From Uche Usim, Abuja
For the rapid and strategic growth of the Nigerian and African petroleum sector, the Chief Executive Officer of Zigma Limited and President, Women In Energy Network (WIEN), Mrs Funmi Ogbue, has called on government and other stakeholders to be more practical in revamping the petroleum sector and quit offering oral solutions to the myriads of challenges plaguing it.
Speaking at the recently-concluded Nigeria International Energy Summit (NIES 2022), Ogbue said the industry can only developed when all stakeholders are on the same page and totally committed to changing the narrative.
She said: “We keep saying that “the world is a global village”, but how often have we told ourselves a deep truth which is Africa, particularly the Sub-Saharan parts, have not benefited from this saying; especially if we are to use other continents as a comparison mechanism.
“I have found that we often dwell on the potential of Africa. We are very good at providing possible solutions. However, translating these solutions via actions and
transparent tracking of such actions, to harness the touted potential is nowhere near good enough.
“Attracting more investments into our continent will require bold actions which involve: enabling policies that can lower transport and energy costs; eliminating formal and informal barriers to trade; increasing the flexibility of labor markets; and ensuring effective competition policies”.
She pointed to Rwanda, a country lacking natural resources, but has seen its Foreign Direct Investment increased more than threefold. This has been credited to improving its regulatory structure for business, increasingly sophisticated regional and global
manufacturing supply chains demand cross-border predictability, transparency,
reliability and accountability.
“I have highlighted the Rwanda example to illustrate that attracting investment is very doable within our continent. Many countries within our continent, like ours, have vast natural resources.
“There is an estimated 125 billion barrels of oil reserves and 500t SCF of Gas on this continent. A lot of African countries are discovering new oil. Liquified natural gas (LNG) possesses the highest expansion potential in global markets. Notwithstanding the 2050 net emission targets, I don’t see why this can’t be used as leverage to develop our continent”, she added.
The WIEN President alluded to the fact that Africa needs infrastructure, as future growth will depend on productivity increases and higher private investment to bridge the infrastructure gap.
“We won’t be able to compete with other regions without roads and universal access to electricity. In emphasizing the electricity bit, only one in three Africans has access to electricity, and those with power access typically pay up to seven times more than consumers elsewhere.
“At present, the concentration of investments in the continent are relatively short term which reflects investors’ reluctance to engage the continent over a longer time frame. We must take actions to address same.
“There also needs to be demonstrable demand for our goods and products. Most
times, the available labour force determine the quality of the output we present to the international scene. We have the numbers in this continent – in terms of young
demographics. We must now devise a way (through policies) to shape these people and then leverage on that to provide international value”, she said.
On energy transition, Ogbue said Nigeria and Africa cannot run away from it since it empties into the global net zero emissions target.
“We have seen breakthroughs across the auto, power and lighting sectors. Electric vehicles are increasingly becoming popular in the world. The growth is happening even in places that governments lag behind.
“Despite the apparent growth, it can be reinforced and made faster if it is led by government’s policy. To illustrate, Norway is a seller of more electric vehicles than petrol, diesel and hybrid vehicles. This is backed by their government’s target to end internal combustion engine sales in 2025. There is that clarity from the government for the industry to follow.
“Despite the Norway example, we must acknowledge that the country depends on oil and gas. We have been doing so for some time and for that reason, will take us much more time to switch onto the Energy Lane.
“We must also acknowledge that the law regulating the industry is still young, barely into its first-year anniversary. In that context, you can understand the reluctance
by the government to immediately declare a policy that will disrupt an industry the country is dependent on.
“Notwithstanding the foregoing, the government cannot afford to lag for long, especially considering we have already made a pledge towards the global target.
“We must face this reality and come up with a strategic direction that the industry, especially Operators need to see to guide future oil field assets strategy. Any policy the government plan to roll out must conform to the pillars of a just transition. We know that a good transition will create jobs, but those jobs must be made available in places where impact is had in the society. The just transition is a
local challenge, and political and business leaders should treat it as such. In that regard, adopting mechanisms for ensuring effective consultation and transparency.
“From the perspective of the current and future operators, I believe they still see a clear industry direction aligned with their local, business and especially political goals. Operators – who are key stakeholders in the industry – thrive on being guided by regulatory clarity. This will inform investment strategies especially that of long term.
Governments can reinforce growth in other ways such as incentivizing the just transition. Operators in many outperforming economies face fewer regulatory and tax barriers compared with companies in other countries. This, in turn, encourages jobs and business creation and improved efficiency.
In all these, it would be interesting to note how the industry will handle the transition process and we necessarily would prefer a just transition through proactive government policies”, she explained.