Babalola: Nigeria Needs More Investment In Energy Sector

Engineer Sunday Adebayo Babalola, a Board Member and Technical Adviser of All Grace Energy Limited and 9-9 Energy Resources Limited, in this interview with SUCCESS NWOGU, x-rays challenges in Nigeria’s energy sector while also proffering solutions.

 

 

FG has crude oil target, in the interim, of two million barrels per day and later to three mbpd in 2025. How can this be achieved? It can be achieved by ensuring that there is peace in the Niger Delta.

The Petroleum Industry Act (PIA) provides for community participation. That is a very good thing. We need peace for foreign direct investment (FDI) to flow because without FDI or foreign financing, I doubt if we can meet the needed financial obligation to be able to grow the industry.

So we should be able to grow the industry from what has presently been done by giving it to indigenous companies and creating peace in the environment. We need to involve the communities in the work which is already being done. Kudos to the government. We also need more investments in the sector.

What strategies should be adopted to grow the oil and gas sector?

We are already on the landing part. Nigerian companies have taken over some of the assets of some of the International Oil Companies (OICs). Nigerian companies are being given many of the oil and gas blocs. Many of them are doing very well.

The strategy generally is to let Nigerians be involved. Other people will not be able to do it for us. It is also imperative to enhance peace in the oil producing region including enhancing community relations and stakeholders’ engagement.

When host communities enjoy the benefit of oil production, they will protect the investments since they benefit from the investment. Neglecting host communities posed a serious threat to crude production in the past.

For example, those people came, they were producing and they were not caring about the community and problems ensued. The result is that they are running away from those community areas now to go deep offshore.

But Nigerians are actually taking up the challenge and they are making a good thing out of it. That is why you find that our daily production is growing gradually. So let us involve Nigerians, we are very good. We know what we are doing.

The same thing should go to other types of energy sources. We should do the same things.

Is the Petroleum Industry Act (PIA) having the desired impacts in the sector and the nation? If not, what should be done?

No law is 100 per cent deficiency proof. But in spite of that, the PIA has done well.

There are some areas where there were arguments between the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) who should handle this and who should handle that? For example, terminal.

The current President, Asiwaju Bola Tinubu, has put his hand to paper to handle that. For a long time, many companies did not know which one they would be reporting to.

Then there are duplicate charges and tariffs. NMDPRA is charging you this, NUPRC is charging you another thing for the same thing. All those things should be considered and streamlined.

Apart from their overlapping functions, there are places that they need to let go because the thing is that each of those organizations knows that the 4 per cent revenue is what can sustain them so they are looking for how they can get maximum money out of the revenue.

But this is also creating problems for the companies, where you have duplication of charges. I think they should look at those areas and streamline them.

Those are not from the main law directly but those are from the side regulations which every one of the two organisations created. They should just streamline them.

There has been a price war between Dangote Refinery and the Nigerian National Petroleum Company Limited (NNPC Ltd).What do you make of this, considering deregulation?

I think it is a very great thing because when there is a price war, the price will come down to what people can afford. That is why deregulation is actually very good.

I have always given examples of the telecommunication industry. At that time, you will recall how much a dollar was selling and yet we bought a SIM card for N34,000 or even more. It appeared to be high at that time.

Even a minute call then was about N50 that was about $5 given the exchange rate by them. But as competition came in, even at N1500/$1, today we are paying less than a cent for a minute call in Nigeria.

This is because of competition. That is what competition does. Let them compete with each. I am happy with their price war. It will benefit Nigerians very well.

It will lead to cheaper petrol, it will stimulate industrial and commercial activities as well as boost employment. It also means that the cost of energy people are using to produce things will be less.

How do you feel about the resumption of petroleum products’ production by Port Harcourt and Warri refineries?

What is the capacity utilization now? That is what you should be looking at. What products are they bringing out? These are the things they should update us on.

They should tell us that they are bringing out these products and the capacity utilisation. Then one can make an informed judge ment to say they are doing very well or not.

They said that Port Harcourt refinery at resumption of operation was producing at 70 per cent of its installed capacity with plans to ramp up to 90 per cent and that Warri refinery resumed operations with 125,000bpd capacity.

