NEGLECTED ENERGY POLICY A KEY TO ECONOMIC HARDSHIP IN NIGERIA

The nature and extent of energy demand and utilization in a national economy are, to a large extent, indicative of its level of economic development. For a productive economy and for rapid and secure economic advancement, the country must pay maximum attention to the optimal development and Utilization of her energy resources and to the security of supply of her energy needs.

To do this, the country needs to put in place a coordinated and coherent energy policy, which will serve as a blueprint for the sustainable development, supply and utilization of energy resources within the economy, and for the use of such resources in international trade and co-operation. Dr. Rilwanu Lukman (Nigerian petroleum minister)

Newspaper headlines are typically dominated by events of short-term measures on energy sector. But I deemed it is crucial that we keep our eyes on the medium and longer-term pressures that economic, security and environmental demands place on our energy system as well.

Though, the short-time measures provide policymakers and industry experts with insight into the evolution of energy markets and analysis of the key challenges that we must overcome to ensure the existence of secure, efficient, environmentally acceptable and flexible energy systems and markets worldwide.

But extremely volatile and uncertain moment in world energy markets, soaring oil, gas and coal prices which explode energy demand in various part of the world, war in Iraq and electricity blackouts in many developed countries reflected the need for long-time transformations buffeting the energy sector.

ENERGY

Energy has a major impact on every aspect of our socio-economic life. It plays a vital role in the economic, social and political development of our nation. Inadequate supply of energy restricts socio-economic activities, limits economic growth and adversely affects the quality of life. Improvements in standards of living are manifested in increased food production, increased industrial output, the provision of efficient transportation, adequate shelter, healthcare and other human services. These will require increased energy consumption. Thus, our future energy requirements will continue to grow with increase in living standards, industrialization and a host of other socio-economic factors.

Energy generated from a variety of primary energy sources such as oil, gas, coal, renewable is being transformed into lighting, heating, cooking, motive power, mechanical power, transport and telecommunications. The benefits from providing energy services matter from the viewpoint of human and economic development. Poor people require affordable, accessible and reliable energy services to support their household, economic and social welfare activities. By contrast good quality heating and lighting, modern fuels and electricity provide mechanical power for agro-processing, refrigeration for clinics, motive power for transport and telecommunications for education and public awareness.

ELECTRICITY: Availability of electricity remains a major factor in the location of industries and a strong instrument of social development. Electricity supply has been a major problem in Nigeria, the country electricity generation is everyday becoming worse.

Commercial electricity is generated mainly from hydropower, steam plants and gas turbines in Nigeria. The installed capacity for electricity generation, which is 98% owned by the Federal Government, increased by a factor of 6 over the period 1968 to 1991 and by 1991, stood at 5881.6 MW. No further addition to generating capacity was experienced over the subsequent decade. Over the years, the availability varied from about 27% to 60% of installed capacity, while transmission and distribution losses accounted for about 28% of electricity generated. In December 2001, the available generating capacity was raised to 4000 MW, but this soon dropped to about 900MW within the third quarter of 2008 the lowest ever.

The annual consumption of electricity has been increasing very rapidly over the last three decades. It increased from 1,273 GWh in 1970 to 15,600 GWh in 2008. The domestic sector has accounted for over 50% of the grid electricity consumed in the country while the commercial and industrial sectors have accounted for about 25% each.

The INDUSTRIAL sector is one of the major energy consuming sectors and it accounts for about 25% of total commercial fuels currently consumed in the country.

Inadequate and unreliable supply of energy to industry is a major contributor to low industrial capacity utilization.  The considerable energy resource base of the country is enough to satisfy the industrial energy demand under any plausible scenarios in the foreseeable future.

AGRICULTURE

Agricultural sector formed the backbone of the nation's economy before oil discovery. Most Nigerian farmers, who produce over 80% of the food needs of the country, live in the rural areas with little access to electricity and petroleum fuels and therefore rely mainly on manual techniques and solar energy in executing most pre- and post-harvest agricultural operations.

