3 Things Nigeria Can Do With Increased Oil Revenue Earnings
Crude oil prices in the international oil market is rising - from an all time low of about $30 per barrel in 2016 to about $65 per barrel by the end of 2017.
Due to consistent peace efforts in the Niger Delta, attacks on oil facilities has almost ceased and Nigeria is now enjoying more crude output, targeting more than 2 million barrels per day this year.
More so, demand for Nigerian crude has also increased as buyers who had stayed away before now have returned.
So, it is safe to say that the boom years are back.
However, to avoid the mistake of the past when excess earnings from crude oil was frittered away, here are three things the leadership of the country can do with the increasing earning from crude oil.
Invest In Renewable Energy:
Energy investments and trends across the world in 2017 showed that the world is gradually moving away from fossil fuel.
France and UK announced in 2017 they would ban petrol cars in 2040. India said early last year that every vehicle sold in the country should be powered by electricity by 2030.
Norway has said all new passenger cars and vans sold in 2025 should be zero-emission vehicles.
And according to the International Energy Agency, at least 8 countries including Austria, Denmark, Ireland, Japan, the Netherlands, Portugal, Korea and Spain have set official targets for electric car sales.
China, the world's largest car market, and one of the biggest importers of Nigerian crude, is also working on a plan to ban the production and sale of vehicles powered only by fossil fuels.
So, who exactly will be buying Nigerian crude at least 20 years from now?
That is the question that should bog Nigerian leaders’ minds.
And that is why it has become imperative for Nigeria to start investing in renewable energy, using the excess earnings from crude oil sales.
“Although politicians may tout the “Nigeria Without Oil Slogan,” it will require serious commitment and aggressive investment to prepare for that future,” noted an energy analyst, Lawrence Onyedi in a chat with Bounce News.
When it comes to renewable energy, the first to come to mind is solar energy. With abundant sunlight almost all through the year, Nigeria can prepare for that future by investing heavily in solar power.
Some African countries such as Morocco are already making an impressive progress in this regard.
Morocco has no fossil fuel reserves so is almost entirely reliant on imports. In 2015 King Mohammed VI committed the country to increasing its share of renewable electricity generation to 52% by 2030, aiming for the installation of around 10 gigawatts (GW).
“Of that, 14% is expected to come from solar, with plans to install 2GW of new capacity by 2020, as well as increases in wind power and hydraulic dams,” said a report by the UK Guardian newspaper.
Morocco has even opened the door to exchanging electricity produced from renewable sources with Europe.
Nigeria can borrow a leaf from that. Already, the federal government has started investment in that energy type, but it is marginal and almost too late.
In July 2017, the federal government announced the commencement of the first solar power project in Nigeria, the 1.2megawatts solar power plant in the lower Usuma Dam, Bwari, Abuja.
The government should increase such investment and spread it across Nigeria, and quickly too, if the impending energy revolution will not catch Nigeria unawares.
Get The Refineries Working:
Recently, the federal government got approval from state governors to withdraw $1 billion from the money saved selling crude oil above budgeted benchmark.
The money is to be used to fight Boko Haram. Time has come again for the government to save more money in that account.
Read More: Nigeria’s Refineries Idle, Bleeding Out
With oil price benchmarked at $45 per barrel in the 2018 budget and the actual price hovering around $65 per barrel, Nigeria has a chance to save billions of dollars from crude oil sales. Part of the things it should be using the fund for is to get the local refineries working.
Now, Nigeria has only three refineries. Two are performing below capacity and one is idling away. This has led to endless fuel crisis and increasing cost of fuel consumption for Nigeria.
Save For The Future:
Nigeria’s crude oil provides a reliable source of foreign exchange. Now, this is critical for an import dependent nation such as Nigeria because any disruption in the flow of the foreign exchange will trigger lots of economic woes, including a recession.
At the time crude oil sold at more than $100 per barrel, Nigerian state governors rebuffed any attempt to get the country saving.
And so, when the dollars flowed scantily, there were no dollars to provide the necessary buffers. This plunged the country into a crisis – the naira weakened, inflation set in and eventually the economy stagnated leading to a recession, the first in 25 years.
Those managing the economy can ensure that does not happen again by taking advantage of this opportunity to save more against the future.
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