That is still good. That is hope rising. That is tremendous. You have to recall that they have been doing the Turn Around Maintenance (TAM) for many decades and nothing tangible came out of it. Is TAM different from servicing your car? Do you service your car forever?

They were just using money and not delivering. I appreciate that now, the government is doing better in trying to ensure that these things are coming up. By the grace of God, I pray for success for them.

What strategies should be adopted for the sustainability of these refineries?

If you have a facility, you need to keep using it so it does not go down. You also need to keep servic

I must remark that grid collapse is inevitable in Nigeria today because of obsolete infrastructure

ing it for it also not to go down. Imagine you had four refineries in Nigeria not producing anything! And they had a full complement of staff who were being paid salaries without doing anything! But that is changing gradually and that is much better. They should continue the maintenance.

They should not allow them to degenerate again where they will start using huge money to do the so called TAM. They have egg-heads there who are willing to work but they have not been given the opportunity to work.

Many of them retired without producing and without doing what they ought to have done. This is now a great opportunity for the current staff to be productive. They should adopt a sound management strategy.

The sound management strategy is for them to know that they are a profit making organization and for them to treat themselves like that. When it was a government organization, nobody cared what happened to it.

But now that it is a commercial entity that their salaries will come from their production and their emoluments will come from their productivity, if you do not produce, you do not eat, and people will wake up. They should make it totally commercial.

It should be profit oriented. Not just the way it was run in the past, when people had the notion that these are government refineries, whether they make money or not, I do not care.

Nigeria has been having many power grid collapses. What are the effects of this to the nation and the solution?

The effect of the national grid collapse is very devastating. For example, I am in Band A. They said that I will have light for not less than 20 hours a day. But do I have that? I spend three days sometimes without light.

What effect will that have? It will have an effect on my productivity. I either start looking for another source of energy like solar. But to be frank with you, the money we spend on other sources of energy is tremendous.

If we have one source that is stable, it will make work easier, productivity will be greater and life will be better. Grid collapse is not a good thing at all. The effect is tremendous on many people, factories and businesses.

That is why some companies went to Ghana some years back because there was no reliable electricity but Ghana was a place they found that electricity was reliable.

Infact, electricity shortage has led to significant losses, as companies seek alternative destinations with more reliable power supply. Ghana, in particular, has become a preferred choice for many businesses fleeing Nigeria’s power crisis.

This has caused Nigeria to suffer many losses. Some of the losses Nigeria has incurred include:- Investments and businesses. Many companies have relocated to Ghana, resulting in a loss of investments and revenue for Nigeria.

Also Nigeria has suffered economic retrogression as the lack of electricity has hindered Nigeria’s economic growth, since businesses struggle to operate efficiently. It has also led to job opportunities.

The departure of companies has also led to a loss of job opportunities for Nigerians. All these have affected the Gross Domestic Product (GDP) of the country.

To prevent further losses, Nigeria must address its electricity shortage by investing in infrastructure, renewable energy sources, and implementing policies to attract investors and support businesses.

I must remark that grid collapse is inevitable in Nigeria today because of obsolete infrastructure. When we did Nigerian Gas utilisation study in 2000, one of our discoveries was that the national grid and even the distribution system were all old. Some transformers were older than 60 years.

So you do not expect such transformers to perform at optimum capacity. We need to start making some concerted efforts because even when you produce electricity, through what can you transport it to the utilisation point? Through the old system? People try to renew it.

 

That is when I remember a statement of a former Head of State of this country that ‘money was not a problem but how to spend it,’ I was amazed. Even renewing those grids at that time would have been good spending. Yet we thought that we did not have issues with money.

That was a sad statement to have been made. Or the statement that ‘telephone is not for the poor.’ Everybody in Nigeria today, even children and those who have no work have a telephone, yet some leaders are making such a statement.

The leadership should wake up and not be like past leaders. They should do the right thing. They should start concerted planning on how to get the national grid to be up to date so that they can produce at optimum efficiency. Every one of those lines has a lifespan.

