Nigeria Energy Review in 2023

-By Olufunke Afolami

Since the discovery of oil six decades ago, the Petroleum Industry Act (PIA) was one of the legacies projects the Buhari administration did before leaving office in May 2003, including establishment of Nigerian National Petroleum Company Limited (NNPCL) and regulatory authorities. There was also the Host Community Trust Fund.

The year 2023 came with a lot of challenges for Nigeria’s oil industry as it is yet to recover from COVID 19.

Like the oil industry, the power sector has its own misadventure with numerous challenges. The manufacturing sector could not sustain the country’s economy due to poor production with wide disparity between the naira and dollar.

As the war in Ukraine continues, it poses a threat and global distractions for energy demand and supply with Nigeria’s failure to refine crude and importing petroleum products hit the country hard. The implication is intense pressure on the country’s foreign earnings from crude. Instead of boosting the nation’s economy, it became a challenge.

Internally, production targets continues to fail due to massive theft of crude oil, pipeline vandalism, divestments of assets of multinationals, low investments in the oil and gas industry and stalled projects.

With failing power infrastructure, manufacturers only depend on diesel with high cost forcing some industries to close shop while some existing ones transferred price to consumers. Rising inflation in November 2023 was 27.33.

By May 29 2023, new administration came to existence and one of the pronouncements made by the government was removal of fuel subsidy that was effected in June resulting to fuel pump price from N198 to N650 per litre. The Bola Tinubu administration justifies it as necessary due to revenue losses arising from subsidy payment.

According to President Tinubu, “What we are going through today is saving for greatness tomorrow, things that we cannot sustain, we cannot engage in hence we cannot afford the subsidy. It is clear and it is made for just a few elites and it is not beneficial to the generality and greatest number of the people in this country.”

With the world heavily invested in alternative energy, Nigeria’s oil resources could be heading towards extinction due to massive investments in transition fuel. Thus, the award of new oil licenses contracts seems not to show any sign of moving towards transition.

The 2024 financial plan of government rely heavenly on Forex from oil with a benchmark price from 2023 that was pegged at 77.4 millions of barrels with 1.6 million production of oil. With that development, Nigeria energy sector came with the inauguration of Dangote refinery with the delivery of first batch of crude oil to be produced to the local market.

Akin Omole, Director of Operations, Dangote refinery, revealed that “the vessel has 999000 plus barrels of crude on board and it is going to be connected to the SPF a single point any moment from now.”

On his part, the Minister of State, Petroleum Resources, Heineken Lopobiri announced late last year that one of the nation’s moribund refineries is set to begin production after mechanical completion. In his words, “Our own objective is to ensure that in the next two years, Nigeria stops importing fuel and that is why we are here to see the extent of work done and from what we have seen here, Port Harcourt will come on board by the end of the year and Warri will start by first quarter of 2024, and Kaduna will come on stream towards the end of next year 2024. If we add that together with Dangote refinery, we will start refining substantial part of our products.”

The Minister of State for Gas, Ekperipo Ekpo submitted that “it is great news for Liquefied Petroleum Gas (LPG) users when the refineries commences after Christmas, we’ll have sufficient supply of LPG which will automatically reduce the imports at that level.”

It is still believed that Nigeria can achieve self-sufficiency in its energy means. The President of Nigerian Association of Energy Economics (NAEE), Professor Yinka Omorogbe, stated that “there are lots more to be done to make Nigeria favourable investment destination to push Compressed Natural Gas (CNG) and LPG to desired level and a lot is being done already but a lot more needs to be done especially once we realize that time is not on our side anymore.”

With all the different initiatives in the country’s disposal, it needs plans for its resources that one day it will not run out of them and be stranded.

Nigeria needs plans for both private and public sectors to create sustainability in its models and processes.

As most multinationals shut down their factories and leaving Nigeria, resolving the country’s energy crisis is a must for the nation to survive in future with regards to energy transition.


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