The Future of Petroleum in Nigeria: Why the FUPRE Bill, signed into law, is a failed venture

AUTHOR: AKOREDE SAMUEL OMOTAYO

 

INTRODUCTION

President Muhammadu Buhari on Tuesday, 17th October 2017, signed into law the Bill establishingthe Federal University of Petroleum Resources, Effurun, Delta State. The political rhetoric used to justify this development is that it signifies the administration’s commitment to continue to support the socio-economic development of the Niger-Delta region.It will be recalled that the Federal Government in 2006, under the leadership of former President Olusegun Obasanjo, approved the upgrading of the Petroleum Training Institute (PTI) Effurun into a degree awarding institution. With this approval, it became the first Nigerian Petroleum Engineering University with the former PTI, itself established in 1973, operating as one of its faculties.

 

The FUPRE Bill – A FAILED VENTURE?

However, it is my opinion that the FUPRE Bill, turned law, is a failed venture for several reasons.

First, the world’s use of petroleum is approaching a tipping point – soon enough it will become useless. The danger is not an imminent collapse in demand, but the start of a shift in investment strategies away from finding new sources of oil to finding alternatives to it. Electric cars may become commonplace in the future. Ten giant car makers, including BMW and Volvo, have committed to electric cars by 2019. The UK, China, India, France, Germany and many of the developed countries have committed, or at least made plans to switch over to electric powered vehicles by 2025 onwards.A fortiori, this will eventually be doing a disservice to the socio-economic development promised to the Niger-Delta region.

Secondly, this decision does not make economic sense. Oil prices have plummeted in the space of three years. In the year 2014, a barrel of petroleum cost over $100. By January 2016, and till date, the price of a barrel now cost less than $55; although the recent cuts to output by OPEC have helped push the price over $60 in the past few days. Apart from the fact that petroleum is becoming less profitable, renewable energy sources such as wind and solar are becoming more economical and cheaper to produce. Nigeria has enormous solar energy potential, with fairly distributed solar radiation averaging 19.8 MJm2/day and average sunshine hours of 6h/day. The assumed potential for concentrated solar power and photovoltaic generation is around 427,000 MW. According to estimates, the designation of only 5% of suitable land in central and northern Nigeria for solar thermal would provide a theoretical generation capacity of 42,700 MW: which dwarfs the meagre 5,000 MW currently shared by the whole country at present.

In the same vein, with annual average speeds of about 2.0 m/s at the coastal region and 4.0 m/s at heights of 30m in the far northern region of the country, the potentials of Wind, if turbines are erected in strategic places, are more than negligible. Same factors also apply to generating power from Biomass. In other words, investing capital to fund a petroleum university is a waste of tax payers’ money and should be considered a bad economic judgement.

Lastly, legally, this decision should be seen as offending Nigeria’s commitment to the Paris Convention on climate change. It will be recalled that Nigeria was one of the latest countries to ratify the Paris Climate agreement, which aims to avoid the most devastating effects of climate change by cutting carbon emissions. Under the agreement, each country submitted an emissions reduction proposal known as Intended Nationally Determined Contributions (INDCs). In its INDCs, Nigeria considered 30 per cent energy efficiency in industries, homes, businesses and vehicles, and increased use of natural gas in generators and renewable energy. Other measures being considered include stopping gas flaring, capture of gas, setting standard for appliances, generators, buildings and climate smart agriculture, all is expected to lead to $4.5 billion benefits to the country

Although projects like the Mambilla Hydro-power plant are commendable, the signing of the FUPRE Bill to law could be seen as encouraging/fostering the continued use of fossil fuels, which itself is causing a huge damage to our planet.

 

CONCLUDING THOUGHTS

It is therefore worth reminding this government of the resulting economic and social effects of the use of petroleum to the society, and its commitment under the Paris Climate agreement. This government needs to face the reality of an end to the oil era. Establishing a Renewable Energy Research Institute to complement the PTI would have been a welcome development.

The benefits of this are numerous. Nigeria can begin to conduct world leading research on how to generate, exploit and export its huge renewable energy; at least in a specialized and government funded research institute. Successful research and implementation of renewable energy projects will open up new stream of revenue for the federal government in the future when oil becomes inevitably less profitable. It will reinstate the country’s status as a precursor to innovation and sustainable development in Africa. And lastly, it will reiterate Nigeria’s commitment to the Paris Convention on climate change. The question however, is whether this government has the political will to forsake its taste for oil, implement its climate goals and foster technological advancements which will change the face of the nation for generations to come.

Akorede Samuel Omotayo is a First Class LLB graduate of Bangor University, UK and a candidate of the Freshfields Stephen Lawrence Scholarship Scheme. He also holds a BA (Hons) in Philosophy, Ekiti State University, and is presently preparing for his Bar I due to start June 2018.

 

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