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Nigeria’s alternative energy thirsts for infrastructure, policies

The drive to embrace cleaner energy sources in Nigeria on the back of the removal of fuel subsidies and the country’s pledge to achieve net-zero emissions by 2060 requires workable policies and infrastructural investments, stakeholders have said.

Operators in the oil and gas sector and the renewable energy space said the government needs to collaborate with the private sector to focus on the pain points in the country in the formulation and implementation of policies.

They spoke on Tuesday at the Policy Intervention Series on Alternative Fuel, organised by BusinessDay in Lagos.

Ejiro Gray, director of governance and sustainability at Sahara Group, said the method and model of resource exploitation have led the country to an undesirable position.

“This model of just removing and taking resources without developing the value chain internally is what has led us to this undesirable position,” he said. “We need to address something that is extremely critical to our socio-economic well-being as a nation.”

According to her, Nigeria needs to recontextualise exploring alternative energies.

“So, if we don’t develop our resources and develop infrastructure for them to have an increase in demand in the use of the resources internally, then there’s going to be a problem. That is why our domestic gas utilisation policy is extremely important,” Gray said.

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The domestic gas utilisation policy shows a strong focus on strengthening the capacity of the Ministry of Petroleum Resources to provide leadership to the gas industry in terms of policymaking and surveillance capabilities. It also recommends the establishment of a single independent petroleum regulatory agency.

In addition, the policy seeks to stimulate stand-alone gas investments by removing current tax incentives that promote associated gas projects. Under the policy, tax instruments for gas projects will include corporate income tax and a hydrocarbon tax.

“Nigeria needs robust infrastructure investment in the midstream sector to be able to explore alternative energies,” said Kelvin Emmanuel, CEO of Dairy Hills Limited, while speaking on gas as a transitioning fuel.

The CEO said the efficient distribution of gas across Nigeria will foster the country’s drive to adopt Compressed Natural Gas (CNG) and electric vehicles.

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He said: “So it’s important that policy focuses on the pain points, from tapping gas and developing gas fields to the gas carrying pipes to the separation and treatment plants to the high-pressure transmission pipes to the city gates and then to the distribution point.

“If you neglect all of these processes, you can’t come to the final point of distributing gas to the mother and daughter stations where you convert it to CNG. Efficient gas utilisation will help achieve the country’s goal.”

According to data obtained from the National Oil Spill Detection and Response Agency (NOSDRA), the Federal Government lost approximately N843 billion due to gas flaring between January 2022 and August 2023.

NOSDRA’s most recent gas flare report revealed that oil and gas companies operating in the country flared 147.1 billion standard cubic feet of gas worth $514.9 million, or about N390 billion (using the Central Bank of Nigeria’s current exchange rate of N757.5 to a dollar).

According to Emmanuel, these leakages need to be blocked and investments made to exploit the benefits of utilising gas.

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