Nigeria is not excluded from the pursuit of carbon neutrality, being one of the 195 nations that are party to the United Nations Paris Agreement – a pact that seeks to combat climate change by reducing greenhouse gas emissions. In addition, the country has undertaken to cut its greenhouse gas emissions by 20 per cent between now and 2030 and to attain net-zero emissions by 2060.
The rate at which Liquefied Petroleum Gas (LPG) price increases is assuming a phenomenal dimension. This is despite the volume of proven natural gas reserves which the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) said stood at 209.5 trillion cubic feet (tcf) as at January 1, 2022.
Latest data released by the National Bureau of Statistics (NBS) indicate a 101 per cent rise in cooking gas price. According to the data, the average price of five kilogrammes cooking gas increased from N4,397.68 in July to N4,456.56 in August. It noted that the price in August indicated a 1.34 per cent increase on a month-on-month basis from what obtained in July.
“On a year-on-year basis, the August 2022 price was a 101.17 per cent increase over the price of N2,215.33 paid for the same volume of gas in August 2021,’’ it stated. The report added that Taraba recorded the highest average price of N4,925.44, for 5kg cooking gas, followed by Adamawa where it cost N4,920, and Lagos State where it sold for N4,782.50. It stated also that Katsina State recorded the lowest price of N4,020 in August, followed by Ogun and Yobe at N4,057.14 and N4,078.46, respectively.
Analysis by geopolitical zones showed that the North-Central recorded the highest average retail price of N4,615.95 for 5kg cooking gas, followed by the North-East at N4,548.03. The North-West recorded the lowest retail price at N4,285.51.
The NBS reported also that the average retail price of 12.5kg cooking gas increased to 9,899.34 in August 2022 from N9,824.07 in July, representing a 0.77 per cent month-on-month increase.
“On a year-on-year basis, the price rose by 119.26 per cent from N4,514.82 in August 2021,’’ it stated. The report added that the highest retail price was recorded in Ebonyi at N11,225 for 12.5kg, followed by Cross River at N10,982.14 and Delta at N10,965.42. The lowest average price was recorded in Katsina State at N8,150, followed by Yobe and Taraba at N8,212.63 and N8,886.30, respectively.
But given the volume of gas reserves in the country, would it not have been right if gas is sold at a more reduced rate? Experts in the sector hold divergent views on this. For instance, the Chairman of Nigeria Gas Association (NGA) Ed Ubong, agreed that the country may be sitting on a large reserve of gas, but wondered what her production capacity of same is. “Nigeria is sitting on a large, huge resource base of gas, but how much gas are we producing? We are a top ten country when we talk of what we have but when you talk of what we are actually producing we begin to sit back, we are in the top 20 range. Gas only accounts for five per cent of Africa energy mix,” he said.
Globally, the issue of having cheap natural gas may have become a thing of the past. According to a report by Oilprice.com, the era of cheap natural gas might be gone for good. At some point, the U.S. natural gas futures climbed to a 31-month high of 4.16/MMBtu, especially occasioned by forecasts for hotter weather and soaring global gas prices ensuring that U.S. liquefied natural gas (LNG) exports will remain at record highs. It is being projected that average gas demand, including exports.
The continued rise in gas price is not unconnected with the race for cleaner energy. It is therefore not surprising that the net-zero carbon emissions target of world leaders is accelerating the global shift away from hydrocarbon-based energy sources and towards renewables. This is why several governments are making sustainable investments a strategic thrust including using policies and incentives to drive innovation in renewable energy technologies.
Agusto & Co, a research firm in Nigeria and Sub-Saharan Africa, is of the view that the world’s capacity to generate electricity from solar panels, wind turbines, and other renewables will grow significantly in the next few years. This is why it noted that the gas regime is closely tied to the drive for renewable energy. According to the International Energy Agency (IEA), renewables will account for about 95 percent of the increase in worldwide power capacity by 2026, with solar photovoltaics (PV) alone accounting for more than half of the anticipated expansion. In 2022, a projected $472 billion will be invested in renewable energy, 44 percent more than in 2017, when $326 billion was spent.
Which way to go?
A research report by the firm revealed that the country’s current energy mix is heavily skewed towards gas, with 23 thermal plants contributing 76 percent of the total installed generating capacity. It however noted that years of underinvestment in the domestic gas market as a result of price controls, regulatory obstacles and pipeline vandalism have put question marks on the commercial viability of gas supply to the power sector. Agusto & Co estimates that renewable energy sources (such as wind and solar) in the country, which are frequently proposed as alternatives to gas, are still in their infancy and are not commercially viable on a sufficient scale to diversify the country’s energy mix.
However, researchers at the firm are of the opinion that Nigeria’s aspirations are rather lofty considering that the country is still grappling with inadequate electricity supply from the national grid as unmet demand is estimated at approximately 20,000 megawatts (MW). With rapid industrialisation, population and income growth, this supply gap is expected to widen. The challenges confronting the Nigerian power sector are well documented, over-laboured and cut across the industry’s entire value chain. They were summarised by a World Bank study in 2020 where it was revealed that about 47 percent of Nigerians lack access to grid electricity and those who do have access, face regular power outages.
Given its abundant and diverse natural resources, Nigeria, according to Augusto & Co report, is capable of producing significant amounts of clean and renewable energy (particularly solar energy). This is because the country is located within a high sunshine belt and has significant solar energy potential as a result.
The Nigerian Meteorological Agency (NIMET), reckons that the average annual daily sunshine in Africa’s largest economy is 6.25 hours. Nigeria’s Northern region enjoys average solar radiation of about 25.2MJ/m2 (megajoule/square meter) per day, with an average of 12.6MJ/m2 in coastal areas. Wind speeds ranging between 2.5m/s and 6.5m/s in the Northern region of Nigeria, owing to the large expanse of dry land, also present opportunities to generate wind power, while biomass remains a potential and untapped source of bio-energy given the amount of waste produced.
While grid-connected electricity supply remains the cheapest source of power in Nigeria, it is not always economically efficient to construct gas pipelines and/or transmission cables to some remote villages with very little demand for electricity. Agusto & Co believes that this underscores the need to expand the current energy mix to include renewables. Renewable energy plants can be constructed in remote areas as an alternative to running several kilometres of transmission cables, which are subject to vandalism. The poor and erratic power supply from the national grid also provides opportunities for small-scale renewable projects for individual households.
Also, a decentralised energy production system is pertinent to address the transmission and distribution challenges plaguing the Nigerian power sector, which is provided by the use of solar energy. Nigeria’s market for electrification is ripe, with an estimated 215 million people and an annual population growth rate of three percent. Given the appropriate regulatory support, Agusto & Co forecasts significant investment in renewables.
Stakeholders agreed that renewable energy is the fastest-growing energy source globally and many industry experts consider it to be the energy for the future with projections of as much as 85 per cent of global power output coming from renewables (mostly solar and wind) by 2050.
This is why the research firm expects that with growing awareness of climate change and environmental sustainability, more Nigerian organisations would opt for renewables, driving their increased adoption – particularly solar energy – in keeping with the global trend. This would place the country on track to accomplish its goal of increasing energy output sufficiently to overcome the domestic power supply shortfall and putting it on a solid route to meeting its international commitment to achieve zero emissions by 2060.
