By Hosea Parah, Abuja
The energy sector in Nigeria is set to experience a period of growth and development in the third quarter of 2024, according to a report by the Society of Energy Editors. Despite the positive outlook, the industry continues to face significant challenges that demand immediate attention.
One of the key areas of focus is oil exploration and production. Nigeria is expected to witness a surge in oil production as new fields come online, and efforts are underway to revamp existing fields to boost output. However, the industry must grapple with security issues in the Niger Delta, ongoing divestments by oil majors, lack of investments, decaying infrastructure, poor governance structure, and inadequate implementation of the Petroleum Industry Act (PIA).
In terms of domestic refining, fuel imports, and petroleum subsidy, refineries are expected to operate at limited capacity due to ongoing maintenance and upgrade work. This means that the country will continue to rely on high fuel imports, which will put pressure on foreign exchange reserves. Additionally, the petroleum subsidy remains a significant burden on government finances, and with its removal, fuel prices are anticipated to rise by up to 300 percent in some states compared to the same period in 2023.
Nigeria’s gas production is set to increase with the launch of new projects, solidifying its position as a key global supplier of liquefied natural gas (LNG). However, challenges such as gas infrastructure constraints, inadequate investments, and domestic supply shortfalls are expected to persist.
The energy sector also expects a boost in power generation as new plants come online, and efforts to upgrade transmission and distribution infrastructure will continue. However, funding shortfalls resulting from a lack of investment and grid stability issues remain formidable challenges.
Labour unrest is also a concern in the downstream and upstream petroleum sectors, as workers stand in solidarity with organized labor to address the cost-of-living crises. Additionally, electricity sector workers may protest over unpaid wages and benefits, joining forces with organized labor to voice their grievances.
Efforts to enhance revenue generation from solid minerals are underway, with a focus on curbing the impact of artisanal mining through the deployment of newly launched mining marshals. However, challenges such as insecurity, artisanal mining activities, regulatory framework gaps, and inadequate road and rail networks for mineral evacuation continue to undermine investor confidence in mining portfolios.
To foster increased community engagement and development projects in oil and gas producing communities, the energy sector aims to institutionalize the Host Community Development Fund in alignment with the implementation of the PIA. However, persistent challenges such as insecurity, crude oil theft, artisanal refining, and oil spill incidents demand concerted efforts for effective resolution.
The Nigerian Content Development Monitoring Board remains committed to promoting local participation in the oil and gas industry. However, political interference poses a potential obstacle, hindering the efficient management of the Nigerian Content Intervention Fund by the Bank of Industry, thereby impeding progress.
The Niger Delta Development Commission continues its focus on infrastructure development and job creation in the region. However, political interference, project abandonment, and non-payment for completed projects present hurdles that must be overcome to ensure sustained progress.
Efforts to restore oil spill-impacted communities in Ogoniland are progressing, with tangible progress expected in cleanup and remediation activities. However, political interference remains a significant challenge that necessitates immediate attention.
While the third quarter of 2024 promises opportunities for growth in Nigeria’s energy sector, challenges such as security issues, infrastructure decay, poor governance, and political interference must be effectively addressed to ensure sustainable progress. Stakeholders and policymakers are urged to promptly tackle these challenges to further enhance Nigeria’s energy landscape.