by Mondiu Jaiyesimi

Firewood is cheaper, easy to access and majority in rural areas have access to the raw material free of charge; hence, any development that will put the slightest strain on their budget will be immediately ignored.

According to the Energy Information Administration, Nigeria is the largest producer of oil in Africa, producing over 2.53 Million barrels per day of crude oil and also holds the largest natural gas reserves in the African continent (9th in the world). Given these facts, the rather challenging reality is that out of the total energy consumed in Nigeria domestically on an annual basis, crude oil only takes 13% while natural gas consumption is a meagre 4%. The bulk of energy consumed in Nigeria is drawn from traditional biomass and waste as approximately 82% is consumed annually. This arguably presents a damning picture of our energy profile which the rest of the world will expect to be at least more robust and better diversified.

VAST RESOURCE BASE

Approximately, over 95% of Nigeria’s gas resources are exported to Asia Pacific, Atlantic and European markets in the form of Liquefied Natural Gas and the West African Gas Pipeline also serves as channel for regional gas exports leaving only a small percentage for local consumption. Currently, the main use of domestic natural gas supply is for thermal electricity generation and cooking purposes in the form of Liquefied Petroleum Gas. It now begs the question; what is the demand available for the domestic supply of natural gas? Gas projects are known to be very expensive and they require huge long term capital investment so it is only fair to expect a fair return on capital. Given this and considering Nigeria’s population and income per-capita, how can we tap into this huge resource base and provide cheaper and easier access for domestic use?

For the consumption of crude oil and its derivatives mainly for locomotives, cooking and independent power generation, the problems of pricing and affordability still pose a major challenge.  The then less costly kerosene majority of the populace used for cooking is now fast becoming unaffordable for the common man due to the gross inefficiency and corruption marring the sector. I have read some recent surveys where people have confessed to buying a litre of Kerosene for as high as N250.

TRADITIONAL BIOMASS TO THE RESCUE

After considering the existing issues facing the domestic access to oil and gas resources in Nigeria, more people now depend on traditional biomass as a way of meeting their residential energy needs. Historically, the use of traditional biomass (fire wood, coal and waste) has always been the most consumed energy source in Nigeria but as time went by, one would expect the status quo to adjust given our resource base and an embarrassment of riches in technical expertise. This has not been the case.

As we have seen, carbon emission as a result of burning firewood for cooking is extremely dangerous to the environment and one of the leading causes of death in young children. To put this in perspective, according to the IEA, globally, 1.3 million premature deaths per year are directly attributable to indoor air pollution from the use of biomass, with more than half of these deaths children under five years of age. In addition, biomass accounts for over 90% of residential energy consumption in Sub-Saharan African countries.

This is quite an interesting issue as we are faced with the challenge of bridging the gap between environmental friendliness and economic sustainability. In present day Nigeria, given the problem of paucity of data, one can logically assume that it would not be a stroll in the park for an average citizen who utilises firewood and charcoal as means of cooking to switch to gas or kerosene. Firewood is cheaper, easy to access and majority in rural areas have access to the raw material free of charge; hence, any development that will put the slightest strain on their budget will be immediately ignored.

This situation poses a big challenge for the government considering the significance of its future implication on the environment. We are currently battling big issues with the international community on gas flaring as we rank second on the list of top 5 of gas flaring countries in the world (EIA 2012). We also have the problem of the highly poisonous carbon monoxide emission arising from the use of generators which is one of the causes of the heat wave in industrialised and densely populated states like Lagos.

WAY FORWARD

It is quite apparent that the increased demand for firewood will cause the current trend of deforestation to continue. This automatically piles more pressure on the ecosystem and contributes significantly to global warming. However, how do we turn this trend around without putting more financial strain on the populace?

As daunting as it might seem, the power sector has a key role to play in reducing our dependence on traditional biomass. Effective electricity reforms and the unbundling of the sector with efficient price regulation will be a good beginning. Cheap and stable electricity has always been an attractive proposition due to the variety of purposes it serves.

On oil and gas consumption, given that the aim of any government is to maximize social welfare, efficiently subsidizing the domestic supply of all hydrocarbon resources should be a key component of our energy policy going forward. Considering the manner in which our government has handled the volatility in energy prices in the past, people will be sceptical about its ability to efficiently regulate energy prices while protecting the sunk complementary investment of consumers. We can only hope that a better structural framework can be put in place to formulate and implement these policies.

On a final note, after providing a glimpse of what the future holds if these trends are not checked, the most important thing is to look for enhanced people-friendly policies to help encourage the safe use of cheaper and cleaner energy sources so we can make our environment cleaner and safer to live for years to come.

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Mondiu Jaiyesimi is an Energy Economist passionate about energy and public policy, empirical research and energy finance. He studied Energy Economics and Policy at the University of Surrey and has done extensive research work in Liquefied Natural Gas markets, UK energy markets, shale gas revolution and energy demand in developed countries.

He currently engages in independent energy consulting focusing on energy modelling, climate change and trends in oil and gas supply in Africa and other emerging markets. He is a member of the International Agency for Energy Economics and the British Institute of Energy Economics. He currently works with Deloitte, London.

 

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