• Thursday, July 25, 2024
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BusinessDay

Experts raise flag over neglect of renewables

Three foreign elections that could shake Nigeria’s oil fortune

The Petroleum Industry Bill (PIB) has continued to receive knocks from industry operators who see it as a document that contains poor strategies that may not take Nigeria’s oil and gas industry to the next level of development.

For instance, the document falls short of addressing renewable energy at a time the world is moving in that direction.

Some of industry operators argue that in the next few years, the PIB document will become obsolete when the growing global interest in hydrogen strategies, electric cars, and other technologies may have reduced the usage of fossil fuels.

The implication of relying on fossil fuel is that Nigeria would not get big markets for its crude oil in the international market. This will automatically affect Nigeria’s foreign exchange earnings, a development bound to put pressure on financing the economy.

Nigeria despite the plunge in crude oil prices and oil production cuts, oil revenue in the first half of 2020 increased by 57.6 percent over its budget benchmark to N2.7 trillion which was largely driven by increases in petroleum profits tax and royalties, according to the Central Bank of Nigeria (CBN).

This was, however, attributed to the effects of the Nigeria National Petroleum Corporation’s (NNPC) accrual accounting method, where oil transaction contracts materialise within 90 days from the date of initiation, after which the proceeds are deposited in the Federation Account.

Experts believe that as the world relies more on renewable energy – hydro, solar, wind, biomass, hydrogen, the demand for fossil fuel will continue to drop.

“If the world continues to look at renewable which is gaining ground already and Nigeria is still struggling with the PIB document that has refused to take a holistic look at the country’s energy development, chances are that her hydrocarbon reserve may become wasted assets,” said Najim Animashaun, partner, Gulf of Guinea Consulting.

Animashaun further pointed out that the PIB does not comprehensively address the issue of gas constraints and flaring. It also fails to account for climate change, acknowledge the Paris Agreement, and address the need for diversification to adequately prepare Nigeria for the energy transition that is already underway.

The Columbia Centre for Sustainable Investment noted also that “rather than locking more capital into projects and infrastructure that will soon be obsolete, Nigeria should be promoting the stewardship of assets that propel the energy transition forward, not those that will be left behind.

Abiodun Adesanya, managing consultant/ CEO of Degeconek, observed that there were many versions of the Petroleum Industry Bill and that it was difficult to know which one the national assembly is treating.

He said that the bill was not being considered for it merits as the legislators have allegedly resorted to dancing to the tune of the highest “bidders”.

Other sources, who corroborated Adesanya, argued that most of the content of the bill would not be relevant at the end of the day.

Eddy Wikina, a former external relation manager of Shell Nigeria Exploration and Production Company (SNEPCO), decried what he termed conflicting interests in the PIB.

“I think the main problem why the PIB has been hanging is that there are too many interested parties, call them stakeholders, who really are more interested in the bill for selfish gains.

“The primary intent of the amendments to the PIB to separate policy and regulatory agency from operations, and create a robust and independent national operating company, that will compete globally, should not be ignored,” said Wikina.

“NNPC should not be the agency collecting inflow of funds from oil and gas operations. A separate entity should have responsibility for that, and the minister of petroleum resources should not have the freedom to allocate oil fields discretionarily, but only through transparent bidding process,” he added.