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Despite Paris Agreement, Fossil Fuels Still Driving Nigeria's Economy |
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Rising from the intense COP 21 negotiations in Paris last December, Nigeria and other nations of the world agreed to reduce the use of fossil fuels as the global journey towards a low carbon planet started looking global. But, did Nigeria- whose crude oil account for about 90% of her export earnings- genuinely agree to that goal? Nigeria is well endowed with fossil fuel resources from the huge coal deposits in Enugu, to the immense wealth of crude oil in the Niger Delta. Growing up, I was told how Agriculture used to be the mainstay of Nigeria's economy such that countries like Malaysia had to learn how we grew our palm tree for their own domestication- they are currently one of the largest producers of the palm tree today- Nigeria is not close on the list- it's this Nigeria I wish to experience but am yet to. My generation met a Nigeria fully dependent on crude oil products for her revenue. As of 2011, crude oil accounted for 95% of Nigeria's foreign exchange earnings and 82% of budgetary revenue and that tells the whole story of an economy firmly built on fossil fuel exploration. Indispensable, Fossil Fuels?  Photo by: politicalclimate.net Just like life depends on breathing in fresh oxygen, Nigeria since getting used to the massive oil wealth seem to be oblivious of any other alternative. Here is a country where about 95% of the vehicles plying her roads use petrol. It's a country whose best offer of mass transit transport is with her luxurious buses powered by fuel other than train- whose infrastructure are either not available or damaged. You will hardly drive 2KM in any Nigerian town without spotting a filling station which offers up to three different crude oil products. In Nigeria, if you don't use fossil fuels for your car, you do for your cooking stoves or for your generator. Kerosene is very popular amongst Nigerians for cooking while some also use gas cookers. As it is a well known fact that electricity is one of Nigeria's major challenge, it has turned Nigerians to owners of generators both at home and in their working places. Every Nigerians owns an average of two generators either powered by petrol or diesel. This is how needful fossil fuels have come to be in Nigeria. It is almost like the last-born of every household. Perhaps, one of the most striking examples that demonstrated how much fossil fuels meant to Nigerians was in January 1st, 2012, when the then President, Dr. Goodluck Jonathan, announced the removal of subsidy from petroleum products which meant a hike in price of the fossil fuels commodities and a consequent rise in the market price of everything else. It was a testament that petroleum products held the soul of Nigerian economics both on and off the market. Nigerians, quite unusually, throng the streets in protest the next day condemning the removal of petroleum subsidy and demanding immediate reversal. Outside football, you will struggle to find what can unite the multi-ethnic Nigeria if not the market price of crude oil products and its availability. They threw away their ethnic sentiments and protested in one voice and the government was forced to submit to their will in less than a week after the announcement. And just last year, I was in Munich attending the Global Youth Summit on Climate Change but back home in Nigeria, there was chronic fuel scarcity to the point that cars drastically reduced on the road and even radio stations were forced to shut down earlier or completely. The radio station I work with did the later. Fossil Fuels and the Niger Delta The Niger Delta region of Nigeria is home to the bulk of Nigeria's fossil fuel resources. It's geographically located in the South South region of the country and also some South East parts of the country. All the multinational oil companies operating in Nigeria have an abode in Niger Delta and have drilled it to destruction. According to the Nigerian constitution,Oil producing states cannot earn direct revenue from crude oil deposits in such states rather, the federal government of Nigeria gives such oil-producing state 13% of the oil revenue during the monthly revenue allocation by the federal government to the various state governments. Before the government agreed to giving the Niger Delta States 13% of oil revenue, multinational companies endured hard times in the hands of the frustrated youths of Niger Delta who didn't understand why producing what sustains the entire nation left them more wretched and infrastructurally handicapped. Their lands had been rendered infertile by consistent oil spillage and their water bodies breed no life as oil spills killed all the aquatic creatures that made fishing the major occupation of their men. Fossil Fuel 'fuels' War  Photo: businessdaylive With their livelihood taken away by oil spillage and the oil companies not relenting in the massive environmental degradation of the Niger Delta, the youths of that region took up arms against the state as militants demanding for control of their resources or at least commensurate development that will justify what the region supplies the nation. They fought and sometimes, overpowered the state forces and even kidnapped many foreign workers in addition to grounding the activities of the oil companies until former President, Late Umaru Musa Yar'dua, initiated an amnesty plan, in 2009, for the militants who accepted the offer of the president to not just develop the region's infrastructure but also develop