Panelists at the recent Seplat Energy Summit in Abuja have identified finance, time, action, among others, as critical to Nigeria’s quest to transit from fossil fuels to renewable energy.
The panelists were Oscar Onyema, Group Chief Executive Officer of Nigerian Exchange Group Plc; Simbi Wabote, Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB); Mike Sangaster, CEO of Total Nigeria; and Miguel Azevedo, Citigroup’s Head of Investment Banking for the Middle East and Africa.
The discussion was moderated by Aruma Oteh, a former Director-General of the Securities and Exchange Commission.
Chairman of Seplat Energy Plc, A.B.C. Orjiako, whose company organised the summit, set the tone for the discussion by disclosing plans by Seplat to spearhead transition from fossil fuel to renewable energy and end gas flaring in its operations, six years ahead of the government’s target.
He said Seplat Energy would lead campaign and actions towards replacing the use of firewood as an energy source at homes with Liquified Petroleum Gas (LPG).
Also in the plan, according to him, is a tree-planting initiative and replacement of diesel generators with renewable energy.
Onyema pointed out that Nigeria would need time and money to prosecute a viable transition, quoting the ministry of power as having said that Nigeria would need $400 billion to power households in 30 years.
While observing that Nigeria’s capital market could not finance the country’s energy transition, he called for “innovative ways of raising deep capital financing. One of them includes partnership either on the debt or equity side.”
He said: “There are global funds Nigeria can tap into to ease energy transition. Nigeria Stock Exchange partners Luxembourg Stock Exchange.” He also called for the right policies to attract investments to the renewable energy sector.
Similarly, Wabote said Africa, especially Nigeria, needs capital injection and behavioral changes to achieve the energy transition.
He said: “Nigeria needs a transition process that will create incentives for small renewable energy companies to 90 per cent of Nigerian source of electricity needs to come from renewable energy within 30 years.”
He pointed out that the world was facing energy crises and urged Nigeria to leverage the transition to gas energy. The transition he, however, warned would not happen if stakeholders continued to indulge in conversations without commensurate action.
On what his board is doing towards energy transition, he said 70 per cent of investments, so far, have been made in the gas sector. “We have investments in distribution and penetration. We are spearheading the distribution and penetration of LPG in 10 northern states. We need innovations, which is why we set up a $50 million research and development grant.
“If we continue to depend on international bodies for funds, we may never get there; we need companies, like Seplat, for the energy transition. We need to prepare properly for the transition.”
Also Sangaster, CEO of Total Nigeria, identified financing as one of the major issues that need to be addressed, saying Total Energy is committed to being part of the solution rather than being just an observer.
The capital cost of renewable energy, according to him, is higher than the capital cost of fossil fuels, although the recurrent cost of renewable energy is cheaper.
He regretted that Shell had looked for renewable projects in Nigeria to invest in the last couple of years but struggled to find a company to invest in.
“Most of Nigeria’s renewable energy projects need power purchase agreements that are bankable. Africa needs more energy which must be clean,” he said.
He projected that by 2050, oil demand would be half of what it is today and there will be an increase in gas demand.
“Nigeria needs investment in energy. Nigeria has a great opportunity to make use of gas for local consumption and revenue from export,” he said.
Miguel Azevedo, Citigroup’s Head of Investment Banking for the Middle East and Africa, described Seplat Energy’s move to transit to renewable energy as a blessing, noting it would allow for a change in economic and business models. “It will also allow for massive job creation and massive industrialisation,” he said.
This, according to him, will force the development of a new tax system that will be more value-based, which will allow for development.
He described Seplat as one of the first oil companies to have business plans that are not dependent on oil.