The economic effect of the coronavirus pandemic did not just cripple the oil sector in 2020; it has also given energy transition new wings as multinational firm Pricewaterhouse Coopers (PwC) expects Nigeria’s renewable sector to provide direct job employment for at least 52,000 people by 2023.
According to latest PwC’s annual Oil and Gas Review for Africa, there is an opportunity for Africa to take advantage of the global energy transition and the new global markets taking shape which also provides an opportunity for Africa to diversify their economies, address energy poverty, create new employment sectors and benefit from the investment incentives from developed countries.
“In Nigeria, direct employment by renewable sector is expected to boom more than tenfold by 2022- 2023 to provide 52,000 jobs,” PwC said in its report.
The report suggested that African countries—particularly the oil producers, including Nigeria, Angola, Egypt, Libya, and Algeria—could benefit if they choose to use their oil revenues for the early adoption of renewable energy.
“Covid-19 has not only caused the biggest global oil demand slump in history, at nearly 40 times worse than the global financial crisis of 2007, but has, in fact, accelerated the global energy transition by as much as five years, as the developed world uses the renewable energy transition to anchor economic stimulus packages and new economic diversification,” the report also said.
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Over reliance on oil revenues is known to be a problem, especially for developing economies but weaning an economy off petrodollars has proved challenging even for affluent Gulf producers.
This means African oil exporters have a tough challenge to overcome if they are to diversify away from oil and into renewable energy, especially since governments there cannot afford to be as generous with green-focused economics stimulus as EU governments.
PwC noted that Africa can benefit tremendously from the technology initiatives and learning curves largely paid for by the developed world despite most African countries having ‘greening’ policies in place, however, “implementation is largely lacking, domestic market momentum is low, and countries can’t afford the level of investment or incentives being implemented by the developed world.”
PwC notes that the African economies that have made the biggest strides — including Kenya, Algeria, Egypt, Morocco and South Africa however “all remain short of their initial renewable energy installation targets.”
Also, the PwC noted that the pandemic has caused the worst oil industry crisis in history and that oil demand will likely never recover to pre-pandemic levels.
This demand loss will also drive lower revenues for oil exporters, the authors of the reports said, helped in no small measure by the green transition.
The COVID-19 pandemic wreaked havoc for the oil market when oil markets dropped to $37 a barrel for the first time in history, which meant sellers had to pay their buyers as a result of shortfalls in global storage and the ability to accept contract delivery.
In terms of gas, the report said that despite the estimated six per cent decline in gas exports in 2020 across the top five African gas-exporting countries, demand was expected to recover quickly from 2021 in mature markets and show steady growth in emerging markets.
“Much of Africa’s supply growth will come from Nigeria, but Tanzania, Mauritania and Senegal are also aiming to contribute to rising supply,” the report said.
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