Once the lifespan is gone, the efficiency of delivery will not be as required. It will be like you sending 10 MegaWatts and they will be delivered like 6 or 7MW because some of them must have leaked out along the line. This is something that the government should look at.

Some people have suggested the decentralisation of the power grid to address collapse? What is your opinion?

There should be decentralisation. There should also be the decentralisation of generation, transmission and distribution.

Because if you generate in Gamji, you pass it to Oshogbo, you generate from Jebba, you pass it to Oshogbo. It should not be like that.

Every generation should be able to supply its local community. That is what they do in South Korea because during the Nigerian Downstream project in the Department of Petroleum Resources (DPR), I had the privilege of visiting most of these places because DPR was supposed to do power plants, one in Kaduna and one in Abuja.

When we were studying it, we discovered that even the nuclear plant, where they generate is where they supply, (to the locality) so you do not transport long distances.

And once you do that, it will reduce tremendously your cost of transportation and so many other things.

What other strategies should be adopted to stop national grid collapse in Nigeria?

To prevent national grid collapse in Nigeria, there should be periodic infrastructure upgrade and maintenance as well as grid expansion and reinforcement.

This will increase transmission capacity and reinforce existing infrastructure to reduce congestion and improve reliability. It is necessary to implement a proactive maintenance schedule to identify and repair potential faults before they cause grid instability.

In addition, renewable energy integration such as increasing renewable energy share will promote the development and integration of renewable energy sources, such as solar and wind power, to reduce dependence on fossil fuels and improve grid stability.

It will also be helpful to adopt energy storage solutions, implement energy storage systems, like batteries, to stabilize the grid and ensure a stable power supply. Demand management is another strategy.

It is necessary to implement load management strategies, such as demand response programs, to reduce peak demand and prevent grid overload. In addition, promotion of energy-efficient practices and technologies to reduce energy consumption and alleviate pressure on the grid, should be considered.

The consigned authorities should establish a robust regulatory framework to ensure compliance with grid stability standards and penalise non-compliance and offer incentives to attract investment in grid infrastructure, renewable energy, and energy storage solutions.

There is also the need for technological advancements by adopting smart grid technologies, such as advanced metering infrastructure and grid management systems, to improve grid visibility and control.

Grid automation is another strategy so as automate grid operations to enable real-time monitoring and rapid response to grid disturbances.

There should also be collaboration and capacity building including stakeholder collaboration.

Fostering collaboration among stakeholders, including government agencies, utilities, and private sector players, to share knowledge and best practices, could be a laudable mechanism.

Moreover, capacity building is essential so as to provide training and capacity-building programs for grid operators and technicians to enhance their skills and knowledge.

Implementing these strategies requires a coordinated effort from government agencies, utilities, private sector players, and other stakeholders.

By working together, Nigeria can prevent national grid collapse and ensure a reliable and sustainable power supply.

How should Nigeria go about its energy transition?

We should do it gradually. I must be sincere with you, oil is going no-where. We should not in an attempt to please the white people, over-labour ourselves in trying to make sure that we as they say we should achieve a certain level of zero emission at a particular given time. Even they cannot achieve it.

Most of their wind turbines are dead. That is one of the reasons why Donald Trump won as the President of the United States. Energy transition is failing them. Even Elon Musk, who is building electric vehicles (EV) , is supporting Donald Trump who said that people are free to buy any car they want.

Honestly some people are deceiving themselves because turbines are mainly built in the seas. Do we all have seas everywhere in Nigeria because it is in the sea where the wind blows a lot? Most of their wind turbines are parking up.

Should we adopt renewable energy?

Yes. But we should not force ourselves to achieve it within a short time. We should achieve it gradually and we get to where we are going. We should also adopt gas. Gas is cleaner.

They said we have plenty of it and that Nigeria is a gas nation. But nobody considers that the production of gas is associated with oil mainly in Nigeria today. So if you do not produce the oil, you will not produce the gas.

You have to do the energy transition gradually until you get to that stage where you can go on a higher scale. You will study your system and know what you can go by. It is a very simple thing. It is not rocket science.

So we should not at this time jettison fossil fuel?

Yes. We should not jettison it. Not at all.