Summary
Nigeria has an abundance of oil/gas and coal resources to justify subsidised
and, in fact, low energy prices but unfortunately, current oil/gas and coal
production per capita is relatively very low. This implies that Nigeria cannot
currently afford to maintain low energy prices for its people. New Foreign
Direct Investment is therefore required to significantly increase
hydrocarbon/coal production and reserves.
and, in fact, low energy prices but unfortunately, current oil/gas and coal
production per capita is relatively very low. This implies that Nigeria cannot
currently afford to maintain low energy prices for its people. New Foreign
Direct Investment is therefore required to significantly increase
hydrocarbon/coal production and reserves.
There is a requirement to attract more financially capable and technically
competent oil and gas upstream, midstream, downstream and power players and also
promote an investor friendly business environment for existing players. A fiscal
regime that is simple, unambiguous, competitive, progressive and stable is
required to create a vibrant oil and gas business in Nigeria. These attributes
and a Capital Gains Tax regime should be reflected in the PIB. Fiscal incentives
for the development of non-associated gas resources are also required.
There is no such thing as cheap energy. The concept of cheap energy is a
contradiction in terms. Oil and gas, clean coal, wind, nuclear, hydro and solar
energy are all very expensive to develop. End-user energy prices have to reflect
this development cost, especially in a country like Nigeria that has very
limited FX income per capita.
competent oil and gas upstream, midstream, downstream and power players and also
promote an investor friendly business environment for existing players. A fiscal
regime that is simple, unambiguous, competitive, progressive and stable is
required to create a vibrant oil and gas business in Nigeria. These attributes
and a Capital Gains Tax regime should be reflected in the PIB. Fiscal incentives
for the development of non-associated gas resources are also required.
There is no such thing as cheap energy. The concept of cheap energy is a
contradiction in terms. Oil and gas, clean coal, wind, nuclear, hydro and solar
energy are all very expensive to develop. End-user energy prices have to reflect
this development cost, especially in a country like Nigeria that has very
limited FX income per capita.
1. Downstream
The downstream oil industry in Nigeria is distorted because of inadequate
refining capacity. Refining capacity has declined over time due to poor
maintenance of the refineries at a time when population growth has led to
increasing demand for petroleum products.
refining capacity. Refining capacity has declined over time due to poor
maintenance of the refineries at a time when population growth has led to
increasing demand for petroleum products.
There is no easy fix around improving the supply of refined petroleum products.
The only answer is costly investment in new refineries since Nigeria has simply
overgrown the productive capacity of the existing refineries. Pouring scarce
funds into the existing refineries is counterproductive. Nevertheless, financing
The only answer is costly investment in new refineries since Nigeria has simply
overgrown the productive capacity of the existing refineries. Pouring scarce
funds into the existing refineries is counterproductive. Nevertheless, financing
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