Professor Bart Nnaji, the chairman of Geometric Power Group, was a guest lecturer at the debut of Dele Momodu Annual Lecture held recently at Nigeria Institute of International Affairs, Victoria Island, Lagos. The event was in commemoration of the 60th birthday of the chairman of Ovation Group, Aare Dele Momodu. It provided a dignified platform for interrogation of a critical national challenge. With the title: “The Politics of Energy and the Way Forward for Nigeria,” Prof. Nnaji set the tone of his intervention by delving into some historical events to buttress the inevitability of economic nationalism in the global energy supply. The political praxis of sovereign nations and geopolitics are largely influenced by energy security. Countries strive to protect their nationals and investments from the vagaries of modern economy that is heavily dependent on energy supply.
Hence, he noted that it was strategic energy security that informed United States military offensive that routed out Saddam Hussein’s forceful annexation of Kuwait as Iraqi’s 19th Province in August 1989, but in a similar coincidence, the US ignored an American colony, Liberia, when it faced the jackboot of Charles Taylor in December 1989. Harping on contemporary global energy politics, the former power minister noted that, despite the vigorous campaigns in support of clean energy, protectionism still holds sway among the industrialized nations that emit the largest proportions of carbon. There is a massive slowdown of efforts at limiting global warming to 1.5. Centigrade by 2030, as encapsulated in the Paris Accord on Climate Change in 2015. The effect of the West’s sanctions on Russia over the invasion of Ukraine and Moscow’s retaliation by stopping gas supply to energy-needy countries like Germany, made Berlin to resort to revival of coal-fired power plants, hitherto closed down under the watch of Chancellor Angela Merkel.
This was done to avert electricity crisis that could pitch the citizenry against government. The United Kingdom that flaunted shutting down of coal-fired plants and mounting of large windfarms had in 2022 looked the way of resuscitating the plants to avoid the backlash of unbearable heatwave. France also extended the lifespans of coal-fired plants in the same year. Also joining the momentum of self-preservation are the leading oil and gas multinationals like Shell, Exxon-Mobil, Total-Energies, Chevron and British Petroleum (BP). They are making haste slowly in moving away from fossil fuels to clean energy. Shell, for instance, burnt its fingers and learnt in a hard way. Its climate ambitions had adversely affected the stock performance vis-à-vis Chevron and Exxon-Mobil counterparts. In January 2023, Shell reduced its investments in renewables from $3.5 billion in 2022 to $2.7 billion in 2023, indicating that loyalty of the company is to the shareholders and not the clean energy protagonists, and stepped up heavy investments in oil and gas.
For BP, “Its investments in low-carbon energy are seven times less than its investments in fossil fuels.” On the other hand, Prof. Nnaji raised issues about the hyped gains of renewable energy as the silver bullet to climate change. The Western mainstream media downplay the environmental hazards of exploiting lithium in Chile, where it is cheaper to produce than any other country. Lithium is a key raw material in the production of solar panels and batteries. At the Conference of Parties (COP) 28 held in Dubai in late 2023, it was a consensus that phasing out fossil fuels has to be gradual, but there was no guarantee that all parties would comply within the stipulated timeframe. At the G-7 meeting of April 2024, held in Italy, energy issues were handled with enlightened self-interest. Back home, Prof. Nnaji is of the view that government has a responsibility to tell the clean energy pushers that in as much as natural gas is a fossil fuel, it is transitory because of its relative cleanliness. It reduces carbon footprint and emits greenhouse gases.
As the second largest global source of energy after oil, gas has been projected to overtake coal by 2030. Nigeria is one of the leading countries with huge deposits of gas resources. “Nigeria has 206.53 trillion cubic feet of untapped gas reserves; the estimated recoverable gas is 139.4 TCF.” Over the years, supply bottlenecks, policy gaps, lack of infrastructure and low investments have led to poor maximization of the gains. Besides, government prioritizes export of gas above meeting the growing domestic demand. Understandably, the much needed foreign exchange earnings are critical but, sadly, the Nigeria Liquefied Natural Gas company saddled with the responsibility of gas export operates below 60% capacity because of inadequate supply of gas. Ironically, even the investment in the construction of 5,600 kilometers Trans-Sahara Gas Pipeline with the expectation of carrying “30 billion cubic metres of natural gas from Nigeria to Europe through North Africa” could be checkmated by European advocates of renewable energy if and when the continent stabilizes from the sanctions by Russian.
The reality of business is that “gas producers naturally prefer to export their products because their domestic prices are regulated, subsidized, and sold below the world market value. Besides, those who supply gas to (privatized) power-generating firms are typically owed huge amounts for long periods.” A few months ago, government paid a paltry sum of $120 million out of about $1.3 billion debt to gas companies (GasCos). Going forward, the 40% gap in gas export must be filled. Government should mobilize incentives to meet the ever-growing domestic gas market. Thermal plants across the country, for example, Aba’s Geometric Power, use gas to generate electricity.
Liquefied petroleum gas (LPG) is used for household cooking and baking. Manufacturers use gas for heating, as well as petrochemical firms like Indorama Eleme Petrochemical Limited, which “uses gas as feedbacks to produce fertilizer.” And with government’s ambitious plan of massive conversion of vehicles into the use of compressed natural gas (CNG), it becomes compelling to arrest an impending gas supply crisis. The present leadership in Nigeria must rise to the occasion and seize the opportunities to leapfrog the country from its doldrums. I agree with Prof. Nnaji that a state of emergency in the gas sector is long overdue.