her human resources to enable them take part fully in the oil industry. They agreed ever since to lay down their formidable arms. The development plan has been followed fairly well for people of the region since then. UNEP Report on Ogoniland  Photo by: nairaland.com The amnesty programme may have changed the livelihood of some people from the Niger Delta region but it did nothing to the mess oil spillage brought to their land. It is noteworthy that the campaign against environmental degradation in Ogoniland- one of the worst affected communities in Niger Delta- took the lives of popular environmentalist, Ken Saro-Wiwa and nine of his compatriots by the administration of late Gen. Sani Abacha, who was the then military ruler. In 2011, the UNEP- at the request of the Nigerian government- released a report on the cleanup of Ogoniland how the government should go about cleaning up the damages done to the land by oil spills. The report is yet to be implemented though the current President has started the first step towards implementing it by setting up a board of trustees to commence the process. It is projected to cost 2 billion naira but activists feel even that will not be enough. Currently, most parts of Ogoniland cannot boast of portable drinking water and their rain,unlike the one most of us enjoy, is heavily acidic. However, a Dutch Supreme Court recently found Shell guilty for oil spills in four communities in Niger Delta and ordered them to pay damages amounting to billions of naira to the respective communities. That may be an indication of a light at the end of the tunnel. Gas Flaring  Photo by: channelstv It is quite sad to know that oil companies in Nigeria flare natural gas that comes from crude oil majorly because they want to save the cost of converting it to a more useful product. These companies recklessly burnt gases in the air and have succeeded in placing Nigeria as the number one gas flaring country in the world. You can hardly imagine the waste. Quite strangely, it is believed that this companies do not try such in any other clime outside Nigeria. Economics of Fossil Fuels in Nigeria In the last three years, there has been a decline in the projected oil production rate in the Nigerian budget perhaps, pointing to a realization that a nation's economy being dependent on oil has nothing good about it. In 2014, Nigeria targeted 2.3883 million barrels per day production with the benchmark at $75 per barrel. That reduced to 2.27 million barrels per day in 2015 at a benchmark of $65. In the 2016 budget which is currently being debated at the National Assembly, the production target further reduced to 2.2 million barrels per day for 2016 at a $38 per barrel benchmark showing a consistent crash in the oil price. Now, even with the current benchmark, Nigeria will struggle to finance her 2016 budget if she depends on oil proceeds as the daily sales seem to be steadying around $32 per barrel. It has forced the country to prepare a zero based budget with serious eye for diversification of the economy. Government Contradiction  Photo by: climatechangenigeria.wordpress.com The Nigeria government had a decent outing at the COP 21 in Paris and committed to the final agreement of reducing global emissions. From Nigeria's INDC, she only promised to "work towards ending gas flaring by 2030 "as her key commitment against the continued use of fossil fuels. But then, the Nigerian President is working round the clock to make sure that the three crude oil refineries in Nigeria and back to life and operating at full capacity while also perfecting plans to build new ones and this is exactly the development many Nigerians voted for in the last election that brought in President Muhammadu Buhari. Again, if you think that the decline in the target daily oil production in Nigeria's last three budget is a sign of transition, the announcement by the Nigerian National Petroleum Corporation, in November 2015, of a new production target of 3 million barrels per day should make you have a rethink. As it stands, it will be difficult for Nigeria to make any committed effort towards transition from an oil-based economy to a green economy. Plans to replace kerosene cookers with Liquefied Natural Gas cooker may be a welcome one, but even that is an insufficient commitment towards the needed global transition. The Nigerian President is currently on a visit to Saudi Arabia and Qatar and the reason is to seek ways of improving the oil price above its current rate. That, perhaps, says a lot about the intent of a nation rich in fossil fuel resources and for Nigerians, affordability and availability of fossil fuel products nationally will represent success for anyone that occupies her presidential seat. That, indeed, is worrisome.
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2 Comments
Fossil fuel are cost effective for Nigeria because of its oil reserves. But damage to eco-system will be immense & severe over long run & already the pain may be felt by the residents.
As fast they adopt sustainable methods, better for them & the residents.
Posted 27-02-2016 20:28
Thanks for a very very informational report, Udeh. I agree with you that knowing the current circumstances, happenings and historical background, it seems unlikely that Nigerian government wants to divest from fossil fuels. They are infact going the other way round. It is indeed sad to note. They could have put the same efforts to bringing up renewable energy systems. A lot lot needs to be done in Nigeria for it to turn or even start turning to Green Economy. Thanks again for the insight.
Posted 26-02-2016 20:12