A new report on the “Implications of Oil & Gas Transition on the Nigerian Economy” has called for a careful transition away from oil in such a manner that it will not aggravate the present economic reality.
The report was presented by the Centre for Climate Change and Development (CCCD) at Alex Ekwueme Federal University, in collaboration with the World Resources Institute (WRI) in Washington, DC, at a webinar held jointly by the two institute.
The report argued that transition should not be done haphazardly and recommended the use of gas as a transition fuel.
According to Prof. Chukwumerije Okereke, the Director, CCCD, the report is a multi country project, that is why AE-FUNAI is focusing on Nigeria, why some of the colleagues from Colombia are also mirroring their own perculiar scenarios.
Okereke said that Nigeria and some other oil dependent countries could lose a lot of jobs and revenue from transiting away from oil, but worried that there are limited statistics on the number of jobs that could be lost, where and how it would be lost and it’s impact on the economy.
The scholar noted that there were attempts in the past for the country to diversify its revenue source by looking at different regions in the country with comparative advantage and dominance of resources.
For instance, Cocoa in the South West, Oil palm in the South East and Ground Pyramid in the North.
Okereke argued that Nigeria is one of the most vulnerable countries to climate change.
He said that attempts to diversify Nigerian economy away from oils and gas could exercebate climate impact in Nigeria.
The Prof. said that available statistics show that Nigeria would be loosing about 450 billion dollars to climate change by 2050.
He added that Nigeria lost about 100billion dollars to climate change by 2020.
Okereke said that flooding was another consequence of climate change, leading to the death of many persons and loss of infrastructure along the coastlines.
He said that 25 million Nigerians were at risk of flooding and 630 square kilometres of land were susceptible to flooding along the Niger-Benue basin in the Niger Delta area.
According to him, the direct estimate of damage and loss from flooding in 2022 is N1.48 trillion, while the total damage and loss, including indirect ones, due to the flooding is about N2.6 trillion.
He added that a carefully managed transition was important for Nigeria to transition away from fossil fuels.
Also speaking at the webinar, Mr Uchenna Nnamani, Research Fellow at Centre for Climate Change and Development, while talking in the report, said that transiting away from Oil & Gas has huge implications for sub national governments in Nigeria, employment and GDP growth.
According to him, the transition will also have very huge consequences on the workforce (labour).
He added that mist states if the country depend heavily on revenue accruing from the federation account on monthly basis to meet up their obligations to their citizens.
“There is a national dependency on revenue accruing from oil & gas revenue.
“Sub nationals seem to be vulnerable to oil and gas revenue.
“28 states of the federation got bail-out in 2021 with oil & gas revenue.
“With drop in oil & gas revenue, states will find it difficult to cope.
Nnamani said that the report stressed the need for a careful transition away from oil & gas with emphasis on gas as the transition fuel.
He noted that transition would come down with huge risk, fiscal vulnerability, economic breakdown, energy poverty and stranded assets.
He argued that transition could easily lead to huge revenue loss on the public service front and advised that transition away from oil should be planned to avoid the worse.
Nnamani said that the report recommended cohesion in government policies for a careful and smooth transition away from oil.
He added that the report placed high premium on gas and solar energy which is abundant in the case of Nigeria, but said that gas should be singled out as the transition fuel
