New Telegraph

Stakeholders identify challenges, solutions to energy growth

Nigeria’s energy sector has many challenges that need to be addressed for the sector to grow, stakeholders have said. According to the Managing Director/Chief Executive Officer, Falcon Corporation, Mrs Audrey Ezeigbo, in addressing Nigeria’s energy transition, it is imperative to enhance investment opportunities and address challenges in the oil and gas sector.
She said the attainment of such would be pivotal to Nigeria’s economic development, environmental sustainability, global competitiveness, and the well-being of people.

She described energy as the lifeblood of any economy, adding that access to reliable, affordable and sustainable energy sources was critical to the growth and development of any nation.
She said energy was not just about economic growth, adding that it also had profound implications for the environment and the collective future of the nation.

According to her, Nigeria’s energy transition is not just a necessity, but an opportunity for Nigerians to reshape the nation’s future by optimising its gas resources, embracing renewable energy, diversifying the energy mix, and addressing the challenges that the nation is facing.

Ezeigbo said: “Nigeria can build a sustainable, resilient and prosperous energy sector to enhance investment opportunities and address challenges in the energy sector. Nigeria must commit to stable policies, foster innovation and engage in collaborative efforts at home and abroad. This is a journey that will require vision, determination and collective action on all our paths as we move forward.

“Nigeria’s energy transition is not just about powering our homes and industries. It is about powering our dreams and aspirations for a brighter, cleaner and more prosperous future for all Nigerians. Nigeria is an amazing country. We’re a country that is blessed with abundant energy sources, including our gas, with renewables, including solar wind, hydro and biomass. harnessing these resources present for us enormous opportunities for sustainable energy production.”

President of the Nigerian Gas Association (NGA), Mr Akachukwu Nwokedi, identified insecurity, assets vandalisation and community unrest as impediments to the sector’s growth.
He stated that they should be addressed to make Nigeria an investor destination.

According to him, it is important to ensure the sanctity of contracts and a properly structured fiscal framework to encourage investors.

He said it was important to streamline the regulatory environment so as to make the process of activating investment from project delivery, and production all the way to the market smooth. He added that the contracting cycle in the industry needed to be streamlined.

Nwokedi, who is the General Counsel/Company Secretary of the Nigeria Liquefied Natural Gas Limited (NLNG), opined that the recent Memorandum of Understanding (MoU) by the Nigerian Content Development and Monitoring Board (NCDMB), the Nigerian National Petroleum Company Limited (NNPCL) and the five international oil companies (IOCs) to shorten contracting cycle must be replicated across the board.

For him, the Petroleum Industry Act (PIA) has done a lot to bring good fiscal terms to the industry.

He, however, stated that there was a need to focus more on the implementation of the Act in a manner that restores investors’ confidence, boosts oil and gas production and ultimately increases the country’s earnings.

Nwokedi said: “Investors need an enabling framework and the government should test regulations against investment coming into the country to ensure their viability. Some regulators must set KPIs to attract the right investment and increase production output.”

Ezeigbo, Nwokedi and other industry stakeholders spoke at a recent annual international strategic conference 2023 of the Association of Energy Correspondents of Nigeria (NAEC). The theme of the conference was: ‘Nigeria’s Energy Transition: Enhancing Investment Opportunities and Addressing Challenges In the Oil And Gas Sector.’ The pioneer Chief Executive Officer of Seplat Energy, Mr. Austin Avuru, said it was needful to boost the sector through massive investments.

He stated that Nigeria needed about $25 billion of annual investment in the next 10 years to achieve crude oil output of three to four million barrels per day and three billion cubic feet per day of domestic gas production.

