support and promotion of strategic initiatives in the energy sector form the basis for the implementation of major energy projects in the future.

 

The provisions of the energy strategy of Russia have ensured that the electric energy industry has been reformed and the electricity market liberalized; a more favourable tax treatment set up for the oil and gas indus­tries; the development of oil refineries and petrochemical plants promoted, while an energy exchange trade was developed and excessive administrative barriers hindering energy companies removed. Infrastructure projects crucial to the development of the domestic energy sector are also being implemented actively. The development of Russia’s energy sector even under tumultuous domestic and international conditions confirmed the validity of its energy ministry.

 

In the United States, the Department of Energy was created in 1977 as an executive agency of the federal government bringing together all major federal energy responsibilities into one cabinet-level department. Before its creation, no overall energy policy existed. Government officials generally thought in terms of particular fuels, technologies, and resources rather than “energy.”

It was created in response to the early 1970s energy shortages, long lines at the gas pumps, and rising prices. Until then, the US federal government played a limited role in formulating national energy policy in an era of relatively cheap and abundant energy. The nation relied on the private sector to supply most of its energy needs.

The establishment of the Department of Energy brought most federal energy activities under one umbrella and provided the framework for a comprehensive and balanced national energy plan.

Its many duties include the administration of federal energy policies and functions, research and development (R&D) of energy technology, marketing of federally produced power, promotion of energy conservation, regulation of energy production and consumption, and collection and analysis of energy-related data. The Office of Energy Efficiency and Renewable Energy directs efforts to increase the production and utilization of renewable power sources such as solar, biomass, wind, geothermal, and alcohol fuels. The Energy Information Administration collects, processes, and publishes data related to energy production, demand, consumption, distribution, technology, and resource reserves. In addition, the administration helps governmental and nongovernmental users to understand energy trends.

 

The Department of Energy also oversees five power administrations that market and transmit electric power produced at federal hydroelectric projects. The Federal Energy Regulatory Commission (FERC), an independent commission that took over many of the functions of the former Federal Power Commission, including the setting of rates and charges for the sale of natural gas and electricity. The commission also establishes rates for the transportation of oil by pipeline.

 

There are other climes where bringing the entire energy ministry under one umbrella have delivered equally good results. We do not have to re-invent the wheel here in Nigeria. Just as the energy crisis of mid-1970s hastened a series of government reorganizations in the US, Nigeria’s executive and legislative arms need to act fast and seek for an energy ministry that will better coordinate energy policies and programmes for the good of the citizens.