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With the increased need for energy, it’s time to consider renewable energy sources

On the October 2 2013, Nigeria’s Federal Executive Council (FEC) approved a new automotive policy.  Under the new policy, procurement of all vehicles should be from local assembly plants except when the vehicles required are not produced in Nigeria. The policy is intended to lead to a gradual stoppage of the importation of foreign fairly-used vehicles into the country. To encourage investors and assure them that there will be no sudden reversal of the government’s position, the new policy is to be backed by appropriate legislation.

While the populace and automobile industry stakeholders continue to express divergent opinions on the policy, especially the potential increase in acquisition cost of vehicles if governments phase out the importation of fairly-used vehicles, some vehicle manufacturers believe that over the medium term, the policy will help to push price of cars down by 40%. Assuming we accept this theory, then we need to start to prepare for other implications of this scenario. Low acquisition costs would lead to increased demand for cars and more importantly demand for fuel. There will also be a rise in the number of road users leading to increased need for road rehabilitations and constructions. In addition, most of the power generating plants in Nigeria uses fuel from petroleum (oil & gas) which shortage at most times has been blamed for low level of power generation. With the reform of the sector and the eventual privatisation, it would be appropriate to consider alternative energy sources.


Alternative energy sources in the North Western Nigeria

As a source of large scale solar energy and bioethanol, Nigeria’s North West region provides an unrivalled opportunity for in the provision of renewable energy sources for both economic and political reasons. The region has the hottest weather in the country with temperature of up to 450C in Sokoto, Kebbi and Kano States. The establishment of a plant in these areas that can store and covert the scotching sunlight into energy for power generation would be a good idea. Although may be costlier that gas-powered plants, it is more efficient and renewable. According to scientists, energy sources from the sun are expected to supply energy to the earth for another one billion years.

There have been attempts to establish bioethanol plants in Katsina and Kaffanchan but were not successful due to management challenges. Since the proposed communities have been prepared and some of the farmers have engaged in sugar cane farming, it would be easier to locate bioethanol plants in such areas. In addition, farming is more large scale in the Northern region of the country; hence the needed raw materials will be available.

A well planned and implemented alternative energy programme could be a larger source of energy to the country and rival oil and gas as the largest income earner for Nigeria.

  • Written by The Analyst
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Take away the fuel subsidy, but give us Bolsa Familia

The harsh reality of a deregulated petroleum regime is that it will hurt the poorest in the land especially in the short to medium term.  The abolition of the subsidy would increase gasoline prices to between N150 and N180 a litre. This could stoke inflation, weaken disposable income and further aggravate economic inequalities. In Nigeria, food accounts for 52% of household spending, 45% live below the poverty line, and the World Bank puts the country’s Gini Index at 0.43 (Gini index is a measure of income inequality where 0 represents perfect equality in a society, while an index of 1 implies perfect inequality). Nigeria lacks the most basic social welfare niceties even to those genuinely deserving of it and the removal of the petroleum subsidy which has helped provide cheap fossil fuels will be hotly contested. Removing the fuel subsidy will save the country about N1.8 trillion annually for the next five years and reformers will help their case by pushing for good causes to channel these savings into.

We highly admire the good works of the “Bolsa Familia”, a conditional cash-transfer programme (CCT) which goes to 13m families in Brazil (about one in four) as long as the children stay in school and get medical check-ups. Bolsa Familia, according to its most recent progress report, published in March, helped drop rural poverty by 15 points between 2003 and 2008. It has also won high praise from ever sceptical bodies like the World Bank whose former President described it as a “model of effective social policy” and has been exported to places like the United States. New York’s Opportunity NYC is partly based on it. Bolsa Familia has also come cheap, costing the Brazilian government only about 0.4% of GDP in contrast to our unwieldy fuel subsidy which is costing us about 3% of GDP. Nigeria can therefore benefit from replicating this model .

  • Written by The Analyst
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