Tackling Nigeria’s Unspeakable Energy Poverty

By

Bello Salihu, PhD

Recently it was revealed that Nigeria lost over two billion dollars last year from gas flaring. Since gas flaring has been going in the Niger Delta for as far back as when oil production in the delta started it is safe to assume that, on average, at least half a billion dollars is wasted each year through gas flaring for the past fifty years. This simple assumption considers that firstly, it took years for oil and gas production to reach its current peak state and, two, the price of gas has not always been this high.

But looking at this issue from pages of profit and loss statements misses a more important point, or two. Firstly, it negates the importance of those who live in the vicinity of the gas flares and who see their quality of life continuously being eroded. People who have rather not live with those flares at whatever cost. 

Secondly, for a nation grappling with nearly fifty percent of youth unemployment, tackling the flares of the Niger Delta could go along way in providing millions of jobs if the gas is processed and used to power thousands of industries across the land that have become moribund over the past decades for no other reason but the high cost and, often times, inaccessibility of energy.

At different times in past editions of this column the issues of youth (un)employment and the (half)wisdom in exporting tanker loads of cheap energy for a few dollars when we are faced with massive unemployment at home have been discussed. But these are discussed here again because they are issues of immense gravity that should drive our energy policy with or without deregulation or passing of the PIB. One will do anything and everything that one can do to draw the attention of the Nigerian authorities and keep it firmly focussed on this issue. So far no local or international statistic, index or news headline on this issue is complimentary to the country. That needs to change.

The recently released item of statistics from the United Nations that two in five Nigerian young people are unemployed seriously underestimates the level of employment in the country. Even if that is to be accepted as the correct data then one might add that of the two that are unemployed one and a half are grossly under-employed. And here we are not talking about the university graduate that has found himself ferrying passengers about on his motorcycle taxi or selling mobile phone recharge cards. I am talking also about the young graduate who can only work for the few hours that his part of town has electrical power. He or she must have invested the little money they lay there hands on to open a tailoring shop or hair salon but for most of the day they are just sitting and waiting for power. In those UN statistics he or she would be counted as fully employed.

At the other end of the economic scale only an uninformed over overly optimistic entrepreneur will engage in the the business of manufacturing anything in NIgeria today. All one has to do is look at the thousands of factories that have closed shop all over the country, but especially in the North, due to lack of energy. Another sad statistics is that millions that hitherto have decent means of livelihood have now been rendered unemployed swelling the ranks of the disgruntled. This has manifested itself into the most widespread security risk the country has experienced since the civil war of the late sixties.

An often used predictor of the economic state of any nation is how much energy the citizens of that nation consume per person. In that, Nigeria currently fares woefully when compared to other nations of the world. Even in West Africa many countries are ahead of Nigeria in that measure. Others may argue that because of our massive population the energy usage per capita is bound to be low. I would in turn counter that  all the countries in the world that have populations higher than Nigeria’s are ahead of us in per capita energy usage, this includes China and India. Like these two countries that make up almost half of the global head count, translating our massive oil and gas resources into corresponding rise in productivity holds the key to the country’s economic emancipation. In other words, the more energy we consume per person the more productive we are and consequently the higher our GDP. Simple.

According to statistics obtained from the Energy Commission of Nigeria the country’s primary energy consumption per citizen nose-dived from 0.153 tons of oil equivalent (TOE) to 0.079 TOE in a span of five years between 2002 and 2007. Since 2007 the country has been struggling to return to that level. And returning to that level in itself will be nothing to celebrate as the global average per capita energy consumption currently stands at about 5 TOE. 

A saturation point at which a country is totally sufficient with energy and thus exports the excess exists. As long as a country has not reached that saturation point it makes little sense to sell off something it needs more than those it is selling to. Almost no country in the world has reached that saturation point yet. 