According to him, the country should achieve domestic gas production of four billion cubic feet per day between now and 2030.
He argued that even if Nigeria had the cash to achieve the four million barrels and three billion cubic feet daily production in 10 years, the country would still have to possess the technical and execution capacity to achieve the kind of production level that the country desires.
Avuru, who is the Executive Chairman of AA Holdings, advised that Nigeria should focus more on energy security and optimising the value of its oil and gas resources before committing to its energy transition agenda.
According to him, the energy transition agenda was a lot more serious than an issue that has to do with carbon emissions in the country.
He said: “By 2030/2050, when we say gas is our transition fuel, Nigeria should have retained the value of the crude oil and gas resources and thereby be in the right standing to position itself for the energy transition agenda in 2030 and 2060.
“However, Nigeria is, unfortunately, doing the opposite at a time when it should be doing 3 mbpd of crude oil, we are doing less than 1.2 mbpd.
“At a time when domestic gas production should be heading towards 3bcf per day, the country has stagnated at 1.1bcf per day for the past five years. This is happening because investment has not come into the sector since 2012.
“Our average investment in the sector had peaked between 2011 and 2012 at about $22 billion per annum. It has tapered down to about $5 billion per annum.”
He added: “Where are the rigs and the service companies with the capacity to achieve this goal? There is a lot of deep thinking that has to go into this process.
“We have to reconstruct our energy transition agenda, otherwise Nigeria and Venezuela would be the two countries with both oil and gas resources stocked to the ground when the rest of the world has moved on.”
For the Group Managing Director, Mojec International Limited, Chantelle Abdul, the power sector must be developed.
She stated that stakeholders should encourage and attract investments into the sector to bridge Nigeria’s energy deficit, which she put at 195,400 MW.
She emphasised that there was a need for more investments in the sector that will make the country generate 200,000 megaWatts (MW) for Nigerians to enjoy a constant electricity supply.
According to her, this implies that Nigeria needs an additional 195,400 megawatts to meet its electricity needs, as the country wheels about an average of 4,600MW for a population of over 200 million people.
Abdul said: “Based on international standards of 1 GW (1000MW) to one million people, the country is expected to at least generate 200GW (200,000MW) to give the population better access to electricity.
“Nigeria has the capacity to generate 12.5GW (12,000MW) of electricity, but owing to different reasons, the 29 generation companies (GenCos) are only able to generate, transmit and distribute between 3GW to 5GW (3,000MW to 5,000MW).”
She warned that Nigeria was facing surging electricity demand owing to rapid urbanisation and industrialisation.
She recalled that before 2023, the country had 26 gas-powered plants and three hydro plants, but noted that the approval of 11 new GenCos in 2023 has taken the country’s electricity-generating plants to 40.
According to her, the current transmission wheeling capacity is about 8.1 GW (8,100MW). Currently, Egbin has the highest capacity as a gas plant to produce 1.39GW (1,390MW), and Kainji Jebba Power Plc has the highest capacity as a Hydro plant to produce 1.33GW (1, 330MW).
She stated that solar plants could be introduced to the state governments to serve as a means to generate electricity for their various regions.
She expressed optimism that the new Electricity Act would pave the way for more investment into the sector, thereby, allowing states to generate, transmit and distribute their own electricity.
Chiedu Ugbo, Managing Director/Chief Executive Officer, Niger Delta Power Holding Company (NDPHC), said Nigeria could produce gas in large quantities but noted that cost of production has always been a major challenge.
He said: “The gas tariff we are paying for is denominated in dollars, that means for instance if the tariff is $2 the payment which is allowed in naira is at the equivalent rate of dollars as at the time of payment and because of fluctuation in dollar rate (at almost 100% now) it means the power we consume will go up and it will be a huge burden on Nigerians. The good news is the government is stepping in and they are working out some modalities so we are waiting for an official pronouncement on that.
“What I’m saying is that not all the costs are in USD, for instance, the salaries they pay are not in USD, all the trucking, they are not in USD. Yes, it can form part of that but equipment can be in USD. For me, I also get my equipment in USD as none of my equipment is manufactured in Nigeria but I collect naira and I still buy parts and we still import parts. If you start benchmarking everything the way they are doing, you will not do business, you go out of business.
“As gas producers or power generation companies, we should all work together and stop the idea of benchmarking against the dollar it becomes difficult for all of us.”
General Manager, Government, Joint Venture and External Relations, Heritage Energy Operational Services Limited, Mr Sola Adebanwo, also called on the government to create an attractive environment for investment to thrive in the sector.
He said capital always favours environments that have enabling business policies, adding that difficult investment, regulatory, and unprotected legal environments would naturally drive investment away.
He canvassed that the government should strengthen the ease of doing business and provide a legal and policy framework that makes for predictability in terms of the investment cycle to attract investors.
Adebanwo said that fiscal regime was a major policy issue that had been addressed in the Petroleum Industry Act (PIA). He, however, called for more clarity and the government’s commitment to further its implementation.
According to him, the PIA had provided attractive tax regimes that were likely to enhance and invite investment but stated that the policy must protect investors in such a way that would ensure that investment funds were recoverable.
Adebanwo said: “We need to intentionally position Nigeria’s investment landscape in such a way that it is attractive to foreign capital.”

Last line
The Deputy General Manager in charge of Corporate Business and Relations at First Hydrocarbon & Petroleum Development Company, Mrs Anita Edo-Osagie, said it was imperative to have gender balancing in the sector.
She noted that Nigeria has competent females in the sector, adding that harnessing their great potential would advance the oil, gas and power sectors.

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