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 Energy sector: Not yet on thresholds of global competitiveness 61 years after

Energy sector: Not yet on thresholds of global competitiveness 61 years after

THE SUN

Sixty one years after oil was discovered in Oloibiri in present day Bayelsa State, Nigeria and its citizens cannot be said to have fared any better despite the huge revenue it had generated over these years.

Indeed, events in the last decade could be a pointer to this where the standard of living of an average Nigerian has degenerated, as more of its middle class are joining the lower class.

Over these years, Nigerian general public has received so little benefit from this oil wealth as the country continues to fare badly on all development indicators as decades of oil exploration in the Niger Delta, have created an explosive mixture of environmental impacts, poverty, and oil-spill related conflicts.

Data from the Central Bank of Nigeria (CBN) show that Nigeria earned N77.348 trillion from the oil and gas industry from 1999-2016 but has nothing to show for this revenue inflow other than poverty, poor infrastructure among others.

While countries that started oil and gas exploration years after Nigeria are reaping the gains of their hydrocarbon resources, that cannot be said of Nigeria. But for some commentators the icing on the cake for the industry over the last 61 years was the mobidity rate refineries which has now left Nigeria a 100 per cent petroleum product import dependent economy.

The gains that the country ought to make in higher oil prices are now diverted away through huge subsidy.

The Nigerian National Petroleum Corporation (NNPC) spent a total of N905.27billion on petrol subsidy in eight months amid rising global oil prices, according to a recent data obtained from the NNPC

With the international oil benchmark, Brent crude, hitting $80.20 per barrel last Tuesday, expectedly the landing cost of imported petrol and subsidy will to increase.

The subsidy, which the NNPC prefers to call ‘value shortfall’ or ‘under-recovery’, resurfaced in January this year as the government left the pump price of petrol unchanged at N162-N165 per litre despite the increase in global oil prices.

The Federal Government had in March 2020 removed petrol subsidy after reducing the pump price of the product to N125 per litre from N145 following the sharp drop in crude oil prices.

The NNPC, which has been the sole importer of petrol into the country in recent years, has been bearing the subsidy cost since it resurfaced.

Data from the corporation showed that it incurred N25.37bn subsidy cost in January, N60.40bn in February, N111.97bn in March, and N126.30bn in April and N114.34bn in May.

The subsidy cost rose from N143.29bn in June to N175.32bn in July but fell to N149.28bn in August, according to the NNPC.

In the power sector, there are a couple of issues bedeviling it. Some of these included; frequent system collapse as a result of ageing transmission network, cost reflective tariff being prompted by the Discos, poor metering and generation constraints. While the Federal Government has concluded plans to suspend all forms of subsidies in the electricity market which will technically translate to increase in tariff, labour has said it will resist any form of move that will further inflict pains on the citizen.

In 61 years of independence, the power sector has witnessed appreciable progress and most of the problems that confronted the sector at birth are still there as at today with the country generating less than 5,000MW of electricity for a population of over 200 million people compared to South Africa which generates about 40,000 for far less population. But, in the midst of these challenges, the sector has witnessed some progress, thus giving it hope that should this trajectory be followed to the letter, Nigeria would be better for it.

 

Over these years, Nigerian general public has received so little benefit from this oil wealth as the country continues to fare badly on all development indicators as decades of oil exploration in the Niger Delta, have created an explosive mixture of environmental impacts, poverty, and oil-spill related conflicts.

Data from the Central Bank of Nigeria (CBN) show that Nigeria earned N77.348 trillion from the oil and gas industry from 1999-2016 but has nothing to show for this revenue inflow other than poverty, poor infrastructure among others.

While countries that started oil and gas exploration years after Nigeria are reaping the gains of their hydrocarbon resources, that cannot be said of Nigeria. But for some commentators the icing on the cake for the industry over the last 61 years was the mobidity rate refineries which has now left Nigeria a 100 per cent petroleum product import dependent economy.

The gains that the country ought to make in higher oil prices are now diverted away through huge subsidy.

The Nigerian National Petroleum Corporation (NNPC) spent a total of N905.27billion on petrol subsidy in eight months amid rising global oil prices, according to a recent data obtained from the NNPC

With the international oil benchmark, Brent crude, hitting $80.20 per barrel last Tuesday, expectedly the landing cost of imported petrol and subsidy will to increase.

The subsidy, which the NNPC prefers to call ‘value shortfall’ or ‘under-recovery’, resurfaced in January this year as the government left the pump price of petrol unchanged at N162-N165 per litre despite the increase in global oil prices.

The Federal Government had in March 2020 removed petrol subsidy after reducing the pump price of the product to N125 per litre from N145 following the sharp drop in crude oil prices.

The NNPC, which has been the sole importer of petrol into the country in recent years, has been bearing the subsidy cost since it resurfaced.

Data from the corporation showed that it incurred N25.37bn subsidy cost in January, N60.40bn in February, N111.97bn in March, and N126.30bn in April and N114.34bn in May.

The subsidy cost rose from N143.29bn in June to N175.32bn in July but fell to N149.28bn in August, according to the NNPC.

In the power sector, there are a couple of issues bedeviling it. Some of these included; frequent system collapse as a result of ageing transmission network, cost reflective tariff being prompted by the Discos, poor metering and generation constraints. While the Federal Government has concluded plans to suspend all forms of subsidies in the electricity market which will technically translate to increase in tariff, labour has said it will resist any form of move that will further inflict pains on the citizen.

In 61 years of independence, the power sector has witnessed appreciable progress and most of the problems that confronted the sector at birth are still there as at today with the country generating less than 5,000MW of electricity for a population of over 200 million people compared to South Africa which generates about 40,000 for far less population. But, in the midst of these challenges, the sector has witnessed some progress, thus giving it hope that should this trajectory be followed to the letter, Nigeria would be better for it.

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