Nigeria can work towards that saturation point and still have a huge percentage of oil and gas production left for export. Two examples of countries that have achieved this are Venezuela in transportation fuels and our Gulf of Guinea neighbour, the Equatorial Guinea in natural gas.  A litre of gasoline still stands at 0.5 U.S. cents per litre or 80 Nigerian kobo in Venezuela yet almost all taxis and a large proportion of public transportation in that country run on natural gas. Equatorial Guinea uses its gas to generate 80% of its electricity. The country’s annual gas usage counted in billion cubic feet rose from zero to 45 in a span of two years ten years ago. It now stands at almost 60. Because of its relatively small population, per capita gas utilisation in Equatorial Guinea is most impressive placing it above almost all the OECD countries including United States, United Kingdom, Japan and Germany. While at the end of last decade Nigeria’s per capita domestic gas consumption stood at just 2500 cubic feet, that of both Equatorial Guinea, one of Africa’s biggest energy exporters, and Saudi Arabia, the world’s number one oil exporter, stood at over 70 thousand cu. ft. each, proving that high domestic energy usage and earnings from  oil and gas exports are not mutually exclusive.

Another ‘gas’ news that came out about the same time announces that Nigeria and its co-investors in the Nigerian Liquefied Natural Gas (NLNG) have earned over fifty billion dollars from LNG exports in the last thirteen years since the company’s liquefaction trains were commissioned. Most LNG importing countries use the gas to provide their power plants with thermal energy, yet Nigeria, with one of the most extensive gas reserves and one of the major exporters in the world, is grappling with problems in power generation for almost a generation. As the Jamaican reggae superstar, Bob Marley, aptly puts it, “in the abundance of water, (only) the fool is thirsty”. 

In the last three years Nigeria has exported between sixteen and eighteen million metric tonnes of LNG each year to countries that require cheap energy far less than Nigeria does. This volume corresponds to about eight percent of the global LNG demand. 

First mooted in 1970, the aim of the Trans-Saharan Gas Pipeline (TSGP) project is to transport Nigerian gas from Warri in Nigeria to Hassi R’Mei in Algeria where it will connect with the existing Trans-Mediterranean and Maghreb-Europe gas export pipelines. Along its way, in Nigeria, it will transverse the breadth of the country, south to north, where it is planned that gas will be tapped at selected junctions to be delivered to power generation and industrial concerns. The Memorandum of Understanding on the project was signed ten years ago between Nigeria’s NNPC and Algeria’s Sonatrach. The feasibility studies were completed six years ago and three years ago a joint venture and an inter-governmental agreement were signed between Nigeria and Algeria to kick start the project. But the project is hardly in the news these days because, for some unexplainable reasons, attention has shifted from there. Yet, paradoxically, this project may hold the key to unshackling Nigeria from our dependence on oil and gas export revenue.

The entire nation stands to benefit from TSGP. Ready gas to thermal power plants and industries will unleash a wave productivity in the country that can best be imagined. The same gas can be used both as fuel and as an industrial feedstock. 

If only the agitators for oil discovery in the North can shift their focus from exploration for oil to the realisation of the objectives of the TSGP they will discover that it is infinitely more important, for now, to have ready energy delivered to the region than to go exploring for oil which may or may not be discovered. The delivered gas will revive the industries that are now dead and possibly fuel the creation of even more agro-allied industries to provide easier and faster outlet to market for the grains produced by millions of peasant farmers.

Every security challenge faced in the country today can be traced to poverty and unemployment. Reducing energy poverty will go along way in providing sustenance to millions of young people who make up the ready pool of potential recruits that fuel the insurgencies the country is now facing. Our young people become easy recruits because they do not see any future for themselves in the current Nigerian arrangement. A career, a family and a rewarding means of sustenance will go along way in showing them that another avenue for self-realisation exists and re-enforcing their belief in their nation.

This was earlier published in my column 'Oil and Gas Weekly' in Government, 

a publication of Leadership Newspapers, Nigeria - 2012.