TRANSPORT

The transport sector accounts for the bulk of the nation's petroleum products consumption. This pattern in the nation's energy consumption is expected to continue. Furthermore, increased needs for road transport services contribute significantly to the higher energy consumption in the transport sector.

It is therefore a fact that the above listed sectors form more than 80% of the Nigerian Economy.  And all of them depend solely on secured energy supply which could only be realized by coherent energy policy.

NEED FOR A NATIONAL ENERGY POLICY

The need for National Energy policy in Nigeria is traced back to the year 1984, when the Federal Ministry of Science and Technology produced a Draft Energy Policy Guideline. The contents were however limited in scope and depth. The Energy Commission of Nigeria, in furtherance of its mandate, produced a Draft National Energy Policy in 1993. This was later reviewed in 1996 by an Inter-ministerial Committee, under the Chairmanship of the Ministry of Science and Technology. In view of significant changes in the orientation of the economy, especially as regards increased private sector participation, it had become necessary to review the 1996 document, prior to its approval.

The resulting coherent and comprehensive policy covers the development, exploitation and Supply of all the nation’s energy resources. It also covers key energy utilization sectors; energy related issues such as environment, energy efficiency and energy financing and energy policy implementation. It includes strategies for systematic exploitation of the energy resources, the development and effective use of energy manpower, supply of rural energy needs, efficient energy technology development and use, energy security, energy financing and private sector participation. The strategies are finally harmonized and grouped into short-medium – and long – term measures for easier implementation, with the hope that it will provide the framework for a better development of the energy sector and for a more effective contribution of the sector to the national economy.

The current National energy policy if properly implemented has the potentials to relieve millions of Nigerians from poverty and make positive impact on the country economy as the policy covers all sectors of energy generation, utilization and efficiency.

But government at all level prepares implementing short-term measures only as they do not consume much money. While the medium term and long term measures are in most cases abandon along the implementation process, normally as a result of funding, personal interest, negligence or due to political differences. And this is now impacting negatively on the country economic development.

THE CONSEQUENCES

Improper implementation of this policy as well as negligence has been impacting negatively on the country economic development.

The Niger Delta militant issue, the oil Bunkering and lapses from the oil regulatory agencies and pricing control, have now downgraded the country oil production. And as a result the country loses more than 30% of its oil generated revenue annually. 

The persistence power failure in the country has significantly affected the economy and inflicts poverty on most Nigerians. Small scale industries have been a history especially in most part of Northern Nigeria, where the poverty level is between 65% and 70%.

The major industrial zones in the northern and some part of Eastern Nigeria have been empty due to lack of power supply. The issue of power has rendered millions of people jobless. More than 80% of industries in Northern part of the country have closed down mostly due to lack of power supply.

Pipeline vandalisation has been claiming lives of hundred of thousand Nigerian citizens while government is loosing Hundred Millions of Naira. This is due to high level of poverty in the country.

CONCLUSION

It is quite unfortunate for country rich of energy resources and well coordinated energy policy, but the can not be synchronize for a better economic and human development.

It is a pity that the policy drafted could not be implemented in the long run to positively contribution toward alleviating poverty in Nigeria. The current Energy policy in Nigeria is neglected in such away that it makes little or no success in transforming the standard of living of over 140 million Nigerians.

It is for sure that lack of proper policy implementation and negligence will continue to be a demarcation between developmental achievements and hardship. Nigeria will continue to remain backward if action is not taken as the poverty level will ever remain at high level. And my greatest fear is when the oil runs out.

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Comments

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Wed, 09/10/2008 - 1:56pm

Every country with vast energy resources that does not have citizens with the resources, knowledge, and wisdom to extract aforesaid resources without the expertise of multinational corporate entities will become a nation of victims.

William Norquay

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