A policy and regulatory development specialist, Tunji Ariyomo, has advised the government to seek local solutions to the energy crisis in Nigeria.
Ariyomo said the country will achieve rapid economic development if it achieves energy sufficiency.
This was stated by Ariyomo, an expert in finance and infrastructure development, at a public lecture organized by the Nigerian Society of Engineers in Akure.
Nigeria’s energy crisis has worsened with the removal of the fuel subsidy by the Federal Government in May, leading to increases in the price of gasoline at the pump.
Before the move, the national energy body, NNPCL, said it was spending 400 billion naira monthly on fuel subsidies (about $1 billion a month at the time).
Ariyomo highlighted four major issues undermining Nigeria’s energy sector.
These are dependence on oil and gas, inadequate infrastructure, energy poverty and environmental concerns.
He said to end the importation of petroleum products, which he said was depleting foreign exchange and causing job losses, Nigeria needed to build its own refineries based on the technological capacity of Nigerians.
He said the country has been unable to maintain sophisticated refineries due to lack of capacity.
According to him, refineries always break down and “our people” simply cannot repair them.
Ariyomo noted that the United States, China, South Korea, and the United Kingdom have functional refineries because they build and operate them with “local knowledge and know-how—organic ownership of the technology associated with and incidental to oil refineries.”
To build their own refineries, he said, Nigerians must acquire technical knowledge, noting that “our ancestors had control of the technologies with which they refined their palm oil.”
“Therefore, Nigerians can only fix crude oil refining by acquiring the technical knowledge and organic capacity to locally manufacture, assemble and install all refinery components by leveraging local capacity.
“Indeed, once Nigeria and Nigerians possess and control the required knowledge, the possession of crude oil as a natural gift within their geographical boundaries will no longer be a mandatory requirement in the nation’s quest to meet its energy needs and export the surplus. This is what is called self-sufficiency.
“In simple words, Nigeria must stop seeing imports or the race to build the biggest refinery acquired with technologies controlled by its rivals as the compelling subject of its observations.
“Also, we need to stop seeing crude oil as the problem here. We should only see it as a means to an end. Our focus must be on knowledge of the sciences behind the processes, the competitive and practical application of that knowledge, and the strategic means to deliver the services necessary to produce the goods and materials needed to drive our economies.
“We must deliberately move away from a ‘cash and carry’ mentality that has plunged us into a country that is directionless and thoughtless in its approach to solving critical problems.”
Ariyomo also said states should be allowed to generate and distribute power.
“If a country is building power transmission infrastructure for you, you are its market, especially if you are also doing so with your loan,” he said.
“It simply provides the income guarantee needed for your future, with interest! That country would never want you to learn how to build good refineries, good roads, good power lines, good railways, etc. That country would never want you to become self-sufficient and start building your own refinery, power lines, roads, railways, etc.
“In fact, the country that builds your highway, your refinery, your railway line or your electrical infrastructure is actually your strategic enemy. Write it somewhere. Never forget.”
“If we had absolute control of the technical means to manufacture, install and manage our refining processes locally, we would automatically have expanded the economic value chain inherent to the entire petroleum product management process.
‘We would be able to ensure that all of West Africa and beyond now represents our market, thereby ending half a century’s experience of regional smuggling of subsidized Nigerian petroleum products. Except for crude oil prices, all other indices, such as capital and operating costs (parts and labor) that determine final product prices, would be subject only to local metrics as is the case in China, substantially protecting our macro and microeconomies of the vagaries of international price fluctuations.
Ariyomo also advised diversifying energy sources by investing in renewable energy sources to locally produce critical components associated with solar, wind and hydropower.
“These will not only be more sustainable but will also create jobs and boost local economies,” he added.
Furthermore, he emphasized the need to modernize energy infrastructure, improve transmission and distribution networks, and improve grid reliability to reduce energy losses.
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The NNPCL had said that local oil refining will not significantly reduce the cost of fuel.
“There is an idea that if the product is processed locally, prices will go down. Let me make it clear that nothing is going to change. If it is produced locally, the refineries will also cover the cost of production and other things and it will be sold at the current price,” NNPCL group managing director Mele Kyari said at a forum.
The same opinion is held by the Nigerian Major Petroleum Marketers Association (MOTHER).
But the Independent Petroleum Marketers Association of Nigeria (IPMAN) disagreed.
“If the refineries are running, freight and ship-to-ship transfer costs would be reduced,” IPMAN National Operations Controller Mike Osatuyi was quoted as saying.
“If the refineries start operating, at least 60/70 naira per liter will be lost. The cost of insurance will go down.”
